DESPITE the assertion by Thomson Holidays that it plans to expand the customer base of Budget Travel and offer a wider range of products, the acquisition announced yesterday may further reduce competition in the sun holiday market.
In less than 12 months the structure of the Irish package holiday industry has been transformed. Then there were four major players JWT, Budget Travel, Falcon Holidays and Sunbound competing against each other and the leading British operator. Thomson Holidays was saying it was prepared to spend £1 million to get into the market.
Following yesterday's deal there are now just two major players, Thomson Holidays and First Choice. Although they will continue to work through a number of operations, the bulk of the market will be controlled by the two.
The first major consolidation came last September when First Choice, the British owners of Falcon Holidays, bought the sun package holiday arm of JWT for £5.3 million.
There are no official market share figures published for the package holiday industry but at the time it was claimed that the JWT acquisition gave First Choice control of around 45 per cent of the sun package holiday market
If Budget Travel's claims to have a similar slice of the sun package holiday market are accurate, then Thomson Holidays and First Choice will have in the region of 90 per cent of the market between them.
But the Department of Enterprise and Employment has approved the purchase of Budget Travel and not basked the Competition Authority to investigate it.
All acquisitions over a certain size have to be referred to the Department of Enterprise and Employment but only a small number are referred to the authority.
In the last two years there have only been two such incidents - the purchase of Jet Oil by Statoil and the acquisition of Allied Lyons by Unilever.
The Thomson Holidays takeover of Budget Travel was subjected to the normal Departmental scrutiny and it was decided that it did not require any further investigation by the Competition Authority, according to Departmental sources.
It is understood that the Department took the view that although the ownership of one of the main players had changed, the market share of the various protagonists had not.
The main impact of the takeover would appear to be a scaling down of what had been heralded as a major assault on the Irish market by Thomson Holidays.
The British group promised to invest £1 million when it opened its Irish office in January this year and planned to sell 40,000 holidays. One of its main targets was Budget Travel's customers and it embarked on an aggressive marketing campaign.
However, the Department took the view that given the short time that Thomson had been in Ireland, its share of the market was not a significant feature.
The obvious implications for the market of yesterday's deal have not been lost on the various travel agents who sell the holidays on behalf of the big operators.
The Irish Travel Agents Association has declined to welcome the acquisition. Instead, the organisation's chief executive, Mr Brendan Moran, has refused to comment pending discussion of the deal by the board of the association next week.
With the bulk of this year's package holidays already sold, the implication for the consumers will not become apparent until next year's holidays go on sale.
