Then out of nowhere came Magic Eye pictures. From a distance they looked like a psychedelic mess, as though Bez from the Happy Mondays had thrown up on your gran’s wallpaper. If you stared closely for long enough, though, the haunting silhouette of a shark or Rick Astley would miraculously levitate off the page, blowing your mind – shortly before you blacked out with a migraine.
I was reminded of Magic Eye pictures when I was perusing the latest Atol data on the CAA website recently. In case you’ve never known such pleasures, every year Atol holders have to project how many passengers they expect to carry over the next year. The numbers are approved by the CAA and made publicly available for review. And if you stare at the data long enough, a few pictures of the travel industry will also levitate off the page.
The first you get is a snapshot of the market’s confidence and growth plans for the coming year. As of last month, Atol holders expected to carry a total of 25.8 million passengers during 2017-18. This is in line with what they were planning this time last year, but when you factor in the 800,000 seats lost following Monarch’s demise, it suggests an underlying expectation of around 2.5% growth.
Interestingly, Jet2holidays has added 600,000 new passengers to its 2017-18 Atol authorisation, so it has already replaced nearly all of Monarch’s intended package holiday capacity, usurping Thomas Cook as the second largest UK tour operator in the process.
The second picture is of consolidation in the market as those Atol bookings become concentrated among fewer companies. The three biggest Atol holders: Tui, Jet2holidays and Thomas Cook now control 42% of the market, up from 39% last year. There are also around 100 fewer Atol holders in 2017 compared with last year – a fall of 5%.
There are a number of likely reasons for this fall. The year to March 2017 certainly saw more Atol-holders fail than at any time in the past five years. In addition, the CAA introduced tighter financial tests for Small Business Atols in 2016, which has reduced the flow of new applicants and pushed more small companies into the arms of the consortia Accredited Bodies. In extreme cases, a consolidating market raises prices while reducing competition, innovation and choice, so this is definitely something to monitor.
The final image that jumped out at me was the continuing rise in the dominance of technology.
The list of the top 10 Atol holders now includes Expedia (4th), On the Beach (5th), Loveholidays (7th), Travel Republic (8th) and lastminute.com (9th). These five OTAs have scaled rapidly and now represent about 15% of the total combined market.
The established order is still being disrupted by technology.
Martin Alcock is director at the Travel Trade Consultancy
