John Kent, chief executive, youtravel.com and Noel Jozephides, Sunvil`s Managing Director commented on TravelDailyNews International their views regarding the Thomas Cook merger with MyTravel. Kent suggested that the next phase of consolidation would come in the online space.

Thomas Cook has been doing a lot of work with their online offer, the airlines and hotel groups are becoming more powerful so the next stage will be consolidation between the online players.

He also described Thomas Cook AG CEO, Manny Fontenla-Novoa as the ideal guy to drive the business forward and he claimed that Manny would not give up on First Choice as a medium-term target.

Kent felt that a future benefit of the two companies merger would be the significant savings from rationalising their overseas teams. There is a lot of duplication, and it’s a huge expense which can be cut.

For Noel Jozephides, Sunvil`s Managing Director the merger came us a surprize saying who would ever have thought it would be Thomas Cook and Airtours merging? All of us were duped into thinking that both these companies were competing to buy First Choice’s mainstream operations.

He stressed that the game is on another field now I bet First Choice is feeling quite sore. Suddenly, the darling of the City is looking very vulnerable and very third-rate, with a 40p fall in its share price. There is no doubt that the race is now between Thomson and the new Thomas Cook/Airtours combination,

He went on to say Come to think of it, I never really understood what future there was for First Choice without its mainstream operation. It would then have been a much smaller company and most probably very ripe for take-over. It is very hard to imagine how a big-time vertically-integrated tour operation could be an attractive proposition once it had shed its airline and mass-market tour operation. Should First Choice have been broken up then it probably would have disappeared altogether - its mainstream business sold to one operator and its specialist divisions sold to someone else.

Jozephides said that there has been a gradual reduction in the number of package tours sold and the traditional Western Mediterranean power base of the big four has been gradually eroded by the arrival of the no-frills carriers and the facility to book accommodation on the internet, explaining why this consolidation took place.

Ryanair and easyJet between them sell somewhere between 45 and 50 million return seats a year. This enormous extra capacity just did not exist in the late 1990s. It was therefore inevitable that there would be consolidation amongst tour operators in an attempt to control capacity and increase margins. The merger of Airtours and Thomas Cook will certainly do exactly that for Thomas Cook/Airtours and operators as a whole. Where four companies had to compete by flying their own aircraft to a destination, now only three are left. Certainly, we will see a small increase in prices, but they will remain extremely competitive and there will be no reduction in choice for the public.

Jozephides felt that the merger will also benefit the other companies in the industry as the inevitable reduction in capacity will, in the short term, increase their profitability.

Possible threats of the giant merger will be the confusion in the marketplace and an inevitable reduction in staff morale leading to inefficiencies within the operation and, inevitably, a reduction in the quality of service will push clients towards those companies that offer stability and consistency, explains Jozephides.

In the longer term, the consolidation at the top will make the specialist products at the bottom even more attractive to the consumer because huge companies tend to lack the personal touch which will become more and more important to an increasingly discerning clientele. In fact, this merger is a win-win situation for all those in the industry – with the exception, of course, of those unfortunate enough to be made redundant, conculded Jozephides.