Evaluate the way in which 'Big Four' Tour Operators ( TUI, MyTravel, Essay

Evaluate the way in which 'Big Four' Tour Operators ( TUI, MyTravel, First Choice and Thomas Cook) have established a cartel within the package holiday market i - Essay Example In 2000, the ‘Big Four’ controlled over 75% of all outbound package tours. As the travel industry undergoes a change, the Big Four show that one size does not fit all (PWC, 2006). This paper evaluates the way they have established a cartel within the package holiday market in the UK but changing trends have revolutionized the industry. The UK is the fourth most important generating market for holidays, after US, Germany and Japan (Meyer, 2003). As the British prefer to use the services of a tour operator for long-haul destinations, this sector had increasingly become mainstream with British tour operators. The main trends in the industry are economies of scale and vertical integration. These strategies give the tour operators tremendous buying power and control over the supply and distribution of their products. Vertical integration means investment into other suppliers which gives them control over quality, availability, access and price, and the ability to reach consumers. Besides, it helps to limit competition. The regulatory authorities have been challenging how the Big Four exercise control at several stages in the distribution chain. The Big Four are all vertically integrated. This vertical integration takes the form of control, normally through ownership by a single group, of a tour operator, an airline and a retail travel agent (R&M, 1999). The travel agent Lunn Poly, owned by TUI, UK had 800 shops in 2000. Going Places is owned by MyTravel, Thomas Cook has 700 travel agents and First Choice owns 361 shops under the name of Travel Choice and related brands (Meyer). If a customer walked into a Travel Choice office he would not know that he was buying a First Choice package. To reduce such misunderstandings, the Monopolies and Mergers Commission (MMC), ordered that the notice of ownership must be displayed outside the shop, in brochures, on official stationery and in advertisements. All the Big Four tour operators had some airline in