As part of the ATOL scheme’s half century celebrations, we are looking at how the package holiday industry has changed since the first ATOL licenses were issued in the summer of 1973.
ATOL was first tested with the collapse of tour operator Clarksons in 1974, but for the rest of the decade, the travel industry stabilised and continued to grow rapidly.
This growth had slowed by the early 1980s as the country was in recession with record unemployment figures. Ultimately this would lead to the collapse of another big name in the travel sector at the time.
Laker Airlines, and its associated tour operating businesses, led by flamboyant entrepreneur, Sir Freddie Laker went to the wall in in February 1982. The ATOL scheme intervened to help the 139,000 holidaymakers who were either abroad or had holidays booked with the company.
Not long afterwards, another flamboyant entrepreneur would take to the skies for the first time. Sir Richard Branson moved away from the music industry to launch Virgin Atlantic after being frustrated with his options when trying to flying to his home in the British Virgin Islands.
The first flight was between Gatwick and New York in August 1984 – it is said to have run out of champagne well before it touched down at Newark airport.
As the 1980s went on, the travel sector saw some major trends emerge which would change the face of the industry as the UK’s appetite for travel continued unabated.
Long distance travel
British holidaymakers were becoming more adventurous than sea and sand trips to the Mediterranean with big tour operator Instasun offering trips to Florida costing from only £139 for a week or £199 for two weeks. Soon the US and Caribbean became popular holiday destinations. Cosmos began to offer package tours to China, and Kuoni’s best sellers included trips to Thailand and the Maldives.
In the second half of the decade, long haul holidays increased from 6.7 percent of the total flights taken to 12.7 percent.
Closer to home, people started to travel behind the Iron Curtain. Yugotours, which offered trips to Yugoslavia grew to be one of top 10 package holiday operators and UK holidaymakers started to enjoy beach holidays in Bulgaria and Romania. Thomson even took 10,000 travellers a year to the Soviet Union at one point.
Rise of computers
The 1980s was a heyday for high street travel agents, which controlled around 90 percent of the travel market, with over 3,000 travel agents operating 4,500 branches nationwide. Big names included Lunn Poly, owned by Thomson, which had 500 branches around the UK and Thomas Cook.
In 1982 Thomson Holidays introduced a new computerised reservations scheme for travel agents called TOP. Computerised reservations made the booking process easier and helped to fuel massive growth of package holidays in the 1980s, as disposable income also rose throughout the decade. The introduction of bigger aircraft such as the Boeing 757 and 767 meant cheaper flights through greater economies of scale.
Growth of the big tour operators
As the decade progressed, three big operators spearheaded the package travel boom: Horizon, Thomson and Instasun (renamed ILG in 1985.) Other big names fighting to win market share included Cosmos, Global, Thomas Cook and Airtours.
Thomson grew to be the number one package holiday operator with around 3.5 million customers a year, around 30 percent of the market. In 1988 it paid £75m for Horizon, which needed approval by Monopolies and Merger Commission. Horizon was at that point the UK’s third largest tour operator which included its own airline, Orion. This acquisition added another million customers.
The merger meant Thomson was around double the size of ILG in second place. Instasun, which became ILG was founded by Harry Goodman, went public in 1981 and continued to grow throughout the 1980s before Goodman took it back into private ownership in 1987. ILG bought rival Global for estimated £5m and by late 1980s, was taking two million people on holidays.
Cut-throat competition resulted in price wars, particularly between ILG and Thomson, meaning overseas holidays became well and truly affordable for many more Brits.
Clouds on the horizon
The late 1980s also saw the privatisation of national carrier, British Airways, in 1987 and the European Commission put together common rules to protect EC holidaymakers which would become the Travel Package, Package Holidays and Package Tours Regulations 1992.
By 1989, the top five UK tour operators account for 68 percent of 14.2 million packages sold. However, there were clouds on the horizon, which would culminate in the loss of ILG, a major ATOL holder in 1991, affecting more than 20,000 people who were overseas at the time of the collapse.
This will be covered in the next of our series of blogs exploring the history of package travel in the UK and the role the ATOL financial protection scheme has played since 1973.
Whether they book by visiting a travel agent or do it all online anyone who organises a holiday financially protected by the ATOL scheme can jet off safe in the knowledge that they will not be left out of pocket or stranded abroad in the rare event that their tour operator collapses.
You can check if your air package trip is financially protected by ATOL by using the handy online tool on our website.
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