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Booking your Four Seasons resort with easyJet? Packing a wardrobe worthy of fancy lodgings could well make the low-cost carrier’s checked-in luggage charges seem reasonable. Luxury options were recently added to easyJet’s package holidays business, which like others, is booming.
EasyJet Holidays this week said it had hit its medium-term pre-tax profit target of £250mn two years ahead of schedule and claimed a 10 per cent share of the UK market, albeit still well behind leaders Tui and Jet2, with 40 per cent between them.
Investors though have been experiencing something more like this year’s viral Jet2 meme, where that company’s jazzy tagline plays over a scene of holiday snafus. Shares in easyJet, Jet2, and smaller online rival On The Beach, after optimism earlier in the year, have all fallen. Profit warnings in September from Jet2 and OTB pointed to weak winter seasons with holidaymakers worried about the state of the British economy, while a trend towards late bookings makes year-on-year comparisons look poor.
Yet the underlying trends are in their favour. All three are targeting a holiday market hotspot. Some 61 per cent of British holidaymakers have booked a package trip overseas in the last year, says Abta, the UK travel industry body, compared with 51 per cent in 2019.
This new interest in bundled tours has arisen out of the chaos of pandemic-era travel. Holidaymakers are also wary of the risk that the best-laid plans may be upended by geopolitics, strikes or extreme weather. Having a single point of contact is a comfort and protection against the hassles of booking transfers, rerouting or cancelling flights, sorting refunds or even arranging repatriations.
EasyJet only launched its holidays offering in late 2019 — just months after the collapse of package tour originator Thomas Cook and several low-cost airlines. It arguably benefited from the pandemic disruption that hit very quickly afterwards, which gave managers time to build relationships and encouraged struggling hoteliers to be more receptive to new players.
The attraction for its top brass is fairly straightforward: the airline’s extensive flight network, carrying roughly 100mn passengers a year, offers more destinations and travel flexibility than any tour operator rival can muster. Pitching to its existing customers works in effect like a form of upselling, alongside speedy boarding and those much-despised luggage charges.
EasyJet boss Kenton Jarvis this week struck a bullish note, as did Jet2’s Steve Heapy when he updated investors earlier this month. Poolside cocktails all round? Investors aren’t yet convinced, but evidence of a steadier economy could soon have them digging out their resort wear.
jennifer.hughes@ft.com
