Thomson's lead under threat

OVER the past five years Thomson Holidays has watched the irresistible rise of Airtours with all the enthusiasm of Captain Hook studying the progress of the ticking crocodile.

When International Leisure Group collapsed in March 1991, Thomson was left as the undisputed leader of the package holiday business.

Throughout the 1980s ILG's flamboyant boss, Harry Goodman, had been a constant irritant, forcing Thomson into a ruinous price war in 1985 in order to protect its market share.

After Mr Goodman's luck and money ran out two years ago, Thomson might reasonably have expected a period of unchallenged supremacy, during which it could consolidate its position and improve profitability. But even in 1991 it was clear to the Thomson management that Airtours had its sights set on filling the number two slot left by the ILG brand Intasun.

In 1987, when it surprised the travel industry by gaining a stock market quotation, the tour operator had the look of an Intasun clone, down to the lurid colours and style of the brochure cover. Like Intasun, Airtours aims its packages at the lower end of the market. Its holidays are designed to be cheap and cheerful: they may be cheap but the higher-than- average rate of complaints indicates they are not always cheerful.

Airtours quickly demonstrated, however, that while it may have borrowed Intasun's clothes to establish itself, it had plenty of ideas of its own. Summer packages to the Caribbean for pounds 199 and cheap charters to Hawaii, with a marketing strategy that developed the relatively untapped potential of its home base in the north-west of England, quickly catapulted Airtours into the top flight.

Thomson also rapidly discovered that in the Airtours boss, David Crossland, it faced a far more challenging adversary than Harry Goodman. Mr Crossland may have failed his maths at 'O' level nine times, but he has a knack for business and a penchant for hard work.

Mr Crossland has maintained a low profile, happy to remain out of view in Airtours' headquarters in Rossendale, Lancashire. He rises at 5am and is in the office meeting Airtours executives to plan the day at 6am.

Unlike Owners Abroad - a sometimes uneasy alliance of several holiday programmes from mass-market Enterprise to well- regarded specialists like Sovereign Sailing - Airtours has a clear, powerful brand image.

Thomson is justifiably anxious about Airtours' extraordinary growth; from 4 per cent market share in 1988 to 14 per cent last year.

A merger of Airtours and Owners Abroad would see the new, unified company level- pegging with Thomson's summer package market share of around 28 per cent.

For Thomson, which has planned its development on the basis that it will always be the clear market leader, the sound of the Airtours ticking clock must suddenly be deafening.