Leading Article: Fair competition in the travel industry

BY AND LARGE, British holiday- makers get a good deal. They pay less to fly abroad than the inhabitants of other European countries; and they have a wide variety of package tours to choose from. This is partly thanks to practice: the world's first package tour took place in 1861, when Thomas Cook and Sir Joseph Paxton MP arranged a Whitsun excursion to Paris for British working men. It is also because of lively competition, not just at airports but also in high street travel agencies.

In recent years, the competition that brings lower prices and more choice has been put at risk. Five big agencies account for half of all the packages sold. Four out of those five agencies have financial links with tour operators. Smaller tour firms have begun to complain that these four agencies take advantage by demanding higher commissions from them, and by using computer reservations systems and the careful placing of brochures on shelves to steer customers towards a single company's packages.

The inquiry into travel agency practices launched this week by the Office of Fair Trading is therefore reassuring. Four months ago, Sir Bryan Carsberg, the OFT's director-general, wanted the Monopolies and Mergers Commission to investigate a proposed takeover of a big agency chain - but was turned down flat by Michael Heseltine, the President of the Board of Trade, who had other matters on his mind. Sir Bryan's staff, undaunted by this rare rebuff from their political masters, learnt enough during their February study to justify taking a second look.

This is an informal inquiry, and it should not be prejudged. The higher sales of the integrated chains may be because they are better run, and benefit from economies of scale. But there is much to consider, ranging from the commissions that agencies charge and the incentives that tour firms offer, to overt attempts to squeeze out competitors when tour operators threaten not to deal with agencies that sell competing holidays.

Two good things should come out of the OFT's inquiry. First, the very fact that the industry is under scrutiny should help smaller tour companies to get their brochures on agents' shelves. Second, the business should become clearer for customers. In the past, many have assumed that a travel agency can give them impartial advice in choosing the package that best suits them. If travel agents choose to become mere frontmen for a single tour operator, they are welcome to do so; but they cannot expect to keep the fact a secret.