As with most of my posts, this one was inspired by a Twitter conversation. Alex Bainbridge kindly pointed out the fact that package or, “Fly n’ flop” holidays were a very big deal in the UK. I knew they were popular, but I couldn’t stop thinking about how this subtle difference between the UK and Australia could have such far reaching effects on their ability to withstand the global financial crisis.

Throughout 2009 it felt like every time I looked at travel news I read about another UK airline to go bust, XL being the most memorable. Compare this to Australia who had (To my knowledge) no major collapses and it’s quite obvious that there were some major differences between the two markets. If you believe the numbers from Jetstar, they actually had some growth during the downturn. So what happened? For one, Australians love to create adhoc holidays to their favorite destinations. With a choice of only a few budget airlines, it’s quite easy to mix and match land and air components to get a more personal experience at a cheap price. As the crisis progressed, these cheap flights became pivotal to keeping Australia afloat in a time of turmoil, linking hotels and tour operators in New Zealand, Indonesia , Thailand  and Fiji with Aussies looking for a cheap escape, essentially keeping the travel ecosystem somewhat healthy. 15 000 kilometres away things looked very different.

The general public may not realize it, but months of back work go in to creating a package holiday. Hotels, airlines and activities are planned up to a year in advance and representatives of the tour company spend time at the selected properties to ensure everything looks just like it does in the brochures. The tour company may own their own airline, charter flights or book a portion of seats on a set flight. However how you look at it, a lot of money has to be spent before any returns can be seen. In some ways it is a bit of a gamble: spending to little could see small ROI, spend to much and risk not selling enough  packages to make to make profit. Basing their business plans on figures from 2008, companies would have been ill-equipped to deal with the full force of an economic downturn. Those who played it safe squeaked by, those who over-capitalized crumbled and were quickly absorbed- The meek shall inherit the Earth.

There isn’t a right or wrong way to sell travel, but comparing packages against customized itineraries is like choosing between high risk stocks or blue chip. Get packages right and the rewards are huge, over play your hand and risk total failure.

If anyone has experience with packages please leave your comments below.