Prices cut on a million unsold sunshine breaks

Package holiday firms are slashing prices and offering free foreign currency in a desperate attempt to shift more than one million unsold summer breaks.

The biggest savings are on trips to Spain, with the average price of a family holiday to the Costa Blanca down £240 - 14 per cent - on last year.

Industry research shows prices to 15 of the top 30 destinations have fallen against last year.

For someone able to take advantage of a last-minute deal, a Mediterranean holiday can be bought for as little as £75 per person.

Some industry figures believe that the traditional mass market package holiday, where flights and accommodation are bolted together by a tour operator, faces oblivion.

Increasingly, families are chasing a bargain break by putting together their own DIY holiday by booking flights and accommodation separately.

Budget airlines such as Ryanair have launched an aggressive pricecutting campaign on summer flights to holiday hotspots in an effort to turn the screw on tour operators.

At the same time, travellers are increasingly looking beyond the traditional sun and sea destinations of Spain and Greece for more exotic holidays.

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Rising interest rates and increased consumer debt have prompted many to put off booking a summer break until the last minute in the hope of getting a cut-price deal.

Many in the industry fear some leading tour operators will be unable to survive the turmoil.

The crisis in the package holiday industry was confirmed yesterday when Thomas Cook revealed it is to close 150 stores and six offices, threatening up to 2,800 jobs. The closure plans follow the completion of an £8billion merger with rival MyTravel, which went through earlier this month.

The study on prices for the cost of a holiday for a family of four was put together by the travel agency Co-op Travel.

The head of the chain, Mike Greenacre, said: "This is good news for everyone, especially parents with school-age children as prices have fallen throughout the whole of the school holiday period."

Holidaymakers are also being tempted with incentives. For instance, the Co-op is giving them 50 euros, or the equivalent in the currency for their destination, on bookings worth £750 or more.

Lucy Huxley, editor of the industry magazine Travel Trade Gazette, said tour operators were struggling to cope with the latest cut-price offers from budget airlines.

"There are a fair few traditional operators who haven't a hope of competing," she said.

"In fact it will probably drive some over the edge."