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Jet2 observes demand lift after Thomas Cook failure

UK budget carrier Jet2 is experiencing an uplift in demand following the demise of Thomas Cook Group, and its parent is expecting higher full-year profits as a result.

Dart Group states that its leisure travel division had already been observing "encouraging levels" of later-season bookings, with its package holiday and flight-only products "continuing to strengthen".

But it adds that the collapse of Thomas Cook in the last week of September has generated "increased" customer demand.

"We continue to assess the impact this will have for our business in the coming months," it adds.

For its previous full year, to 31 March 2019, the company disclosed that 49% of its overall flown customers were package holiday passengers. Package holiday customer numbers also rose faster than those opting for the flight only.

Dart Group's operating profit for its leisure travel arm rose by 63% during the year to nearly £200 million ($372 million) on a one-third increase in revenues to £2.96 billion.

"The increasing mix of package holiday customers is pleasing, as the longer duration, end-to-end holiday experience allows greater value to be added through product innovation and service at each point in the customer's journey," the company states in its recently-released annual report.

"This proposition lends itself to brand loyalty and retention and a better quality of recurring revenue and profitability, compared to the more impulsive, price-sensitive, shorter duration, flight-only product."

Dart Group says the strengthening booking trend leads it to predict that overall group profit for the current year – before taxes and foreign exchange – will "be exceeded".

But it states that it remains "very cautious" in this outlook given the cost pressures faced by the travel industry, which are exacerbated by the weakness in the UK currency and "deepening" uncertainty over UK's planned withdrawal from the European Union. Dart is set to unveil interim financial results on 21 November.

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