It would appear that the major tour operators slowed the growth of Dynamic Packaging in January through to March by using two key early booking advantages.

Differentiated product (which is in demand and can only be bought from TUI or Thomas Cook), usually sells well in the early booking period boosting early sales. Given the big expansion of this product you would therefore expect the major’s early sales to be stronger, which they have duly delivered.
However, unless high load factors are achieved early on this differentiated product, it can quickly become a burden in the price sensitive lates market, since its high cost can cause heavy losses when sold as a perishable product close to departure.
The major’s ownership of in-house airlines, gives them the ability to offer customers a low deposit of £50, which for a family of 4 equates to £200 deposit per booking. Compare this to the £500 required for most Dynamic Packaging bookings and you can see why early booking customers may be willing to pay more or upgrade to a differentiated holiday, since the immediate cash outlay is a lot less.
In the current well-documented recession and reduced access to credit, it should not be surprising that the rampant growth of Dynamic Packaging has slowed a bit. However, the majors should not be complacent, since we have now entered the late booking market, where full balances are required on booking and traditionally customers become more price sensitive and willing to shop around for the best deals.
This year’s early Easter also means that we have 7 low demand weeks before we get to the May half term week, which will drive lates prices low and benefit the Dynamic Packaging retailers who love distressed flight seats to package up. Given the DP’s non-risk model, a tough lates market is not such a bad thing since input costs e.g. flights and hotels go through the floor with little damage to their margins.
Ironically the problem faced by most DP retailers is increased marketing costs as customers are finding it easier to shop around and are increasingly using mobile platforms, which due to the current poor user experience have an even lower conversion rate.
Online Travel Agents selling holidays will soon be faced with a stark choice.
Ignore mobile completely due to the cost of site modification and the low conversion levels, which obviously reduces traffic and risks becoming less relevant to the customer during all stages of their booking journey.
Or spending lots of money to acquire customers in the short term on a less cost effective basis, but secure your long-term market position when mobile matures.
It would appear that even in the OTA world, the majors are set to become bigger as the middle ground is squeezed hard.
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