Tour operators in Europe lost over one million customers in the year to October 2002 according to a new survey launched at World Travel Market by the European Tour Operators' Association.

Revealing what it calls a 'severe crisis' the latest ETOA survey demonstrates that, not only did its members throughout Europe carry 1 million less visitors in the year to October 2002, down to 5.6 million, but that these visitors also spent less, resulting in a 28%, or €5 Billion drop in revenue for the year.

Said ETOA Executive Director Tom Jenkins: It is possible that we are now witnessing a permanently unstable market. Events such as September 11 are random, and unpredictable, and wreck otherwise viable businesses.

To make matters worse, the ETOA survey also showed that if there was another 'incident' in the Middle East, such as a war on Iraq, then members would expect a further drop of 38% in business - effectively halving business over a two year period.

A further major problem affecting tour operators into Europe highlighted by the ETOA survey centres on a proposal by the European Commission to 'simplify, modernise and harmonise' the taxation of travel products.

If these plans goes through ETOA believes that many EU in-bound tour operators will have to base themselves outside the EU, in order to survive - a move that will take €2 billion of business with them.

Added Tom Jenkins: The proposals aim at a one-size-fits-all solution, which ignores the realities of the important inbound tourist trade. Unlike much of the EU travel trade, which is handling business within the EU, the inbound sector has to compete in a global market. This is an intensely competitive industry. When there is a perceived parity in quality, a consumer will switch supplier for as little as 0.5% of the sale price.

ETOA believes that, as a result of the way in which Value Added Tax is applied to the services they sell European tour operators are placed at a 'massive disadvantage'.

The EU now wants to stamp out the tax advantages that countries such as Ireland, Denmark, the Netherlands and the UK offer, a move which ETOA believes would threaten some 3,000 jobs in the UK alone.

Added Tom Jenkins: The proposed measures merely provides a further incentive for the companies operating in the EU to close down and set up outside the EU, so that they can remain competitive.

It is hardly surprising that the result of this taxation has been the near-complete removal of such inbound tour operators from the EU. Those who were based here have folded, emigrated offshore or moved to one of the countries that offer some relief against the impact of the tax.