THE beleaguered holiday industry was given warning yesterday that the number of package tours sold in the coming year will fall because of the growth of no-frills airlines.

The forecast came as the first signs appeared of a price war among tour operators and British Airways launched a heavily discounted fares promotion.

Yesterday the Association of British Travel Agents (Abta) and Visit Britain, formerly the British Tourist Authority, predicted that sales of package tours could fall by up to 2 per cent this year from the 22 million sold last year. Holidays organised independently are forecast to rise 5 per cent.

The growth in independent travel will be due to the expansion of budget airlines such as Ryanair and easyJet, which have opened up routes to regional airports all over Europe.

Pressure on prices will bring problems for tour operators such as My Travel, owner of Airtours, which after several profits warnings announced a £911 million pre-tax loss this month. In what looks like a dash for market share, My Travel is already offering summer 2004 bargains, including free places for children and discounts of 25 per cent. Deals include up to £500 off a cruise.

Robin Parry, Airtours’ marketing director, said: “We want people to book early, and are prepared to reward them for doing so.”

Lunn Poly, the travel agent run by Thomson Holidays, is offering savings of up to 30 per cent on some summer breaks. The offers include a “buy now, pay later” deal. Lunn Poly’s promotional campaign for 2004 will be its biggest ever, costing £11 million.

Budget airlines have made independent travel easier by teaming up with hotels and car hire groups. Ryanair’s average fare to destinations in Europe this year has been £37.

Yesterday BA began discounting 500,000 fares to destinations including the Caribbean, Florida and Dubai.