The contraction of Europe’s big four tour operators to two looked inevitable last night when the European Commission cleared MyTravel’s £3 billion merger with Thomas Cook.

The Commission also gave a clear signal that it would allow the £4 billion-plus marriage of First Choice and TUI, the German owner of Thomson.

The twin deals will result in thousands of job losses, mostly in Britain. Analysts said that consolidation was necessary for the companies to compete effectively in a travel market where their traditional dominance is challenged by internet operators and low-cost airlines.

Although there had been fears that both deals would be referred to lengthy Phase II investigations, the first sign of the Commission’s intentions came yesterday morning when it agreed to extend its Phase I inquiry into the First Choice/TUI deal by ten days. That will allow the consideration of an offer by the two companies to sell one of their Irish businesses to address competition issues.

Although the tie-up could still be referred to a Phase II inquiry, the two companies said they remained “confident that the proposed merger will be cleared”.

The benign attitude from the Commission to travel sector consolidation is in marked contrast to eight years ago, when it blocked the acquisition by MyTravel – then called Airtours – of First Choice. Its decision was later challenged by MyTravel and the ruling was overturned in 2002 by the European Court of First Instance.

In their submissions to the Commission for the latest deals, the four protagonists all emphasised the seismic shift in the travel industry in the past few years as internet booking agents and low-cost airlines have seized a substantial share of the wider market.

Shares of MyTravel added 19p to 335p, while First Choice was up 19½p to 329p.

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