"HOLIDAYS have never been cheaper," sighs Gillian Bowler of Budget Travel. There's a "what can you do?" tone to her voice.

"It's a great year to be a punter. It's probably not a great year to be a travel agent ... but it's not the best year to be a tour operator either."

Every day tour operators are further reducing the prices of sun holidays, because despite the fact that earlier this year tour operators reduced by 100,000 the number of holidays they'd booked for the Irish market, there is still a huge overcapacity.

The public's memory of last year's hot Irish summer means fewer people have planned holidays abroad this year.

Meanwhile, Thomson Holidays and a few other newcomers are fighting for a market share, and Budget and Falcon have no intention of letting them win one.

Factors such as competition and last year's weather go to make up a four to five year cycle in the sun holiday trade, Ms Bowler says. This year the customer's advantage seems to be at its peak.

Holidays are selling at up to 50 per cent below prices advertised in brochures published earlier this year, travel agents say.

The scale of the reduction is such that it is helping to keep down the consumer price index.

"It's crazy, says Sean O'Donoghue, of Apex Travel, Dame Street, Dublin. "What you paid £400 for in January you can probably get now for £199. There are an awful lot of good deals out there at the moment. Every morning faxes are coming in here telling us the latest prices."

Mr O'Donoghue says that of the sun holidays sold by his agency, only around 10 per cent were sold at the prices given in the January brochures. "The rest are all last minute things."

On the weekend of June 22nd, return seats to Orlando were selling for only £99. "Imagine you found yourself sitting beside someone who'd paid that price, and you'd paid £369," Mr O'Donoghue says.

"The bottom line is that there's too much capacity. Thomsons coming in flooded the market."

"At the moment we have specials available up to and including the August bank holiday weekend, which is unheard of," says Cathy Burke of Creation Travel, Duke Street, Dublin.

This weekend they have two week holidays to Majorca available for £239. These would have sold for £577 earlier this year.

They have two weeks in Morocco for £179, which earlier this year would have cost £349.

The 100,000 seat cutback by tour operators earlier this year "didn't make a dent in the oversupply," says Cathy Burke. The market size is about 500,000 holidays, tour operators estimate.

Ms Burke's agency may have sold as few as 10 per cent of their sun holidays at the January brochure prices, and another 10 per cent at the prices given in the "second edition brochures" published nearer the summer.

"If they don't do something about overcapacity next year, then they might as well forget about having brochures," she says.

"There is an overcapacity issue there," says the chief executive of the Irish Travel Agents Association, Brendan Moran.

"It's not good for anybody in the industry. And it leads to the false view of customers that such prices will be available for ever."

Gillian Bowler, on the other hand, maintains that the majority of Budget sun holidays were booked early. She also believes the numbers taking sun holidays will be up by 10 per cent to 15 per cent this year, "although the tour operators' yield will be less from these holidays".

Niall McDonald, sales manager with Thomson Holidays, says the arrival of Thomson has led to reduced prices and an increased number of people faking sun holidays.