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Positioned as a standalone online brand, TUI is aiming Budget Holidays at couples and young families seeking value holidays.

It is a direct booking brand that cuts out travel agent costs and features no TUI or Thomson endorsement. The web site, www.budgetholidays.com, is offering holidays to 27 destinations from May 1, with a lead-in price of £69.

Holidaymakers will travel on TUI's charter fleet, Britannia, but will not enjoy rep services in their resorts.

Hugh Edwards, TUI Thomson's marketing director, said Budget Holidays would be marketed as "funky, young and modern".

He said the soft launch would rely on online advertising and promotion, although the hard launch later this year would feature guerilla marketing and "some other surprises" to make it stand out from the other budget holiday brands in the market.

TUI had originally planned a major launch this spring but due to the current slump in holiday bookings, this has been scaled back to a soft launch this week followed by the hard launch during the summer.

"We've scaled it down because the market is trailing behind last year," admitted Edwards.

Latest figures from travel agents suggest holiday bookings are almost 25% down on a year ago due to fears of a war with Iraq and economic uncertainty.

Edwards defended the decision to proceed with the launch saying it gave TUI the chance to test out the web site before ramping up bookings.

Budget Holidays fits into TUI's portfolio of direct booking brands, which already includes Portland Holidays Direct, favoured by an older demographic, and Just, a no-frills operation aimed at youngsters going to Greece and Turkey.

These brands are managed by campaigns manager Chris Meeke, who reports to Edwards.

Advertising will be handled by WCRS, which is set to lose the high-spending Thomson and Lunn Poly brands to the DDB network later this year as part of a pan-European review.