First things first: Hats off to Ed Jackson. His decision to shut down Runaway Tours in a manner that showed consideration towards his clients, vendors, employees and even competitors was extraordinary.

His openness was reassuring at a time when people wanted to know what was going on. And almost everyone in the industry could, to some degree, empathize as he cited the market conditions that led to his decision to shut down: The rise of the Internet, airline bankruptcies in Hawaii, hurricanes in Mexico, timeshares everywhere.

One would hope that nobody concludes from the final chapter of Runaway that nice guys finish last. If such a thought occurred to you, think back on some of the more spectacular tour operator meltdowns.

In their final weeks of operation, the leadership of some of those companies proved that they were not nice guys at all. Im inclined to believe that Eds straightforward character extended the life of his company rather than shortened it.

But there is a conclusion one could draw from events at Runaway that is not very comforting: Midsize companies finish last.

When I first heard that Runaway, which specialized in Hawaii and Mexico, was shutting down, I recalled a conversation I had with Ron Letterman in 2003.

Letterman, chairman of Hawaii specialist Classic Vacations (then called Classic Custom Vacations) and senior vice president of its parent, Expedia, outlined what he felt were Expedias advantages in the marketplace. Do we want to be the biggest player in Hawaii? he asked. Of course we do. There will be a culling of the tour operator sector, and the companies with superior technology and superior resources will have real advantages in the marketplace.

Expedia, whose womb was Microsoft, never had to worry about superior resources. When Rich Barton, Expedias founding president, addressed a Travel Weekly conference in 1997, he described all of the technological, marketing and promotional efforts his firm had invested in and then said that sales had reached $10 million in just a year. Barton cited this fast growth as a proof point of Expedias bright future.

Afterwards, the moderator, Jeffrey Hoffman, looked to the audience and said, I wonder how many of you could have built a $10 million agency in a year, spending only $100 million?

The line got a laugh, but Expedia got the last laugh. That $100 million was, of course, money well spent. Barton understood the power of volume and how it translates into pricing leverage. Last week, Bob Whitley, president of the USTOA, underscored the importance of that leverage when he said, Consumers will switch from one tour operator to another to save $2.

In the wake of Runaways announcement, a number of industry notables told Travel Weekly that conditions were tough for small- and midsize tour operators, but Im not so sure that the small face quite the same difficulties as the midsize. In the space it was playing in, lack of scale alone doomed Runaway. Hurricanes, airline bankruptcies and timeshares may have sped the companys demise, but the challenges Jackson faced as a midsize operator with a mass-market product condemned him long before he shut his doors.

The same is not necessarily true of small operations, especially if they develop expertise in a niche. The big operators cant cater to consumers who are true niche enthusiasts, nor can they establish a personal rapport with clients the way that small operators can. And, importantly for the niche operator, the Internet is friend, not foe.

Ed Jackson, musing about the future, said, Im too young to retire. He appears to have taken the lessons he learned at Runaway to heart, and Im very curious to see what path hell choose next. And -- especially if he stays in tour operations -- I wonder: Will he go big or will he go small? The middle ground is no longer an option; for the time being, its a no-mans land.

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