I think this is a big part of it. I'm not sure I'd describe it as jealousy, more that OP is pissed off that another child is going on a holiday she can't afford, so is presenting it in such a way that it's all about the child being upset.
Thing is, OP can't afford this holiday. So the child wouldn't be going with mum. Dad, quite possibly can only afford the term time rates (have you seen how Center Parcs virtually trebles their prices for school hols, shame on them, but that's a whole other thread) so actually, Dad couldn't afford the holiday required for OP's child to go either. So, actually, neither of the child's actual parents can afford this holiday for him.
Separately, Dad and his wife can afford a cheaper break, which their child can attend, because they aren't at school yet.
Should that child be denied a holiday, which it's parents can provide, because both another child's parents can't afford the out of school version in the first place?
When you look at it that way, he's not going because his mum and dad can't afford it.
I agree with PP, I think the ages of the children would show this is the case, and it's exactly why OP is withholding that.