NEWS: Thomas Cook Airlines goes under (updated)
Thomas Cook – one of the world’s oldest holiday companies founded in 1841 has collapsed, stranding around 600,000 holidaymakers worldwide.
Talks to find funding to save the company have fallen through, putting roughly 20,000 jobs in jeopardy. The cease trading announcement came from the UK Civil Aviation Authority (CAA) early on Monday (23 September) morning.
“Thomas Cook Group, including the UK tour operator and airline, has ceased trading with immediate effect . . .
“All Thomas Cook bookings, including flights and holidays, have now been cancelled.”CAA
The move will spark one of the largest non-wartime repatriations of UK residents and is expected to involve many airlines including British Airways and easyJet, according to the Guardian online.
Many travellers will have their accommodation and repatriation covered by the ATOL scheme, run by the CAA to protect package holiday purchasers, but those who merely bought airfares from Thomas Cook, will not be protected by the scheme.
Why did they collapse?
Looks like a combination of a £1.7bn debt burden from a bank bailout in 2011, and a failure to change their business model are at the core.
The company had been negotiating to cover the debt, when its bankers insisted on an additional £200m of coverage – something that the board could not deliver, and hence triggering insolvency.
Their business was based on the outdated model of fly to a destination and flop at a large hotel, all packaged together, sometimes with meals. Tourists today want experiences, so a flights and hotel package doesn’t quite work for as many contemporary travellers as it once did. Some have commented that their 2019 brochures looked the same as their 1999 ones.
Thomas Cook also owned its own planes, meaning that it had high fixed costs. That’s all very well during the tourist season, but what about still paying those fixed costs when the planes are on the ground during the offseason?
What to do if you are affected?
Go directly to thomascook.caa.co.uk which provides advice for those currently outside the UK, and those yet to leave the UK. You should note that if your package includes flights with a non-Thomas Cook airline, then your bookings are still valid, however, your accommodation and transfers, or other travel arrangements may be affected.
This probably doesn’t affect too many Australian tourists, as Thomas Cook has not operated in Australia for almost two decades. Nor does it affect Thomas Cook India, which is owned by a different organisation.
Without sounding too smug – this is another reason to make sure you have adequate and comprehensive travel insurance.