Last week the world’s oldest travel firm Thomas Cook collapsed, stranding 150,000 holidaymakers around the globe. This resulted in the largest peacetime repatriation effort in British history – Operation Matterhorn.
So, what exactly happened? And how will this affect the aviation industry?
Firstly, Thomas Cook was under a 1.6 billion-pound ($2.9 billion AUD) pile of debt which has existed since the global financial crisis over a decade ago. Because of this, it had to sell 3 million holidays every year just to cover the interest on this amassed debt. This debt, combined with a shift in travel habits with more online bookings, a weaker pound on the currency market, and a unusually warm summer in the UK sent the firm on a gradual downward spiral – going into liquidation on Monday 23rd September.
How will this affect the aviation industry overall?
The bill of repatriating holidaymakers will cost the UK government around £100m, and in addition to refunding hotels and future bookings, the bill may exceed £500m. However outside of the cost – much which may be footed bu UK taxpayers – there has been a large knock-on effect with the aviation industry.
Airline crew, pilots and other staff employed by Thomas Cook are now desperately looking for new work around the UK and beyond. Staff were due to get their salaries on September 30, however they are now amongst Thomas Cook’s creditors – so it is now unclear when staff for the travel firm will be paid. In Crete, over half the 2,000 hotels worked with Thomas Cook – many which are now owed up to 3-months of payments from the peak European summer season.
Because of the package deals provided by Thomas Cook and other travel agencies, the effects flow on much further than airlines – so many of the hire-car agencies, hotels, catering and local transport operations all feel the effects of having such a large source of income disappear overnight.
What affect does this have on the Australian aviation industry?
Thomas Cook has not operated in Australia since the early 2000’s, however some holidaymakers and businesses are still affected. The Australia travel group, Webjet Ltd, has stated it is now $48 million worse off because of the collapse.
Bentours and Tempo Holidays, an Australian and New Zealand-based travel company, were placed into voluntary administration on September 19 by Indian-based head company Cox & Kings. This has affected a number of holidaymakers in Australia, but not to the tune of Thomas Cook.