[GUEST POST] Thomas Cook Collapse by David Sutherland

Thomas Cook: It’s the staff that have been stranded, not the customers

In 1841, Mr Thomas Cook introduced the first Package Holiday to the world. It involved people from Leicester taking a train to Loughborough. Mr Cook, a Baptist preacher, thought that by going on an organised holiday away from their every day lives, people would be encouraged to drink less alcohol. What Mr Cook would have made of the Club 18-30 brand that emerged from later versions of his company, can only be imagined.

Perhaps this hints at the problem which after 178 years brought down the Anglo-German travel giant resulting in the largest peacetime repatriation of holidaymakers back to the UK by the Civil Aviation Authority’s (CAA) shadow airline operating under the codename, Operation Matterhorn.  As the company went into liquidation and a familiar brand disappeared from the UK travel industry, questions started to be asked as to how this could have happened and what exact market did Thomas Cook occupy by the end.

The aforementioned Club 18-30 brand was shut down last year as Thomas Cook belatedly tried to establish its place in the travel market. There were own brand hotels, luxury tailor made worldwide holidays, standard packages to Europe’s hotspots and an airline operation that was the most profitable part of the group. Efforts to sell off the airline ultimately failed and this is probably due to the reliance on the package holiday customers to fill seats across their short haul network. They had also established a successful long haul division primarily operating out of Manchester to the US and the Caribbean with much less reliance on the package market.

So where did it all go wrong? The finances of the company will be scrutinised for some time to come but ultimately the weight of debt attached to the business after a string of poor acquisitions left them with limited options and a last ditch effort to get new funding from the Chinese owner of Club Med and Wolverhampton Wanderers football club was all but in place until the banks realised that without immediate day to day funding for the winter period, the business would not survive. The banks are often rightly criticised but in this case, it’s hard not to agree with them that Thomas Cook had gone as far as it could as a going concern. Whilst the final Board of Directors and the group’s auditors have many difficult questions to answer about their contribution to the failure, the seeds were sown a decade earlier as the debt started mounting and the business model of traditional package holidays, charter flights and high street retail outlets just did not keep up with changing consumer demands.

Since the Tour Operator’s demise, much of the media attention has focused on holidaymakers ‘stranded’ overseas. In fact, nothing could be further from the truth. Due to the CAA’s ATOL (Air Transport Operators Licence) scheme, everyone with a package holiday with Thomas Cook or using their flights was entitled to a replacement flight home under Operation Matterhorn which also replicated resort transfers and guaranteed hoteliers that the bills for all current guests would be made good. This has been a remarkable feat and nobody will be ‘stranded’ as a result of the company’s demise. Except of course for the 9,000 staff who overnight lost their jobs as pilots. cabin crew, resort reps, retail travel agents and back office support. Liquidation also meant that staff found out they were nit going to be paid for September and those airline crews who were down route at the time had to make their own way back to the UK.

So what next for the staff? The travel industry rallies around as we saw when Monarch Airlines collapsed almost two years earlier. The job market may not be as strong in the industry now, given the economic challenges ahead. However, many operators and airlines have opened dedicated recruitment programmes for ex-Thomas Cook staff. Their reputation precedes them and many staff with years of experience have been snapped up immediately. Many more will follow in the coming weeks. It is perhaps unfortunate for those with little experience looking to break into the travel industry that they may have to wait longer now as the vacancies will be quickly filled but it also sends a message that the travel community can work together in a way that few others will do to support each other and their customers for the greater good of the industry. This won’t be the last airline or travel operator failure but the sunny heart logo representing 178 years of trading will be remembered by the travel industry long after holidaymakers have booked for next summer with a different operator. From now on, they will have to just book it rather than Thomas Cook it.

David Sutherland is the owner of EyeLine Travel, an independent ABTA bonded Travel Agency