The aftershocks of the Thomas Cook liquidation are still being felt some three months after its seismic collapse, if only because the 178-year-old company practically invented modern tourism.
Train trips organised for temperance campaigners by the company’s namesake founder in the 19th century were the precursor to the package holiday that shaped the leisure time of the 20th. Such rich history is one reason why the firm’s spectacular implosion met with such genuine sadness, even from competitors. But the reality of business leaves little room for sentiment, and mourning soon gave way to opportunism.
German arch-rival Tui pounced swiftly, adding 2 million extra seats on flights for summer 2020 and, at short notice, 580,000 for short- and long-haul journeys over this winter.
Looking even further ahead, to 2021, it boasts that customers will be able to choose from hundreds of hotels, “including Thomas Cook favourites recently added”. Shares in Tui had begun climbing in the summer even as Thomas Cook was fighting for its survival, as traders bet that it would move into the space likely to be vacated by its rival.
The FTSE 100 is nearly unchanged since that date in late September, yet Tui’s stock is now 16% higher. The disappearance of one’s only significant competitor can do that.
No-frills carriers have also benefited from the demise of Thomas Cook’s airline, stepping in to help sunseekers make it to holidays from the Med to Miami, and boosting revenues in the process.
Jet2 and easyJet both grabbed some of the group’s coveted landing slots from the Official Receiver, the government employee trying to recoup funds from the liquidation.
Jet2 snapped up berths at Manchester, Birmingham and Stansted for an undisclosed amount. EasyJet shelled out £36m for slots at Gatwick and Bristol, adding 70,000 seats a year to destinations in Turkey and Tunisia.
In the first few weeks after Thomas Cook Airlines’ disappearance, flight prices jumped as rivals capitalised on demand for seats now in short supply.
But according to price comparison site Skyscanner, the effect has been only temporary. “We typically see prices increase for key routes when an airline ceases trading, before reverting back again soon after,” said the website’s Sam Ayles.
“Happily, there’s good news for travellers, as this seems to be the case on former Thomas Cook routes,” she added, pointing to prices for destinations such as Alicante, Orlando and Palma, which rose sharply before returning to normal.
But another comparison site, Jack’s Flight Club, believes prices have stayed stubbornly high in those areas where Thomas Cook’s absence has weakened competition on a longer-term basis.
“Destinations previously covered by Thomas Cook, often at very attractive prices, are now in some cases significantly more expensive to reach,” said co-founder Jack Sheldon. “For example, Thomas Cook ran a number of year-round direct routes to destinations in Cuba, such as Cayo Coco, Holguin and Varadero, often with fares from £290-£400 return – even during the winter high season. Looking at these destinations today, you’d be hard pressed to find anything under £500 or even £600.”
He reserved special mention for Manchester airport, where he said competitors such as Virgin Atlantic have had free rein to keep prices higher than they would otherwise have been. Sheldon said: “As predicted, Thomas Cook’s collapse primarily hurts customers flying from Manchester, where they provided much-needed competition to a fairly large variety of destinations, often being the sole carrier flying direct to certain destinations.”
But what of Hays Travel, the private travel agency from Sunderland that took on Thomas Cook’s network of 553 high street outlets in October?
The prevailing wisdom in some corners was that the bricks-and-mortar model was an anachronism and that this was at the heart of Thomas Cook’s failure.
Not so, said John and Irene Hays, the shrewd husband-and-wife team who run Hays Travel.
“All of the behaviour that we initially saw in terms of the public being supportive of us opening the shops has continued,” said Irene. “Bearing in mind the time of year and that not all shops have been fully staffed, we have had a very good November and early December.”
The Hayses have always insisted that package holidays have a bright future. They believe that despite the fixed costs of physical premises, the shops will be profitable when unburdened of the millstone of Thomas Cook’s massive debts.
“We continue to be really optimistic,” said John.
He admits that some of the shops were unlikely to reopen, some because they are in such poor condition, some because of legal wrangles and others through lack of staff. But of the 553 that the company bought, he expects the chain to eventually number “more than 450, closer to 500”.
It’s an outcome that would ensure that, though Thomas Cook has departed, its package holiday soul lives on.
‘The storm hasn’t been nearly as bad as feared’
When Thomas Cook collapsed three months ago, reactions in the Canary Islands varied from the bleak to the apocalyptic.
One local hotel worker described the news as “a bit of a bombshell” while a Tenerife MP said the company’s demise had triggered “one of the biggest economic crises that the Canaries have faced”.
Given that tourism accounts for more than 35% of the region’s GDP and that – until September at least – a quarter of all the tourists who came to the islands did so with the British travel giant, their fears seemed painfully justified.
Fortunately, however, things have panned out rather better than expected. The busy winter season has taken only a relatively small hit, mainly thanks to the efforts of rival tour operators and the odd European government.
“The UK market is holding out and has stabilised,” said Spain’s secretary of state for tourism, Isabel Oliver. “Forecasts suggest we’ll end the year having welcomed 18.1 million British tourists – 1.9% fewer than the previous year, but with an increase in spending of 1.3%.”
Oliver said the caretaker socialist government of prime minister Pedro Sánchez had acted in “record time to put in place an emergency plan to minimise the effects of the collapse”.
The government has approved €800m (£680m) of financial assistance to help the sector weather the storm as well as handing out subsidies of €15m to the Canaries and €8m to the Balearics.
Jorge Marichal, president of the Spanish hoteliers’ confederation (Cehat), said the acting Spanish government had done what it could given the political circumstances.
Marichal said the German government’s €380m loan to support the Thomas Cook subsidiary Condor had been very important, as had the purchase of the company’s Nordic business by a trio of buyers at the end of October.
“Both of those things really helped people breathe a sigh of relief – especially in the Canaries where people were worried that they’d have to do without the important northern European customers this winter season,” he added.
Marichal said that occupancy rates in the Canaries were down by as much as 4% and could drop a little further. But he pointed out that the fall was not solely due to Thomas Cook.
“We’ve also had Ryanair closing bases and the whole Brexit issue,” he said. “Still, given how bad things could have been, the storm hasn’t been nearly as bad as had been feared. But that doesn’t mean we don’t have to work hard to get ready for next summer.”
Sam Jones
