Abta chief Mark Tanzer called on the government to launch a “full consultation” on the findings of the Airline Insolvency Review today as he denounced the demise of Thomas Cook as “a failure of corporate finance”.
Tanzer opened Abta’s Travel Convention in Tokyo, saying the depiction of Thomas Cook as a “dinosaur in a digital age” masks the true problem.
“Thomas Cook’s financial challenges were no secret, but [the group] paid £1.2 billion in finance charges over the past six years, plus goodness knows how much in advisory fees,” he told delegates.
“The failure is more a failure of corporate finance than a failure of travel. The company did sell £9.5 billion [worth] of holidays last year. It was clearly doing something right.”
Tanzer said with a more balanced financial model, [money] would have been available to invest and develop the business.
He thanked the CAA for a repatriation job “well done”, saying the job of ensuring holidays go ahead and providing refunds to 800,000 people yet to travel had now begun.
He insisted: “The package travel regulations, the Atol scheme for flight packages and Abta for non-flights, worked. The funds are in place.
“Far from signalling the demise of the package holiday, the Thomas Cook failure has been its vindication.”
But Tanzer said: “That still leaves the question of scheduled flight failure.
“After the Monarch failure, the government commissioned a review of airline insolvency protection – a thorough and professional piece of work which now sits with the secretary of state for transport.
“The review recognised the problem of an unfunded obligation or political need to repatriate, and recommended a risk-based insurance scheme to provide funds for repatriating citizens.
“I call on the government to launch now a full consultation on the findings.”
Tanzer told the Convention: “The pain of the Thomas Cook failure is being felt widely in our industry. There is a lot of anger and fear. The desire to look for someone to blame is understandable.
“But we have to work together to maintain customer confidence, to find new homes for displaced businesses and to recruit former Thomas Cook staff.
“When that job is done, we can ask what lessons can be learned, especially about when money is collected and when passed on, when people and companies are financially protected and when not.
“At the very least we need to ensure everyone in the chain understands the system and makes commercial decisions on an informed basis.”
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