The Thomas Cook Affair

This weekend will be stressful for the employees & customers of Thomas Cook

This blog post is tagged with:

Thomas Cook Consumer Financial Protection ATOL

This 178 year-old company is on the financial precipice

This weekend, across the Nation, many thousands of Consumers are wondering if the holiday they researched, booked and planned will go ahead.

That’s not even counting the reported 150k+ British holidaymakers who are abroad on a Thomas Cook holiday. 

Many will have no doubt seen the news and have probably tried to extract information from their hotel reps as to what will happen, but very likely, they are receiving very little information.

We have seen holidaymakers reported to have been held hostage in their Tunisian hotel unless they cough up monies owed to them by Thomas Cook. 

That is an unacceptable situation for ordinary Consumers and it is frankly not acceptable for the UK Foreign Office to stand by and not provide urgent assistance to these holidaymakers. 

Indeed, under the Tunisian Constitution, no person can be detained unlawfully unless charges are to be brought against them. 

A Civil debt, is what it states; a Civil debt. 

The correct course of action is for the hotelier to pursue Thomas Cook and indeed, even in these difficult hours, for Thomas Cook to pull all the stops and provide assistance to these Consumers in need, because after all, they are duty bound to assist these holidaymakers under the Package Travel Regulations.

We should remember that as I publish this Podcast, Thomas Cook is still a functioning and as yet, a viable company. 

There is nothing that I say which is intended to bring about their early demise, quite the opposite. 

I want Thomas Cook to succeed to resolve its problems, not only because of their history, but because if they disappear, the market shrinks for Consumers; they will have less choice because so many travel companies are connected and they face the prospect of higher prices for their holidays in the future.

So how did it get to this stage for Thomas Cook; a British Institution, the father of modern day mass tourism?

Well, it’s important to remember that the problem of Thomas Cook is not solely about them; I would suggest that this crisis reflects a simple reality; it is a crisis of the Travel Industry. 

Whether it is a holiday company or an airline, the Industry is racked by fierce price-cutting, currency fluctuations, the uncertainty of brexit, changing consumer habits, the rise of staycations, rising fuel prices, industrial disputes and the king of all problems; debt. 

It is a combination of these problems that have led to the collapse of travel companies and airlines over the last two years and these events are I would suggest are a taste of things to come.

In the case of Thomas Cook their debt is reputed to be as high as £1.7bn and that is what principally lies at the heart of the problem. 

Some financial observers have commented that the current debt problems can be traced back to an earlier crisis on profitability and debt. I simply don’t know; I am not a financial expert. 

But again I say, for all the right reasons, not just for Consumers but also for their employee’s, that they do indeed successfully negotiate their way out of this crisis..

As I speak, this weekend is suggested as a make or break moment for this historic company and understandably many Consumers are concerned whether they are at home or abroad.

I have seen many commentators talk about ABTA protection; regrettably they have got it wrong.

So, to help all actual or potential Thomas Cook Consumers, let me provide at least some form of reassurance.

When you bought your holiday from Thomas Cook, a fair number of you will have bought a Package Holiday. Some will have bought perhaps a Linked Travel Arrangement, which for the purpose of this discussion means that you have protection under the Package Travel Regulations.

There are two potential alternatives. Package holiday customers will have in place ATOL Financial Protection. If you look at your holiday documentation you should find your ATOL certificate. 

If you have a Linked Travel Arrangement, you may have ATOL protection or you should have a document, required by law, which sets how your holiday is protected financially.

The ATOL scheme is operated by the Regulator, the Civil Aviation Authority (the CAA) and each Tour Company, through the Regulations either have to be a member of the ATOL scheme or demonstrate to the Regulator that they have made alternate arrangements for Consumer Financial Protection.

The CAA (or another scheme operator) will continue to pay your bills if you are on holiday and ensure that you can fly home at the end of your holiday.

If you haven’t yet gone on holiday, then you will get all your money back; the only issue will be if you have bought an overnight stay at your UK airport and paid for car parking, you may be able to get that money back from your Travel Insurer.

The only difficulty will be for those who perhaps bought a flight only from Thomas Cook or a hotel only arrangement. You will be classed as an Independent Traveller and therefore will have to sort yourself out unless you have insolvency cover in any Travel Insurance you have.

I have seen and heard that Government Ministers are claiming that the Government is mounting a huge operation to repatriate holidaymakers; this is not technically correct.

The sole responsibility for ensuring holidaymakers can continue with their holidays or get their money back if they haven’t yet left, is the CAA (or the alternate provider of protection). 

The Regulator is separate from government, like any Regulator, and in the case of the CAA, they have considerable experience of managing Financial Protection and doing what needs to be done. 

They have done this for years, without direct government intervention and they will continue to do so. 

I’m sure those down at the CAA are appreciative of government reassurance and support, but they are the experts!

One final note on this latter point. 

I don’t know why government Ministers believe that they should be seen to be involved intimately in this potential operation, but I wished they wouldn’t. 

It should be no surprise to anyone listening that as a Consumer Campaigner and Commentator, I have long offered blunt but polite observations on Consumer issues and in particular toward the UK Foreign & Commonwealth Office. 

So I say respectfully to the Rt Hon Dominic Raab MP; please let the professionals at the CAA get on with their job and concentrate on UK Nationals abroad who may find themselves at the mercy of some hotelier. 

Please instruct your consulates and embassies to update their twitter and facebook feeds to help UK holidaymakers find their services easily, and without delay, be prepared to advocate for and protect those holidaymakers; that is after all, your job as the UK’s Foreign Secretary; isn’t it?

(You can listen to Frank's commentary in his podcast through this link)