Thomas Cook failure ‘could push up Atol fund contributions’

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The government has so far not set out its plans to act on the Airline Insolvency Review

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Thomas Cook failure 'could push up Atol fund contributions'

More than 155,000 Cook passengers were left requiring repatriation after Cook entered liquidation on Monday (23 September). The operation, which is being coordinated by the CAA, will be the UK’s largest peacetime repatriation mission, eclipsing the effort to fly home tens of thousands of Monarch Airlines passengers after the airline failed in October 2017.

The Department for Transport (DfT) has said the Monarch repatriation, upon which the Cook rescue mission – Operation Matterhorn – has been modelled, ran to an eventual cost to the taxpayer of about £50 million. The DfT says the Cook repatriation effort would be “about twice the size”.

Alan Bowen, legal advisor to the Association of Atol Companies, told TTG this week he expects the cost of the Cook repatriation to exceed £100 million, largely – if not entirely – using up the Air Travel Trust Fund (ATTF), which carried a surplus of about £170 million when it last reported its financials.

“We’ve been here before – a minus point – with ILG, and we turned it around,” said Bowen. “In terms of the ATTF, Cook will come very close to wiping it out. The government are saying the repatriation is going to cost £100 million, I suspect it will cost a bit more than that. And that’s just the repatriation. I estimate they must have had upwards of half a million forward bookings.”

Bowen said it would most likely be smaller online agencies packaging Cook flights hardest hit by the failure. “They happily been putting together flights and accommodation – flight-plus – for years,” he said. “Now, since the law changed last July and flight-plus bookings have become packages, I suspect there will be a domino effect.

“We’re at a crossroads. Either we go for a wholesale review of how packages and flights are sold, or alternatively, we stick with what we have and perhaps raise the ATTF contributions to £10pp. I think we are going to have to look at that. But then, some people thought £2.50pp was bad enough – we have to have back up though.”

Cook has previously cited the summer 2018 heatwave and the lack of confidence among consumers, brought on by the uncertainty around Brexit, for its more recent troubles, but Bowen said these factors were not exclusive to Cook. “Not everyone found themselves in the same mess,” he said. “Business has not been great for anyone this year.”

On the government’s reluctance – so far – to act on the recommendations of the Airline Insolvency Review, which was convened following the collapse of Monarch, Bowen said he feared ministers had filed the report and its recommendations away “on the top shelf”.

“The government has sat on its laurels. It needs to stand up and do something,” said Bowen. “The airlines will object. They only rushed out rescue fares when WOW Air went down [in March] en masse because they were scared of what the report was going to say. They wanted to show they were willing to make the rescue fare system work.

"We need a system that protects customers against airline failure.”