NEWS GUEST COMMENT
parties insisted on moving the retailer to weekly payments and will benefit from protection afforded by the Abta retail bond. In addition, some retained credit insurance protection.
Airline We do not yet know the cost to third- party tour operators and travel agents in relation to forward airline bookings. Scheduled airline failure insurance (Safi) and credit insurers will also have been hit. Many airline seat purchasers have used chargeback procedures on corporate cards, sometimes in combination with Safi and credit insurance. Others have taken a hit.
Financial institutions It is too early to assess the total exposure of all financial institutions, from insurers to bond obligors, merchant acquirers, credit and surety markets, among many. A number in excess of £1 billion has been suggested by insurance sources. That may be speculation but, at a European level, does not appear
travelweekly.co.uk
The industry
responds and reinvents itself. Consumers will always travel as long as we stay relevant
unreasonable. But who pays? Ultimately, the cost will be carried
by the industry and consumers. If gross refund costs end up at circa £500 million, that would represent 200 million APC contributions at the current rate. Te net cost will be lower, but it means the APC contributions of Atol-holders over many years will have funded the fallout from Tomas Cook’s failure. The insurance market, over time,
will recover its costs and there are concerns about the consequential effect on market capacity and premiums. In the short term, we have a difficult market that is naturally reviewing risks and risk appetite, although most participants see
Thomas Cook as an individual corporate failure – not a travel sector market issue. Evidence supports this. GfK statistics show great resilience and post-Cook opportunities taken by Hays Travel, the Midcounties Co-operative, Barrhead Travel, Jet2holidays, easyJet Holidays and others demonstrate a reassuring level of confidence and investment. Te industry responds, reshapes
and reinvents itself. Innovation continues and consumers will always travel as long as we stay relevant and serve them well.
Lessons and next steps There are lessons to learn, but we should be proud the UK’s systems of consumer protection have worked. There will be much focus on
credit terms and agency agreements in the coming months, which is to be welcomed. There will be renewed interest in credit and Safi policies. They are markets to buy good-quality cover in the good times. Now may not be the best of times. The industry
will be managing cash through the winter and watching consumer confidence going into 2020. Te Airline Insolvency Review
was a good piece of work, which reported following the Monarch failure in 2017. Some of the recommendations that were in the Queen’s Speech have just fallen away, and we must lobby hard to ensure this is back on the government’s agenda in 2020. Te industry and market remains
strong. Tis is not 1991-92 when the International Leisure Group/ Air Europe Group failed along with many ski and school travel operators in the aſtermath of the first Gulf war. Tat year, we saw more than 100 failures. Tis year there have been eight. Abta will, as ever, be there to help our members navigate through these uncertain times.
COLLAPSE
THOMAS COOK
12 DECEMBER 2019 13
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