Photi: More firms will fail this week


Amie Keeley


More travel companies are predicted to collapse this week around the Atol-renewal deadline on October 25. Te CAA put back the deadline


for Atol renewals from September 30 to October 25 in the wake of the Tomas Cook collapse, to give itself and the industry time to cope with the fallout. Industry accountant Chris Photi


praised the CAA’s head of operations, Michael Budge, for the decision but said: “Tere will be further pipeline money failures. Tat’s very, very sad. “Businesses are going to fail on the


back of Tomas Cook and I expect there to be failures [this week]. “Te CAA put back the renewal


cycle for the Atol licence to October 25 because of the turmoil of Tomas Cook. [Tat was an] excellent idea as far as Michael Budge was concerned; he did that fairly early in the process. “But there are going to be some


problems with companies trying to renew then.” Photi, who was speaking at Travel Weekly’s Future of Travel Selling event


last week, also said the CAA’s Air Travel Trust fund was “not looking in good shape” with the cost of Cook’s failure “falling squarely” on the CAA. Te CAA has estimated the final


cost of repatriation and refunds at £480 million. Photi predicted the final total cost could exceed that. Te Air Travel Trust has a


£400 million insurance policy for a failure, which kicks in when a collapse exceeds £150 million. Photi, head of travel and leisure


at financial advisory firm White Hart Associates, suggested it was unlikely the insurers would pay out the full amount. “Will the insurers continue with


the policy? Who knows, but it will be more expensive,” he said. CAA chair Dame Deirdre Huton


previously said the Cook failure would “clean out the trust”, but insisted it “would not make it insolvent”. However, she conceded there


“will be some failures”. i Former Cook staff recruited, page 8


COLLAPSE


THOMAS COOK


Operators face Amie Keeley


Tour operators which sold through Tomas Cook retail are facing a “nasty shock” after it emerged the travel giant was taking full customer payments early and not passing them on to third parties. A leading industry accountant


said the impact of the Cook collapse on suppliers which distributed through its retail estate would be “far higher than budgeted”. It has emerged that Cook offered


customers a 5% discount in August and September – for holidays due to depart up to nine months later – in return for full monies upfront. Chris Photi, head of travel and


Thomas Cook customers stranded in Majorca on the day of the operator’s collapse


4 24 OCTOBER 2019


leisure at accountancy firm White Hart Associates, said balances should have been passed on to operators 13 weeks before departure, as per agency agreements.


Cook was not a


well-managed business in any way, shape or form, [but] the industry turned a blind eye


Speaking at Travel Weekly’s Future


of Travel Selling event last week, Photi said: “A well-run agency would go to its customers about 16 weeks before [to collect balances]. “[But] operators have been geting


a nasty shock. Tomas Cook retail was taking advance revenues well in advance of that 13-week cycle and how have they been doing it? Tey have been incentive discounting. Agents get a commission of 15-16% on most transactions; they’ve been saying ‘5% off if you pay now in full’.


travelweekly.co.uk


PICTURES: Phil Gammon; Shutterstock; DPA/PA Images


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