Advertising
  • News
  • Airlines
  • Start-ups & failures
  • Thomas Cook failure spurs UK to act on airline insolvency

Thomas Cook failure spurs UK to act on airline insolvency

Leisure giant Thomas Cook Group's dramatic collapse appears to have jolted the UK government into rethinking the way airline failures are handled.

Thomas Cook Airlines in the UK was grounded on 23 September, as the struggling tour operator filed for compulsory liquidation.

The inability to use these dormant aircraft for the 'Operation Matterhorn' repatriation programme seems to have spurred the government to act on measures recommended in an airline insolvency review conducted after the Monarch Airlines failure in October 2017.

That review, published in May this year, highlights particular difficulties in the UK with using fleets from a carrier in administration to repatriate customers, and recommends development of a special administration regime which would support such a measure.

"There seems to be a very strong desire across [parliament] to do something with [the insolvency review]," said transport secretary Grant Shapps to the lower house of parliament on 25 September.

He signalled that – while the problem was multi-faceted and not simple to resolve – the government would be prepared to put forward the necessary primary legislation.

"[The review] suggested that we should have rules that are not dissimilar to the German rules to allow our airlines to trade in administration. That would make repatriation massively easier, because we could use those airlines."

Operation Matterhorn has required the UK Civil Aviation Authority to build a temporary airline, using spare capacity from other operators, to bring back 150,000 Thomas Cook passengers.

But Shapps points out: "Due to the size, complexity and geographical scope of the Thomas Cook business, it has not been possible to replicate the airline’s own flying programme and its schedule."

He says the airline insolvency review "provides a few useful ideas about things that could be done", some – but not all – of which would require primary legislation.

"We cannot keep returning to this situation," he says. "It is terrible for passengers and for all those involved, and there is a problem in finding sufficient aircraft to solve this problem when it happens."

Owing to the Civil Aviation Authority's need to focus on its efforts to repatriate Thomas Cook passengers, participants in the Air Travel Organiser's Licence scheme – which protects customers – have had their ATOL validity extended past the 1 October renewal date to 25 October.

“Extending the deadline is possible within our regulations but it is unprecedented and reflects the exceptional circumstances that we find ourselves in," says ATOL head of licensing operations Michael Budge.

“Extra time will enable industry to have additional time to support customers in a difficult period and give them the space and time to get things together to meet the terms of their renewals."

Advertising
Related Content
Advertising
What's Happening Around "Thomas Cook Airlines"