The Daily Parker

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Overcooked

The UK has started a £100 m repatriation scheme to get stranded Thomas Cook customers home:

The government has said it will run a "shadow airline" for two weeks to repatriate the 155,000 UK tourists affected by the firm's collapse.

Transport secretary Grant Shapps said its response to the crisis was "on track so far" and "running smoothly".

Mr Shapps, who earlier attended an emergency Cobra government meeting on the government's response, said: "People will experience delays, we're not running the original airline, but we intend to get this done all in the next two weeks and then end this phase of the rescue."

He also stressed people should not come home early from their holidays but should "carry on and leave on the date they were supposed to leave, having first checked the Thomas Cook website before leaving for the airport".

The government has to chip in because of the way UK bankruptcy laws work:

Had Thomas Cook been based here, it would have most likely filed for Chapter 11 bankruptcy protection and tried to reorganize while still flying. But Thomas Cook is a UK company, and that means that when the 178-year old business ran out of financing options Sunday night, it effectively just disappeared as far as the public is concerned. The UK government is solely focused on picking up the pieces in the near term while it prepares for a massive liquidation in the long run.

But:

These repatriation flights are only for those who already left the UK and needed to get back home. Everyone else just gets refunds, and that means airlines like easyJet and Jet2 are about to get a windfall of new business. TUI will pick some up as well, and I’m sure all low-cost carriers that touch the UK at all, like Ryanair and Wizz, will see a healthy uptick in bookings. But in the long run, someone is going to step up. This capacity won’t simply disappear.

So what happened? How did the company accrue billions of pounds of debt when the aviation part of their business remained profitable? Because fewer people like package tours than before:

Meanwhile, as the rescue operation kicks into gear, people are already conducting a post mortem into the death of this 178-year-old travel-industry leviathan—a British household name, with storefronts offering all-in-one resort vacations on almost every main street in the country. Among the causes, one striking possibility has emerged: Did the apparently unstoppable rise of the city break cause the company’s demise?

The rise in popularity of shorter urban breaks does indeed seem to have been a factor. In 2019, the average Briton is far more likely to be found wandering around Barcelona or Amsterdam than, say, sunbathing on the beaches of Spain’s Costa Del Sol, a 1980s favorite.

The number of Britons taking a yearly two-week vacation (a travel-agency staple, long standard because of the country’s generous vacation days) has fallen by more than 1 million since 1996. The number of short trips, meanwhile, has skyrocketed. By 2017, more than half of people in the U.K. were taking at least one short trip annually. This shift is crucial, because it meant that most growth happened in a sector where travel agents do relatively poor business.

Most of all, though, it’s the liberalization of the aviation industry in Europe since the late 1990s that has radically changed people’s destination choices. Before the advent of bargain airlines such as easyJet and Ryanair, the only really cheap flights to be had were summer charters to beach destinations, so that’s where people went. Nowadays, the volume of affordable, even obscure destinations has hugely expanded. Previously far-flung cities such as Trieste, Italy, or Riga, Latvia, are now weekend-break destinations. Travel agencies that depend on block-booking a large number of rooms in high-volume destinations find it hard to capitalize on this trend.

I'm sure AirBnB and Hipmunk contributed as well.

I always feel a little sad (or outraged) when a venerable business dies. Everyone will get home from their holidays after this mess, but a company older than a third of the states in the US is no more.

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