Thomas Cook collapse has drained Air Travel Trust Fund, warns CAA
The Civil Aviation Authority has warned that its Air Travel Trust Fund was almost drained by the Thomas Cook collapse, with £481 million spent on repatriating and refunding passengers, meaning it might not have sufficient cash to cover other company failures in the near future.
The Government spent at least a further £83 million organising rescue flights to bring home 83,000 Thomas Cook customers who didn’t have ATOL protection, according to a report by the Government spending watchdog, the National Audit Office (NAO).
That means that the Department for Transport, which ordered the repatriation co-ordinated by the Civil Aviation Authority, spent £1,000 per passenger.
However, the final cost might not be known for some time, said the NAO, as some invoices for repatriation costs have yet to be submitted.
A further £58 million of taxpayers’ money was spent on redundancy and related payments, said the NAO, while liquidating the company cost another £15 million.
The CAA said the repatriation and refund costs related to the Thomas Cook collapse would deplete the majority of the fund’s resources.
However, the fund is backed by a government loan, so if it can’t meet the costs of any future collapse, it will be able to borrow money, but this will have to be repaid, possibly through a further levy industry levy.
Labour MP Meg Hillier, who chairs the Commons’ Public Accounts Committee said ‘lessons need to be learnt and future risks understood’.
"Government looks set to foot the bill, with industry off the hook," she said.
"The resources to cover other airlines going bust is now very limited. New regulations are urgently required."
A DfT spokesperson said: "Due to the unprecedented scale of the operation, other airlines did not have enough capacity to repatriate those abroad.
"Without this effort, stranded passengers couldn’t be guaranteed a safe journey home, causing stress and disruption to families, which would have had a knock-on effect on the wider economy with so many employees abroad."
Workers’ union Unite is adamant that the huge cost could have been avoidable if the Government had agreed to prop up Thomas Cook to prevent its collapse.
"If the airline had been supported, even for a short time, there would have been no need for a highly costly repatriation exercise, a new permanent buyer found and these costs avoided.
"The government for years has been promising to introduce the Airline Insolvency Review and the Insolvency and Corporate Governance Review which would have prevented Thomas Cook’s airline being forced into liquidation, but still no action has been taken.
"It is essential that the government demonstrates it has learnt the lessons from this sorry saga and ensures workers can access benefits and receive the money they are owed quickly when companies collapse.
"Particularly in the light of the current coronavirus crisis which has already resulted in many workers being made redundant or temporarily laid off."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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