The world has lost a travel company with a creditable heritage to the intense competition of the modern times. Thomas Cook is now a gone concern and its demise has left 1,50,000 British holidaymakers stranded abroad and about 6 lakh travellers in all globally affected. The firm’s collapse has left the British government with the largest repatriation mission since the World War II on its hands. The travel company Monday announced the cancellation of all its flights to and from the UK, forcing the government to charter 40 flights to bring home natives holidaying abroad.
Thomas Cook had survived for 178 years in the travel market, which was no mean feat. It was the pioneer in packaged tours. The founder, Thomas Cook, after whom the company was named, is credited with introducing the concept of package tours. A strong supporter of the temperance movement, Cook believed travel was a good means to keep Britons from drinking. After starting with day trips by train, in 20 years, Cook’s company was offering trips in continental Europe, the Middle East and the US. It was a booming business that the cabinetmaker from Yorkshire had set up. But those things are now relegated to the annals of history. The harsh reality of the day is that there is stiff competition across industries. One model succeeds today and disappears the next day. Thomas Cook may have been the victim, probably of its inability to adapt and like any company with an outdated model of business and a large debt to repay, has perished. A bigger worry here is the fact that such a large company, with thousands of customers and supporting concerns will also take down with it numerous other jobs.
Within the company itself the crash means 22,000 employees globally stand to lose their jobs — 9,000 of whom are in Britain alone. Thomas Cook was revived from near bankruptcy almost eight years ago. But the firm accrued debt to the tune of 1.9 billion pounds and gave in after attempts to raise an additional 200 million pounds to meet its needs for the coming winter failed. For India, the saving grace is that Thomas Cook (India) Group has been an entirely different entity since August 2012. The firm was acquired by the Canada-based multinational investment company Fairfax Financial Holdings.
While the fact may be some relief for Indian travel businesses aligned with the group, there are lessons for companies to learn from the collapse. One of the biggest lessons would be discipline when it comes to debt. While debt is an unavoidable reality in the business world, it should not be allowed to grow beyond the point where risks far outweigh benefits. Thomas Cook may have survived for long on the prowess of the goodwill that the company generated in its heyday. But changing customer behaviour and the availability of numerous options online have faded the old-world charm of booking offices that Thomas Cook maintained. The travel industry is rapidly expanding and with an increasingly high number of people travelling, needs are also diversifying. Only companies that are able to offer the customer diversity of choice that fits into any kind of budget — both in terms of expenses and time — will be able to survive. The act of Thomas Cook has come to an end. It will be a difficult act to recreate. Sad end indeed.