Tuesday 1st Oct 2019
We recently saw the collapse of one of the world’s oldest travel companies and airlines - Thomas Cook - despite multiple efforts to source funding and save the company. The event was naturally headline news, with around 150,000 British people left stranded abroad without clear indication of how they would get home. But we’ve seen far less coverage about the businesses that will be affected by this unfortunate event. Many will have relied on Thomas Cook for their own custom, and reports have suggested that around £500m is owed to suppliers; most of which is unlikely to be recovered. So, what are the ways in which an airline collapse could affect your business?
The most obvious issue will be the movement of people. While Thomas Cook may well have been a pioneer in the package holiday space, it and most other airlines offer flight-only purchases, and businesses regularly rely on flights such as these. To certain locations, Thomas Cook, was previously one of only a couple of options for businesses who needed to fly employees out. A narrowing of the market could make things more difficult for global businesses, though of course there is an environmental argument for reduced air travel where possible.
Working in the tourist and hospitality industry can also be nerve wracking for businesses that see airlines go bust. Should an airline go under that previously ferried large volumes of passengers to a small destination such as resorts, then the hospitality industry in that location could see difficulties as competitors try to replace the airline on that route. Major global hubs are likely to be unaffected, however.
We’ve already mentioned direct suppliers to Thomas Cook, and it’s businesses like these that are likely to be hit hardest in the event of an airline collapse. Think of all of the companies that might provide everything from catering to business services, marketing and more, and it’s easy to see how the collapse of a major airline can send shockwaves throughout industry.
And the final thing to think about is that Thomas Cook were a passenger airline - there are plenty of freight companies out there that rent and operate planes. Should one of these go bust, shipping can be affected, though major shipping businesses usually have contingency plans in place, ensuring that their customers in turn are not affected.
Any transport business going under can have a large impact, but the way an airline is integral to such a large number of businesses means that when one goes down, there are serious shockwaves. Many astute suppliers will have kept an eye on Thomas Cook’s fortunes and attempted to move away from their business where possible, which is why it’s important for all suppliers to diversify. Any company working with an airline should certainly keep an eye on their fortunes, particularly as they’re squeezed by high operational cost.