Thomas Cook: Will the travel giant’s collapse push up prices next year too?

Q You have written about the sharp increases in air fares and holiday prices since the collapse of Thomas Cook, but it’s all been about the next few weeks and months.

What will be the effect of the closure next spring and summer on travel costs in Europe?

Adam K

A Thomas Cook collapsed under the weight of its £1.7bn of debt early on Monday morning, and immediately prices on other airlines began to increase. The stock market reacted by marking up the value of rival tour operator Tui and the budget airline easyJet by 7 and 5 per cent respectively on the day.

The kinds of price hikes I have seen include basic last-minute packages about twice as expensive as you might expect at this time of year. Air fares, too, are soaring, especially on routes where Thomas Cook Airlines was dominant – such as London to Antalya in Turkey, costing £786 one way this week for a 1,800-mile hop from Gatwick on Turkish Airlines.

But these prices comprise a very specific reaction to the sudden reduction in capacity, with thousands of seats taken out of the market overnight, and an understandable desire by disappointed Thomas Cook customers to continue with their travel plans – even at a vastly increased cost. The hikes are driven by systems that raise prices sharply when they detect a surge in demand. But they won’t remain at those levels for long.

When other airlines and holiday companies see disproportionately high “yields” for flights and packages, they naturally react by starting to serve the relevant route or resort as swiftly as possible to extract a premium. And when a significant competitor goes under, as Thomas Cook so sadly did, they move in to grab departure slots at key airports while they decide on their commercial response. They will know, for example, that Thomas Cook provided prodigious capacity to southern Turkey, and may go some way to matching it.

The workings of the market mean that the more capacity that incoming airlines add, the lower the fares go. By around Easter 2020, when the summer season slowly starts, supply and demand are likely to have converged: carriers such as easyJet, Jet2 and Ryanair will have added capacity which will come close to matching the Thomas Cook flight programme.

Jet2 and Tui will also be looking to sign deals with many of the hotels that were formerly contracted by Thomas Cook, which should keep a lid on package holiday prices.

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Q Normally at this time of year I take a week’s holiday, basically wherever is cheap (and sunny). As I believe you recommend, I just wait until couple of days ahead and find something suitable – either a package or independent. I want to travel on Sunday or Monday, 29 or 30 September. But it appears that I’ve timed it all wrong because of the collapse of Thomas Cook and prices going through the roof. Am I going to have to settle for Devon, or can you suggest something from the London area?

Name withheld

A The back end of September and first half of October should be a real buyers’ market, with a week on a lovely Mediterranean such as Malta, Corfu or Crete in the low £200s. Indeed before the collapse of Thomas Cook, I bought from the firm a week’s holiday in Corfu, departing from Stansted on 14 October, for just £187. But with around 30 per cent of short-haul package capacity taken out of the market, prices have soared. For a similar holiday I now face paying at least twice as much.

Independent travellers, too, are facing problems – because fares for outbound flights in the next few weeks have soared after Thomas Cook Airlines shut down on Monday morning.

On your behalf I have taken a look at appealing destinations where the sadly defunct carrier had no presence. Top of the list is Pula in northwest Croatia. The city is at the southern tip of the Istrian peninsula – a heart-shaped territory, slightly larger than Dorset, and joyful in autumn. Think of it as good-value alternative to Italy – with beautiful fishing ports, and inland a ripple of hills draped with vineyards, meadows and woodland. You will even time it well for the truffle season; the subterranean fungus enlivens dishes in Istrian restaurants at this time of year.

The best outbound flights are on Sunday. Ryanair (£35) is cheapest but involves a 6.50am departure from Stansted. Later in the day Jet2 (£49) offers a flight from the same airport. But easyJet at £45 from Southend may suit you better.

Coming back a week later, the flights are much more in demand. But Ryanair at £89 is still reasonable value; grab it soon. If it disappears, then head around the top of the Adriatic to Venice, where plenty of flights in the £80s are available. And it’s a great journey through Slovenia.

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Q The sad demise of Thomas Cook jogged my memory and I fished out some old travellers’ cheques from the back of a drawer. Sure enough, they are branded Thomas Cook – and also carry the Mastercard logo. I’m not sure exactly when I got them, but I wonder if they have any value?

Robert J

A The Thomas Cook collapse has been a tragedy for the 21,000 staff of the pan-European company, and distressing for many of the hundreds of thousands of customers who either were abroad at the time of the collapse or have forward bookings for holidays that will now no longer take place.

The failure also had some unexpected consequences – and, for me, one of them is the sheer number of people who still have travellers’ cheques.

These antique foreign instruments were effectively invented by Thomas Cook himself, who devised the “circular note” to help travellers manage their money abroad. Throughout the 20th century, these cheques were invaluable – providing a safe store for funds, because if they were lost or stolen, the numbers were cancelled and the company provided a swift and full refund.

In the US, dollar-denominated cheques could be used as cash in many retailers, restaurants and hotels.

But by the start of the 21st century, the travellers’ cheque was looking decidedly retro, and now they are difficult to encase – even if the company whose name is on the paper is still in business, unlike Thomas Cook.

Fortunately, I have found a solution. The travel money business of Thomas Cook was taken over in 2001 by Travelex, and this organisation is honouring one of the liabilities it picked up at the same time – in the shape of travellers’ cheques.

You can find the encashment form online easily, and cash them by post or in person at a Travelex retail bureau de change in the UK.

Unsurprisingly, there is a fee: 5 per cent or £7 (whichever is the higher) will be deducted from the final payment.

Non-sterling cheques will also be converted at the prevailing rate of exchange on the day. You can call the Travelex travellers’ cheque team on 01733 279760 for more details.

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Q I read about the new Saudi visitor visa, and wondered what you knew about it – as well as whether it’s worthwhile or dangerous to go there?

James Y

A As part of its process of modernisation and moving away from total dependence on oil revenues, the Kingdom of Saudi Arabia has revolutionised the process of obtaining a visa. Until now, the vast majority of visitors have been pilgrims making the Hajj to the holy city of Mecca.

After news of the new visa scheme for 49 countries emerged yesterday, I applied for an e-visa and found the process very user-friendly: about as easy as a Turkish e-visa, and far more straightforward than an American Esta permit. The only tricky element is that you are supposed to give the name, phone number and email address of your first night’s accommodation; I am now planning to stay at the Radisson Blu Corniche in Jeddah.

The cost is a punishing 463 Saudi riyals, today worth £100, but a quarter of that is for compulsory medical insurance. And unlike many other e-visas, it is valid for a year from the date of issue, and allows multiple visits.

Having read a fair amount about the country I am looking forward to going this winter – starting in Jeddah, which sounds an energetic and cosmopolitan Red Sea port city. Flights are expensive on Saudia and British Airways, but there are much cheaper deals available via Athens, Istanbul or Cairo.

The leading archaeological location is Mada’in Saleh – the Saudi version of Petra in Jordan. Like Petra, the city was hewn from solid rock by the Nabateans. Unlike Petra, it has very few visitors.

The country also has mountains rising to 10,000ft amid some spectacular highland scenery.

By all accounts (well, at least that of Lonely Planet co-founder, Tony Wheeler) Saudi Arabia is welcoming, friendly and easy to get around.

However, the regime is conservative and intolerant of dissent – during the visa process you are warned “publications related to any religious beliefs or political tendencies that contradict with Islam are prohibited in the Kingdom of Saudi Arabia”.

A recent Amnesty International report said: “The authorities used the death penalty extensively, carrying out scores of executions. Despite limited reforms, women faced systemic discrimination in law and practice.”

The Foreign Office warns about a range of threats, and urges against travel within 50 miles of Yemen, but I think a greater risk is posed by the “high number of serious accidents” on the roads. Flying is a safer prospect than long-distance road travel.

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