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Is Brexit to blame for Thomas Cook collapse?

Haider-al-Lawati
Haider-al-Lawati
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Has Thomas Cook fallen victim to Brexit policies amidst Britain’s negotiations to exit the EU? Or are there other reasons behind this long-established tour operator’s bankruptcy? And what kind of difficulties and challenges will the British economy face in the coming period? These questions are on the minds of those following Brexit and other news related to Britain staying in or leaving the EU.


However, Thomas Cook — the international tour operator and travel company established in 1841 — declared bankruptcy due to many considerations, including a decline in profits caused by political unrest in some global tourist destinations, such as the Middle East, in addition to climate related issues like the heatwave that swept the world, including Europe, over the past years, not to mention the falling numbers of holidaymakers who are putting off their reservations worldwide because of Brexit.


Company officials are blaming Brexit for drowning the company in debt and incurring losses due to the uncertainty caused by Brexit.


Credit cards, ATMs, online booking, logistics applications and the technological revolution in general have also facilitated many services for tourists around the world, creating a dilemma for the company.


This made them move away from the products of this prestigious company, such as Travelers Cheques used for hotel and flight reservations and other services.


In the GCC region, many businessmen are very well acquainted with Thomas Cook products, especially Travelers Cheques, on which they depended during their travels, whether within Britain or abroad.


They relied on these cheques in their globetrotting before European banks began offering credit banking products, including credit cards, insurance schemes and travel and tourism programmes, and before the birth of the 4th Industrial Revolution.


Thomas Cook filed for bankruptcy due to its failure to raise funds to pay off its accumulated debt and reach a deal with shareholders and new potential financiers to raise £900 million to refinance its activities, leading it to the path of mandatory and immediate liquidation.


No doubt that many tourist destinations will be affected by Thomas Cook bankruptcy alongside its customers including Cairo, Istanbul and other destinations.


For example, Turkey and Egypt will lose 70,000 and 25,000 tourists a year respectively, not to mention other tourist destinations like Cyprus, Greece and others, affecting international airlines, hotel reservations, insurance companies and governments, especially in returning 600,000 stranded travellers to their homes from across the globe, including 155,000 Britons who are travelling for their annual holidays and got stranded when the company cancelled all travel reservations.


It all added up to a perfect storm that led the 178-year-old company to cease operations recently, stranding hundreds of thousands of travellers in their destinations.


The company’s collapse happened after failed last-minute negotiations that aimed to save it from bankruptcy. Most customers (the company serves about 19 million customers a year worldwide) will later seek compensation from insurance and travel companies due to loss, delay and possible health issues from this crisis, whereas 22,000 employees around the world will face the risk of losing their jobs.


The competition that Thomas Cook faced in recent years from websites under the modern technological revolution and the reasons mentioned above led to the collapse of the company, which confirms that modern technologies will topple many other institutions, and establish new ones instead.


Many observers believe that British tour operator Thomas Cook fell victim due to multiple reasons including shifting travel habits, the rise of online booking sites, the sinking pound, and even unusually hot weather that encouraged fewer Northern Europeans to travel to different parts in the world.


haiderdawood@hotmail.com


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