Taxpayers face £156m bill for Thomas Cook collapse
Taxpayers will fork out at least £156 million due to the collapse of Thomas Cook, a report by the Whitehall spending watchdog has found.
The National Audit Office said the Department for Transport (DfT) has agreed to pay an estimated £83 million towards the total cost of repatriating the travel giant’s customers who were not covered by the Atol scheme.
Other Government costs include £58 million in redundancy and related payments to Thomas Cook’s former employees, and at least £15 million for liquidating the business.
The NAO added that “the final cost may not be known for some time”, partly due to invoices for repatriation costs still being received.
Labour MP Meg Hillier, who chairs the Commons’ Public Accounts Committee (PAC), said “lessons need to be learnt and future risks understood”.
She went on: “The repatriation looks set to cost the taxpayer £83 million and there are other costs associated with insolvency of at least £73 million.
“Government looks set to foot the bill, with industry off the hook. The resources to cover other airlines going bust is now very limited. New regulations are urgently required.”
When Thomas Cook collapsed on September 23 last year, the DfT instructed the Civil Aviation Authority (CAA) to repatriate all 150,000 holidaymakers who were overseas.
This included the roughly 83,000 who had not booked a trip with Atol protection, which meant they were not automatically entitled to be flown home free of charge.
The DfT is reimbursing the cost of repatriating those passengers.
A spokeswoman for the department 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.”
A total of 746 flights from 54 airports were involved in what was known as Operation Matterhorn.
The NAO report warned there could be further costs to taxpayers if another large travel company collapses in the near future.
That is because the Government has agreed to stand behind the fund that covers Atol-protected passengers if it runs out of money.
The CAA told the NAO that the exposure to the fund of the Thomas Cook repatriation and refunds will be £481 million and “there will be relatively limited resources left” once all costs have been met.
In December last year the Government announced plans for new airline insolvency legislation, which would allow carriers to keep their planes flying long enough to repatriate passengers.
The collapse of Thomas Cook led to 9,000 jobs being lost, with many ex-workers still unemployed.
The Government was accused of not doing enough to help what was the world’s oldest travel company.