Thomas Cook collapses – what to do now?

Thomas Cook, the European travel company that started 178 years ago and pioneered package tours, has declared bankruptcy and ceased operations today. All flights, vacations and tours are cancelled. The UK government has launched a repatriation effort to bring home more than 150,000 Thomas Cook customers currently abroad on vacation and has chartered a fleet of planes to do so. Because package tours have special consumer protections, travelers who have booked future vacations will receive a refund. Find out what to do if you are impacted below.

What happened: Thomas Cook started in the UK with train tours in the 1840s. After World War II, Thomas Cook pioneered packaged tours across Europe and expanded into other countries, buying Neckermann Reisen in Germany and Condor, the German airline. In recent years, they struggled with the competition from low-cost carriers and online bookings, reduced demand from an unusually hot summer last year and the Brexit chaos weighing on UK travelers. 
They had negotiated a $900 million bailout with Chinese Fosun Tourism Group, that would have left Fosun with a majority of the tour business and other debtors with a majority of the airline business. But the deal came apart over additional funding requests of $200 million that ultimately couldn’t be fullfilled. Interestingly, American holders of CDS (Credit Default Swaps) blocked the deal, because they would have lost money if a default was averted, putting them at odds with bond holders and investors. It’s one of the same credit instruments that contributed to the Financial Crisis of 2007.

What’s next: Because of special consumer protection for package tourists in Europe, the UK government has launched an operation to repatriate 150,000 UK travelers stuck abroad, the largest repatriation in peace times. They will offer flights not only for the package tourists covered under the regulation, but travelers who purchased only airline tickets directly from the airline! The government, from a special fond, will also refund additional costs from delays as well as future tours purchased from Thomas Cook. 
While 100,000s of other European travelers, including Germans, have similar tour insurance, they are not covered by the UK rescue operation and will have to find their own way home. 

What to do if you are impacted: If you are a UK traveler currently abroad on a Thomas Cook Tour, go to this dedicated website to find out what flight home has been organized for you. Do not go to the airport until your flight is listed – the UK government is attempting to bring everybody home with a fleet of chartered planes as close to your scheduled travel date as possible. Some travelers, likely at smaller destinations with few travelers, will receive instructions on how to get home on other flights. The site also provides assistance if you are having trouble with accommodations or other issues.
If you have booked a vacation with Thomas Cook in the future, you have to file for a refund. At the same website, you’ll be able to provide details of your bookings and will receive a refund within 60 days. Please be patient, as the repatriation of travelers abroad will have priority. 

It’s not as clear for the remaining 450,000 Thomas Cook customers impacted by the insolvency. If you are on a package tour and not based in the UK, contact your travel agent on what to do next. Germany and other EU countries also have insurance for tour packages that should either offer a refund and/or cover the flight home. I will update this post with details, as it becomes available.

How can you protect yourself: There is significant consumer protection in place for package tourists and they cover the cost associated with this type of collapse.
You can further protect yourself in the selection of your tour or travel operators – Thomas Cook has been in the news for a while – just like air berlin and Monarch were – with their financial problems. If you want to be on the safe side, stay away from operators that are in the (wrong) news.
You should also purchase all travel with credit cards, not cash, debit cards or bank transfers, as most credit cards offer protection in case of bankruptcy and you’ll at least be able to get a refund for your flight. 

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