Thomas Cook's collapse will have limited Middle East impact, say analysts
Company's failure will put more planes on the market, Bloomberg Intelligence says
The demise of Britain's iconic tour operator Thomas Cook has wide repercussions for the global travel industry but its impact in the Middle East is comparatively limited, analysts have said.
The region comprises a relatively smaller market for the global travel operator though Egypt and Tunisia, both popular holiday destinations for European travelers, will be the areas in the Middle East and North Africa that are hardest hit.
"There is no significant impact of Thomas Cook’s collapse in the region, given that its estimated market share in the region remained limited," Rabia Yasmeen, senior analyst at Euromonitor International, said. "While there are no significant investments of the group in the region, Thomas Cook had a number of own-brand hotels in [the] UAE, Turkey, Egypt, Morocco, Tunisia and Cyprus, which was one of the key segments for the group to focus on in the region in addition to [the] tour operator segment, where the brand is working with local travel operators in key countries."
The company has a partnership with UAE hotels operator Bin Majid Group for one Thomas Cook-branded property in Ras Al Khaimah, which has indicated that guests' bookings will be honoured. It also has own-brand hotels in Turkey with 29 properties, Egypt with 9 properties, Tunisia with 11, Morocco has one and Gambia has three.
The bankruptcy of the 178-year old London-based travel company led to the cancellation of holidays and flights booked through its units on Monday, prompting the UK to deploy the largest peacetime repatriation of 150,000 stranded travelers. It has filed for liquidation, spelling the end of a company established in 1841 that pioneered the concept of holiday packages across Europe, America, Africa and the Middle East.
"The Middle East is relatively small for Thomas Cook, it does not take a lot of capacity out of that market," Harry Martin, senior research associate at London-based Bernstein, said. "The real effects will be seen in Europe."
"The travel industry in countries like Tunisia would be affected, especially in hotels where Thomas Cook booked out rooms,"
Thomas Cook also ran a charter airline, but charter flights form just three per cent of overall airline revenue in the Middle East and Africa, valued at $908 million in 2018 and expected to grow by 3.5 per cent in 2019, according to Euromonitor.
John Strickland, London-based aviation consultant, said. "If you're in working in Egypt's travel industry, you would have gone through the pain of last year, and this Thomas Cook collapse is another big hit when a major supplier fails."
On the upside, major local tour operators and budget hoteliers in the region will get the opportunity to snap up Thomas Cook's share of customers from key source markets in the region, Ms Yasmeen said.
Turkey's government is preparing a loan support package for Turkish businesses that may be hurt by Thomas Cook's collapse, as authorities step in to stem potential risks for their travel industries.
"Governments can take steps to support both demand and supply," Diogenis Papiomytis, global programme director of commercial aviation at Frost & Sullivan, said. "The Turkish government has subsidised airlines in the past to deal with a fall in hotel bookings. Together with a support package for Turkish hospitality businesses, this could limit any impact."
The travel giant's demise, amid overcapacity in European air travel, will also put more aircraft on the market, thereby "depressing sales for Airbus and Boeing and continuing to squeeze lease rates", according to a Bloomberg Intelligence report.
Apart from owned jets, the company's fleet is owned by lessors and asset-backed structures and the planes average 14 years old.
The Airbus A321 fleet is large at 58 with an average age of nine years. Lessors and asset managers to Thomas Cook include Air Lease, Aviation Capital, GECAS and Lufthansa.
Lessors may be challenged to find homes for the airline's 13 A330s, as almost 6 per cent of the fleet is already parked.
Published: September 23, 2019 07:23 PM