Another giant too shuts down. The latest in the list is Thomas Cook, the 178 year old and biggest travel firm in the world. Even though the firm is not in the hands of Cook family for around a century, many firms in Europe and America still kept the brand name after purchasing its country rights; hence the closure of English firm affected all of them simultaneously. The firm was closed after registering a deficit of over Rs 26, 190crs in the balance sheet. Among this, around Rs 19,000crs is the unpaid debt to Civil Aviation Authority, bonding providers and payment service providers. But nobody in public was aware about the near closure condition of the firm even a day before; and it particularly affected nearly six lakhs people around the world who were in different tourist locations as customers of the firm. They were cheated and had to find out an alternative in order to reach their home.
As alternative to routine entertainments, it was in 1841, Thomas cook came with a 20km trip from Leicester to Loughborough in England. Those local excursions initiated by a cabinetmaker and Baptist preacher was later became the oldest and biggest travel company in the world with 19 million customers a year and a staff of 22,000 employees working in 16 countries. The company was sold in 1928 by the grand children of Thomas Cook. It was nationalized after Second World War and again privatized in seventies. Operations in other countries were sold to different firms later. But all of them eagerly kept the brand name due to its popularity.
When Thomas cook shuts down, it is not the end of any another firm but it is the tragical finishing of a company that contributed many original features to present day world. Leicester, where Thomas Cook started his marathon voyage is considered as the birthplace of modern tourism by several textbook writers. It was Thomas Cook made Traveler’s Cheque a very common practice among travelers before the advent of ATM cards. Traveler’s Cheque helped them not to carry large amount of cash especially in foreign countries without any associated risks. Holiday package schemes, war memorial trips, mass adventure tourism etc were the contributions of Thomas Cook in different periods of history. They even operated air traveling to diverse tourist destinations through Thomas Cook Airlines. But the Titan collapsed after all the major shareholders of the company disagreed to forward a loan in order to save it when it was needed to repay all debts.
Many believe that the collapse of Thomas Cook is the result of continuing recession in the western economy. It is true that the world economic picture changed drastically since 2008 recession which was a set back to the much claimed neo-liberal economic policies propounded by World Bank and Co. Many famous companies were either vanished or bought by others due to financial bankruptcy. Around a million firms were closed down around the world with many lakhs became unemployed. But the case Thomas cook has nothing to do with recession but only to the business model it followed and the changing tourism world.
The travel firm does not own any hotel or ground infrastructure facility other than office spaces and shops. It was only standing as a link between travelers and final tourist facility. Its business was based on reputation and contacts. They kept unusual care in keeping closeness with previous customers. It was this loyalty eventually made Thomas Cook as trustworthy travel brand in the past. But that is not sufficient to keep pace in today’s world. The digital revolution made public relations a matter of easy click. Advertisements through social media and SMS made business packages more important than public relations. When new firms like Airbnb came with ever new offers, Thomas Cook was following its age old methods without any failure.
It was easy and possible for Thomas Cook to develop tangible tourism facilities like hotels, restaurants, tourist carriers etc and other mercantile. They had capital and time for that. Instead they went after associations. The mergers and acquisitions are not equally worth than developing own ground infrastructure. Intention to become big, through mergers and acquisitions, easily as well as quickly is like a package. They bring not only wider spectrum of business but also a bunch of new and not so familiar problems too. The acquisition of My Travel in 2007 became a continuous liability for Thomas Cook which became Rs 9500crs after a decade.
The present is the period of ‘invisible structure of business’. Oyo became the biggest hotel chain without having a single hotel like Uber in private taxi sector. When information replaced industrialization, capitalism is inventing fresh and original business models based on information. They would not survive long. But these bubbles are colorful enough by using linking technologies and business relationships in order to develop attractive offers to consumers. There is the model of Thomas Cook like carrying a bullock cart on a superhighway. We can pay our warmest homage to the extinct age old firm.