Aviation industry leaders hailed the CAA’s repatriation of Thomas Cook customers following the company’s collapse but called for reform of insolvency rules as Iata warned of a “serious risk of recession”.
Simon McNamara, Iata UK and Ireland area manager, told the Airlines 2050 conference in London: “Aviation is a tough business. Failures happen. The question is how you manage it.
“The CAA has done a fantastic job in repatriating passengers, but it is highly inefficient to ask the CAA to run an airline.”
Aviation lawyer Jo Kolatsis, an advisor to the Airline Insolvency Review which reported in May, agreed: “The repatriation was handled extremely well by the CAA.
“But it highlighted the problems with the insolvency regime and the fact that something needs to be done.”
Department for Transport aviation director Dan Micklethwaite denied that the government had been slow to react following the failure of Monarch in October 2017.
He said: “We commissioned the Buck report [the Airline Insolvency review] after Monarch failed. The fact it took some time indicates how difficult an issue it is.
“It reported in May. We consulted on the report and that ended only a few weeks before Thomas Cook failed.”
Micklethwaite insisted: “Work is underway. There are two issues – how you keep a fleet flying, and how you pay for that. It is not easy.”
Yet he conceded: “We need a better tool kit.”
Dale Keller, chief executive of the Board of Airline Representatives (BAR) UK, argued: “Thomas Cook’s failure was not a failure of an airline.
“It was a failure of a tour operator with 500 high street shops. The airline part was high profile because of the repatriation.”
Iata chief economist Brian Pearce told the conference: “A number of airlines have disappeared. Europe has seen a whole series of bankruptcies.
“The industry is quite fragile. Airlines have struggled with rising costs in the last two years, and in the last 12 months the industry has lost the ability to recover its cost increases.
“Air cargo is collapsing in the face of trade wars. It has fallen 5% below the level of last year and in revenue terms it has fallen 10%.”
Pearce warned: “There is a serious risk of recession. Business confidence has dipped sharply. It would be wise to prepare for much more difficult business conditions over the next 12 months.”
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