Thomas Cook customers without Atol protection cost taxpayer £1,078 each

Subsidy is likely to increase still further, National Audit Office report says

Taxpayers paid more than £1,000 to bring back each Thomas Cook customer without Atol protection after the firm’s collapse, an analysis of new figures from the National Audit Office (NAO) by The Independent shows.

The giant holiday firm went bust with debts of £9bn after failing to secure a bailout from either its Chinese shareholder, Fosun, or the government.

A “shadow airline” was set up by the Civil Aviation Authority (CAA) to repatriate 140,000 British holidaymakers who were abroad when Thomas Cook Airlines ceased flying.

The CAA chartered dozens of planes from carriers across the world to bring most holidaymakers home on the days they were intending to fly, with 746 flights from 54 airports.

“Operation Matterhorn,” as it was known, was far more complex and expensive than the collapse of Monarch Airlines two years earlier. Passengers were located in 18 countries, including nearly 10,000 in Mexico and the Caribbean.

But most of the passengers brought home free of charge were not covered by the Atol scheme, and therefore had no legal entitlement to rescue.

The NAO report says that initially 40 per cent of Thomas Cook passengers were thought to be without Atol protection, but this was revised upwards to 55 per cent in February 2020 – representing 77,000 travellers.

While some of the cost was met by the Air Travel Trust Fund, which paid out for Atol-protected passengers, the Department for Transport (DfT) paid most of the bill.

The £83m subsidy worked out at an average of £1,078 for each passenger who enjoyed a free one-way flight to Britain – some of them in first class seats on a Malaysian Airlines Airbus A380.

The report says the government’s decision to provide free flights for all “was based on its assessment that Thomas Cook customers were at risk of significant disruption and cost in returning to the UK”.

The subsidy is likely to increase still further, the NAO says.

“The CAA is still receiving invoices for leasing planes, ground-handling charges, and other services, and will do so for some months.”

The Thomas Cook collapse cost the taxpayer an additional £73m to £81m. The report says redundancy payments totalled “at least £58m”, which will be paid out of the national insurance fund.

Nine thousand UK staff employed by the company lost their jobs in the failure.

The DfT is also paying between £15m and £23m of costs to the official receiver.

Meg Hillier, the chair of the Public Accounts Committee, said: “I applaud the normal duty and public service of staff across government and CAA who helped to get 94 per cent of passengers home on time.

“However, lessons need to be learnt and future risks understood.

“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.”

In February the UK’s main regional airline, Flybe, collapsed. No repatriation flights were operated.