Who will be the Thomas Cook collapse winners?

The impact of the Thomas Cook collapse is set to rumble for many months more, but the positioning to capture their customers has already commenced.

When ILG collapsed in the 1990’s, the clear winner was the fast moving Airtours and in 2019 Jet2holidays appear to be a mirror image, with their Northern heartland, price conscious brand and aggressive approach.

The Friday before Thomas Cook collapsed, Jet2 just happened to take the unprecedented step, of putting a 3.3m seat program on sale 18 months in advance of departure covering up to Winter 2020/21, giving a clear signal to the trade that they intend to take as much share of Thomas Cooks ex-customer base as possible.

The biggest headwind Jet2 face in the race for expansion, is their choice of fleet provider. Like main package rivals TUI and low cost competitor Ryanair,  Jet2 operate a fleet of Boeing aircraft. With the grounding of the new Boeing Max Jet continuing to run, there is a world-wide shortage of Boeing aircraft and deliveries schedules are up in the air.

However, currently only 3.81m of Jet2’s 9 million seats are sold as packages, so it’s a relatively easy move to switch more capacity into its tour operation on holiday routes and push up its flight only prices.

A similar reaction is likely from Tui, leaving only Ryanair and Easyjet as major sources of capacity for the Dynamic Packaging sector. Whether these two giants will also push up prices is less clear, but if capacity remains tight on leisure routes such as Turkey, it is a likely outcome.

Easyjet being a Airbus configured airline, has none of the Max Jet disruption issues, but is playing catch up in the package holiday market, with its tour operation re-launching on new platform in December. No volumes are being quoted, but expect cautious expansion in its first year of operations under the new management team.

Unfortunately, by the time they are ready Jet2 may be out of sight in terms of mass market holiday scale, having absorbed a lot of the market share made available by the Thomas Cook collapse.

Independent retails also look likely to be benefactors with 600 less competing shops on the high street and partner in Jet2 that will replace the holiday capacity of Thomas Cook rapidly, but has no high street chain to sell via.

Obviously, in the longer run Jet2 would like as much distribution as possible to come via its online sites and may use preferential pricing tactics to drive this, but in the short/medium term while they are expanding rapidly, they are highly unlikely to antagonise their trade partners.

The same cannot be said for the supply of seats to dynamically packaging OTA’s ,who compete head to head with Jet2’s online platform. Why would you give price parity to a competitor? Therefore, expect even higher price differences between Jet2’s website and XML supply to third parties.

OTA’s in the longer term are going to have deal with the difficult issue of reducing third party seat supply, after the recent losses of both Monarch and Thomas Cook as seat providers and the increasing price disadvantages being applied by Easyjet and Jet2 as they ramp up volume in their own tour operations.

Ryanair and Easyjet will continue to provide enough capacity in the short term, but in the longer term “Charter” partners may be needed, which will require a radical change in operating models for the ultra-low commitment OTA community.

So the question of who’s my long term airline partner has never been more crucial.

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