On 23rd September Thomas Cook, the world’s oldest travel firm officially ceased trading following its failure to secure £200 million from its backers. The impact of the collapse of Thomas Cook was massive. Over 500,000 holiday makers, 150,000 of which were British, were stranded abroad, 9,000 Thomas Cook employees lost their jobs, and over a million forward bookings were lost.
Over the past week, media coverage of Thomas Cook has been enormously sensationalist. Stories of destination weddings being cancelled, essential hospital appointments being missed, and guests being held hostage in their unpaid hotel rooms have been widely circulated. With 60% of the British public holidaying abroad each year, this crisis is relatable to the majority of the UK. Thus, national interest has been firmly focused on the efforts by both the government and alternative travel companies.
Opportunist or cold blooded?
Unsurprisingly, since the news of Thomas Cook’s collapse broke, there has been a massive increase in demand to rebook flights and holidays. However, customers have been faced with a significant increase in prices on travel booking sites.
While it is understandable that supply and demand principles in part dictate price algorithms, some flight and holiday prices have increased by 400%. This steep increase has led to airlines being accused of price gouging. This can be defined as when a seller raises the prices of goods or services to an unreasonable or unfair level, often as a result of a sudden increase in demand. The worst offenders being named as Ryanair, EasyJet, Jet2 and Virgin Holidays, have all received criticism on social media and by the travel agency industry.
While increasing prices of flights and holidays may lead to short-term benefits as customers have little choice but to pay extortionate prices for their holidays, this may cost firms long-term reputational damage. Even if customers have an exceptional experience on their rebooked holidays or flights, this will do little to offset the feeling of being exploited by big firms who are perceived to be maximising profits at customers’ expense.