Online travel aggregator Thomas Cook recorded its best-ever quarter in the April-May-June period of the financial year 2024 with full recovery in most of its business.
However, one segment — the travel services — managed to reach 77 percent of the pre-pandemic level. The company attributed the delay in recovery in the segment to visa delays.
The company's travel services segment comprises leisure and corporate travel along with destination management services (DMS) in India and globally. Its India travel segment has been affected due to visa delays and rejections.
Visa issues
"While the world has opened up, visas are still not easy to get. So, we can't offer package deals to those, who don't have visas with them. Schengen visa is not easy to get and the rejection rate is as high as 18 percent, which used to be 2-3 percent in pre-Covid days. We have had several cases in the past couple of months when visas were rejected due to which travel plans got cancelled," Debasis Nandy, President & Group Chief Financial Officer, Thomas Cook (India) told Moneycontrol.
He said that in the case of families even if the visa of one person is rejected the travel plan for the entire family gets cancelled. "This has severely affected the number of tourists we can send overseas. Also, airfares continue to be high. For an average traveller, it gets expensive as a round trip ticket to Europe in 2019 that was costing Rs 65,000, today costs Rs 85,000. This is a 60 percent increase in prices and because of this we see some reluctance for foreign travel."
The company still managed large travel groups and about 18,000 customers travelled to Europe via Thomas Cook and its subsidiary SOTC. It expects the number to reach about 25,000 customers by the end of the year. In addition, for the Cherry Blossoms tour that it launched, it reported close to about 2,000 customers that had booked the tour.
There is gradual improvement in the visa situation for Indian travellers, Nandy said. "The visas scenario as compared to the last six months is a lot better today. We expect things will get normalised by the end of December 2023. This segment (travel services - India) will be back to 2019 levels by the last quarter of FY24."
The company's international holiday volume recovered about 50 percent to the pre‐pandemic level in the June quarter of FY24 while its domestic holiday business reported a 72 percent recovery.
Go First impact
The recovery in domestic holiday business was subdued after May when Go Airways announced the withdrawal of its flights on May 3 this year that dented the demand on the domestic side because the airlines connected to some of the ports that used to be in the top five destinations that the company sold on the domestic side, Thomas Cook's management said in Q1 FY24 earnings call.
The travel operator registered a lot of cancellations and 35 percent of cancellations came in because customers did not want to travel by paying a higher price as airfares had gone up after Go First halted operations.
Nandy said that for Go First a lot will depend on how they get back consumer confidence whenever they resume operations. India’s aviation regulator, Directorate General of Civil Aviation (DGCA) has conditionally allowed Go First to resume operations after carrying out a multi-location audit in July.
"They will have to do certain things to build consumer confidence. It is also the question of when will they refund the money of all (travellers and travel agents) whose flights were cancelled when they (Go First) halted their operations. It will not be easy given the way they abruptly stopped operations. However, if they do come back we will certainly see a more balanced airfare at least on the domestic front because today Indigo runs 60 percent market share and it is becoming more like a monopoly. Getting additional flights will be beneficial and Go First's revival will be good for consumers as well as travel companies," he said.
Foreign tourist arrivals
While domestic and international holidays by Indian travellers have been affected, foreign tourists coming to India or the inbound business for Thomas Cook have seen a full recovery. "There have been a 104 percent recovery versus pre-pandemic level," Nandy said.
He added that on an industry level, volumes for the foreign tourist business started reviving in January to March period and the volumes reached 50 percent of the pre-Covid level. "April to September is a dry period. So, in the second half of FY24, we expect bookings to pick up."
G20 boosts business
India hosting the G20 summit this year boosted Thomas Cook's Meetings, incentives, conferences and exhibitions tourism (MICE) business. "This year has been great for MICE travel. We are one of the three parties who have assisted the government for the G20 event and the additional business from that has been Rs 125-130 crore this year," Nandy said.
The MICE travel segment reported a 105 percent recovery versus the pre-pandemic level.
"The G20 Summit has been planned in a way that meetings took place in all major tourist destinations of India and not just in select metro cities. Because of this more interest will be generated for these destinations. Tourism contributes 10 percent to our (India's) GDP (Gross Domestic Product) and the government is trying to make sure it grows."
Thomas Cook reported Rs 91.4 crore in consolidated operating profits in the June quarter of FY24 as against Rs 3.3 crore in Q1 FY23. It said that the strong order book is signalling robust business for the September quarter in FY24.
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