TCS increase and Go First challenges impact travel industry, domestic demand strong: Thomas Cook

While travel demand is increasing, there are certain challenges like TCS and Go First issue which will have an impact on demand in the coming months.

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26 Aug, 2025 12:21

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The increase in tax collected at source (TCS) on foreign trips from 5 percent to 20 percent will likely result in some negative reactions and slow business in the second quarter of FY24, says Mahesh Iyer, the CEO and Executive Director of Thomas Cook India.

Iyer expects a short-term impact as people adjust to the new tax rate, leading to a softer July. However, he believes that domestic travel will become a significant driver in the July-August-September quarter as many international travelers shift their plans to domestic destinations.

Iyer also mentions that the foreign travel market will not disappear entirely.

Regarding credit card transactions made outside India, the Reserve Bank of India (RBI) has included them under the Liberalized Remittance Scheme (LRS). Starting from July 1, 2023, these transactions will be subject to a higher TCS rate of 20 percent without any minimum threshold.

Iyer highlights the concern about the situation with Go First, an airline. He explains that demand is increasing, and the absence of Go First puts pressure on prices. This poses a unique challenge for travel aggregators like Thomas Cook India, as they sell fixed-price holiday packages and may need to find alternative airlines at similar prices to maintain their margins. Due to the absence of Go First, prices for available inventory have significantly increased.

Despite these challenges, Iyer observes strong growth in booking demand. Domestic business has reached 93 percent of pre-pandemic levels in the fourth quarter of FY23.

Leisure travel has shown a recovery of 42 percent compared to pre-pandemic levels, with sales growth of 235 percent year-on-year (YoY). Corporate travel turnover has also grown by 213 percent YoY, and Thomas Cook has acquired 57 accounts.

In the meetings, incentives, conferences, and exhibitions tourism (MICE) segment, Thomas Cook managed over 600 groups, organized 23 events for the G20 Summit, and served 20,500 customers for Khelo India. The government business has become significant in its portfolio, particularly in the MICE segment.