Thomas Cook headquarters

Thomas Cook headquarters.

30-06-2020Europa Press

In the middle of May came the announcement that Thomas Cook Airlines Balearics would be flying again. For an airline that had barely taken off before Thomas Cook crashed, a lifeline was being thrown by a German investment group, Panaf Holding, while Air Berlin veteran and one-time president of the Fomento del Turismo (Majorca Tourist Board), Álvaro Middelmann, was named as the chairman of the board.

At the time of the announcement, Middelmann observed that despite what people might have thought otherwise, “right now” this was an airline with which “significant things” could be done in the future. Thomas Cook Airlines Balearics filed for bankruptcy in December, it having gone into administration soon after the fall of Thomas Cook. But, as Middelmann implied, this wasn’t as a result of structural problems with the airline. As with other Thomas Cook businesses, there was the unavoidable collateral damage. Condor, with which Thomas Cook Airlines Balearics had a collaboration agreement, was likewise free of problems as it was a solvent and indeed profitable airline, but it might have gone under nevertheless, had the German government not stepped in.

The airline, Middelmann explained, had a controlled cost structure and would start operations with two Airbus A320 planes and then take things “step by step”. He accepted that the waters were “turbulent” and that the situation was “difficult”. Nevertheless, there was a “great opportunity”.

Even so, this all seemed pretty counter-intuitive. Airlines were and are under massive pressure, just one recent example of this being demonstrated by Jet2, a well-run company but forced into now having to dismiss pilots and cabin crew, many of whom had come from Thomas Cook.

Thomas Cook Airlines Balearics obviously had a structure to work from, so the revived airline isn’t an entirely new business. But even if it were, there are - odd though it may seem - factors that can work in favour of an airline start-up. There is no shortage of planes currently available and which can be taken on at very favourable terms. The cost of borrowing is extremely low, and there are always investors on the lookout for opportunities. Panaf must see this with Thomas Cook Airlines Balearics.

This said, it will probably strike you (and me) that anyone wanting to launch an airline under the current circumstances would need their heads examining. In which case, do we conclude that hoteliers in Tenerife are mad? On Saturday, the hotel association for Tenerife, La Palma, La Gomera and El Hierro (Ashotel) announced that it will be creating a Canary Islands airline. They’re doing what!?

The hoteliers said that this airline will have a “tour operator aspect” and that it will be about air connectivity with mainland Spain, but with the option of adding a European route (or routes). The president of Ashotel, Jorge Marichal, who also happens to be the president of the Cehat national confederation of hotel associations and federations, said that they were confident of operations starting “in the coming months”.

The hoteliers aren’t embarking on this venture without having some help, and it comes in the form of a Canaries company One Airways, which specialises in leasing, charter flights, technical support and so on. But why do they want to start an airline? And now in particular?

The answer to this goes back, in no small part, to the collapse of Thomas Cook, which affected the Canaries significantly and highlighted the fragility of being highly dependent on tour operators. But they’ve been considering the establishment of an airline for several years, saying that it is crucial, while the current situation once more flags up the fragility because of the impact on airlines and decisions they may take.

This has echoes of what has been said in Majorca and the Balearics in the past. Any impetus for an airline start-up has come less from business, e.g. the hoteliers, and more from political parties. Més have expressed their interest in the past, although when Biel Barceló was tourism minister he dismissed any talk of an airline. The idea hasn’t been mentioned since.

While it may be understandable why the hoteliers in the Canaries want an airline, the same doubts apply to this project as they have previously in Majorca, one of which is the scale. Having two or three planes flying here and there isn’t going to make a huge amount of difference. There has to be a significant fleet. Conditions may be advantageous at present for acquiring planes and setting up an airline, but a fleet of any size is a different matter. Or maybe this is what the hoteliers have in mind.

Álvaro Middelmann says things have to be taken step by step but that there is a great opportunity. Perhaps there is. Hoteliers in Majorca and the Balearics may well be looking at what happens in the Canaries and having a quiet word with Middelmann.

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