With Thomas Cook Airlines going out of business that left a hole in the low cost package tourism industry which is taking a toll on Spanish resort destinations.
Spain’s government is responding with 300 million euros in subsidies “including emergency credit lines and a reduction in airport fees” and – paradoxically, considering the whole issue is reduce tourism – “plans to spend €500m in improving tourism infrastructure.”
One hotel that didn’t hedge at all and was reliant entirely on Thomas Cook for visitors has already closed. The Fuerteventura Princess booked out 95% of its 688 rooms through Thomas Cook in a deal that ran through 2023. The hotel employs 160 people, and they represent about 5% of expected layoffs.
Hotels by the way are on the hook for VAT taxes “on bills charged to Thomas Cook and its subsidiaries which they know they’ll never be paid.”
Credit: Fuerteventura Princess
Meanwhile workers have to show up at a bankrupt Thomas Cook subsidiary even though they aren’t getting paid and there’s no work to do – a quirk of Spain’s unemployment rules.
The In Destination Incoming agency, based in Palma, Majorca, went into liquidation days after Thomas Cook ceased operations, reportedly announcing debts of a €57m.
“We have no guests in any resorts, but due to Spanish law we have to present ourselves at work every day to complete our 40 hours,” one worker from Palma told the BBC on the condition of anonymity due to what she described as “ongoing legal proceedings”.
“If we do not go, they will take it as our resignation instead of an official dismissal or redundancy, and we won’t be able to claim anything at all,” she added.
Pep Ginard, of the CCOO services sector union in the Balearics, confirmed that staff at In Destination Incoming faced a “long and difficult process” to claim back pay and a redundancy package which, under Spanish labour laws, should be worth at least 20 days’ wages per year of service.
Of course other airlines will be picking up the slack bringing package holiday goers to Spanish resorts. Customers out money in the short-term likely won’t be rebooking until next season, however. Spain’s response is a complex web of arcane regulation and subsidy.