On Monday, the travel company Thomas Cook announced it would cease operations immediately after it was unable to raise enough money to pay off its debts. This has left hundreds of thousands of travelers without return flights from their holiday destinations.
As a response, several politicians in the U.K. called for government aid to Thomas Cook, and the government has been called to intervene and help out stranded travelers.
Fred Roeder, London-based Managing Director of the Consumer Choice Center, responded by stating that an intervention by the government would be the wrong direction to take.
"It is sad to see a legacy travel company such as Thomas Cook to go under," said Roeder. "But many politicians want to show their support to stranded travelers by flying them home on taxpayers' dime.
"While it is very unfortunate to be stranded at the end of a holiday, one should ask why taxpayers should pay for tourists who didn't buy insolvency or travel insurance?
"Why should those who stayed home because they either didn't have the money or time for holidays bail out those who went for a holiday trip but didn't want to spend the extra few pounds for insurance? This is effectively is the scenario that ordinary British consumers and taxpayers are faced with," said Roeder.
"We cannot expect Britons who didn't go on holiday to bail out those who did without reasonable insurance, and effectively bail out the company for its own financial mess.
"Airlines and tour operators going bankrupt happens regularly. Monarch and AirBerlin are just two recent European examples. If the government steps in every time a travel company goes bust, the wrong incentives will be set: Travelers won't buy insurances and at the same time risk booking heavily discounted offers from troubled travel companies.
"If this happens, then the next government-sponsored airlift will just be around the corner," said Roeder.
The Consumer Choice Center fights for affordable flights across the world. Read more here.
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