Are airlines hiking prices in the wake of Thomas Cook Airlines’ demise?

Sep 25, 2019

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The big travel news from this past weekend was the sudden shuttering of Thomas Cook Airlines, leaving hundreds of thousands of travelers stranded — and many more with future flights scrambling to adjust their plans. The carrier offered extensive service through Europe and Northern Africa, and also flights to cities across the U.S. In the wake of ceasing operations, have other airlines responded with price hikes?

Let’s take a look at the data.

In This Post

Our methodology

To see how current fares compare to previous ones, we leveraged the power of Google Flights, looking at prices on routes that Thomas Cook was scheduled to operate over the coming weeks using data from FlightRadar24. This included flights to the U.K. from the following airports:

  • New York-JFK
  • Orlando (MCO)
  • Las Vegas (LAS)
  • San Francisco (SFO)
  • Los Angeles (LAX)

We then used Google Flights’ historical price information to see how current airfares for a seven-day trip stack up to past prices, which the site describes as follows:

“All insights based on fares observed in the last 12 months for trips in the same season, of similar length, with the same origin and destination, number of stops, class and airline.”

Where applicable, we looked at both nonstop and one-stop routings, focusing on round-trip prices (as one-way flights from the U.S. to Europe are often exorbitantly-priced). Finally, we included information on median prices from one year ago for flights on these routes, as provided to TPG by Hipmunk.

Here’s what the data showed.

New York-JFK

Over the next week, Thomas Cook had been scheduled to operate six nonstop flights from JFK to Manchester (MAN), and now that the carrier has ceased operations, what are prices looking like on this route? Given the high volume of airlines flying to Europe from JFK, they aren’t bad over the next several weeks:

Round-trip flights from JFK to MAN are currently between $503 and $1,158 (~£404 to £931) over the next several weeks. According to Google’s historical data, these flights should be pricing between $465 and $640 (~£374 to £515), and Hipmunk’s median booking price for flights from JFK to MAN in September of 2018 was $708 (~£569). Though Google Flights is displaying a wide range of fares, there are many dates pricing considerably higher than expected. And the remaining nonstop flight — a Virgin Atlantic-operated one — is pricing very high compared to historical averages, with even the lowest-priced, seven-day trip between now and the end of October falling above this range and Hipmunk’s median price:

Note that this isn’t due to lack of available seats, either. A quick flight availability search on ExpertFlyer (which is owned by TPG’s parent company, Red Ventures) shows multiple dates with 20, 30 or even 40-plus open seats — yet only the highest 2 to 3 economy fare classes are available.

Verdict: Some price increases, especially on nonstop flights.

Orlando (MCO)

One of Thomas Cook’s biggest leisure markets in the U.S. was Orlando (MCO). FlightRadar24 data shows that the carrier had planned to operate 15 flights from there to the U.K. over the upcoming week: two to Glasgow (GLA), three to London-Gatwick (LGW) and 10 to Manchester (MAN). All of these flights have now been cancelled, leaving passengers to make new arrangements.

Here’s a look at prices on Google Flights from Orlando to London for a seven-day trip through the end of October:

Round-trip flights from Orlando to London are currently between $350 (~£281) and, for close-in flights, upwards of $1,174 (~£944). That doesn’t appear to be terrible at first blush, but Google Flights did flag most of the dates as “high” prices compared to historical averages, with the middle range typically falling between $365 and $560 (~£293 and £450). This matched Hipmunk’s data, which listed the median price of MCO to LGW flights for September 2018 at $461 (~£371).

It’s even worse when you focus on nonstop flights on this route, which show trips costing as low as $491 (~£395) in late October but climbing to more than $2,300 (~£1,849).

Historical data shows that these round-trip flights typically cost $405 to $720 (~£326 to £579), so just a handful of dates late next month fall into this range.

Flights from Orlando to Manchester are even harder hit, with almost all of the round-trip flights for the next five weeks falling above the historical average — both from Google Flights and Hipmunk (the latter of which recorded a September 2018 median price of $469 [~£377]). And if you hoped to fly nonstop, think again: The cheapest seven-day trip with a starting date through the end of October is over $2,500 (~£2,010), nearly two and a half times the upper bound of the “typical” price range.

Verdict: Orlando flights to Manchester, especially on nonstop itineraries, appear to be much more severely impacted than those from the Florida hub to London.

Las Vegas (LAS)

Another large Thomas Cook destination in the U.S. was Las Vegas, with six scheduled departures to Manchester over the upcoming week now cancelled. This leaves Sin City with just one nonstop option: a 4x-weekly flight on Virgin Atlantic. However, current loads on that flight through October are quite high at the time of writing, so let’s expand our search to include one-stop itineraries. Here’s how flights are trending on this route:

A similar pattern emerges here, with most dates pricing higher than usual (between $727 [~£585]on the low end and upwards of $2,100 [~£1,688] on close-in flights), according to historical data:

Even these ranges are higher than the data Hipmunk provided, as the median flight price from LAS to MAN in September of 2018 was just $601 (~£483). Thankfully, this does appear to be limited to the next few weeks, as flights in November fall back into a more typical range.

Verdict: Prices appear to be temporarily inflated, though return to normal ranges within five weeks.

Los Angeles (LAX) and San Francisco (SFO)

The final U.S. destinations we’ll consider for Thomas Cook are Los Angeles and San Francisco, both of which were scheduled to have a handful of flights to Manchester over the coming week. Fortunately, the presence of Norwegian on a handful of transatlantic routes may be responsible for keeping prices down over the next several weeks — and largely in line with Hipmunk’s $668 (~£537) median price from September 2018. Though flights through the end of September could exceed $1,300 (~£1,045), October fares are currently available from $561 to $905 (~£451 to £728):

Though the presence of Norwegian on a handful of transatlantic routes may be responsible for keeping prices down over the next several weeks — and largely in line with Hipmunk’s $668 (~£537) median price from September 2018 — many of the most inexpensive itineraries involved separate tickets or outrageous layovers, like this seemingly inexpensive routing through Stockholm (ARN) for $618 (~£497)that requires a 21-hour overnight layover.

Prices out of San Francisco (SFO) are even better, frequently between $599 and $626 (~£482 and £503), especially as you get into the middle of October:

Most of the cheapest options are even on full-service carriers such as Delta (operated by Virgin Atlantic) and Air France:

Hipmunk’s median price from September 2018 was $639 (~£514) on this route, and most flights are still pricing right around that benchmark — or even lower.

Verdict: Flights from LAX and SFO don’t appear to be as impacted as others.

Other considerations

Of course, this analysis only considered flights leaving the U.S. — but Thomas Cook Airlines served many other destinations throughout Europe and Northern Africa, and some of these have allegedly seen increased prices, according to anecdotes compiled by Business Insider.

While an apparent uptick in fares will lead some to speculate that rivals are raising prices to capitalize on demand, it’s not necessarily that straightforward, said one analyst. It’s possible that, instead of consciously raising fares, rivals simply saw their cheapest seats sell out as stranded Thomas Cook customers rushed to book the lowest fares they could find on alternate airlines.

“The airline industry follows the law of supply and demand, just like every other industry”, said Henry Harteveldt, founder of the Atmosphere Research travel consultancy. “What I can’t tell you is if airlines simply hiked fares or saw a lot of bookings come over [from stranded Thomas Cook passengers] and book out the least expensive seats that were still unsold”.

Harteveldt said the first few days after an airline’s collapse are usually the most chaotic for airfares, as customers rush to rebook and remaining carriers figure out how to respond to the demise of a rival and the sudden loss of capacity on a route.

That’s especially true within Europe.

“There’s a lot of froth in the water over there”, he said about how other airlines are reacting on the European continent amid the loss of Thomas Cook’s capacity. “The same is probably true here, too”, he said of the transatlantic routes where the carrier has also made a sudden exit. While some U.S. markets appear to be affected — based on the data we found above — it’s important to remember there’s no clear evidence of price gouging to take advantage of stranded passengers.

And, of course, we only looked at flights within the next several weeks, so at least some of the higher prices can be explained by the fact we’re looking at relatively last-minute departures.

Bottom line

There are some sensational headlines out there about airlines raising prices in response to Thomas Cook Airlines suddenly ceasing operations, but whether this is a function of market forces or an intentional act to inflate profit margins is up for debate (it’s likely somewhere in between those two extremes).

Based on a quick analysis of prices from the U.S. airports Thomas Cook served, we’re seeing some increased prices but would stop short of calling any of them obvious price gouging, though if you were left stranded or with future plans in jeopardy, that’s probably of little solace.

Here at TPG, we hope that you’re able to make it home or otherwise resurrect your vacation with minimal stress and out-of-pocket expenditures.

Featured photo by Christoph Schmidt/picture alliance via Getty Images

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