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What exactly is Government’s response to the Thomas Cook bankruptcy?

Dr Ousman Gajigo
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Dr Ousman Gajigo

Dr. Ousman Gajigo

Late last week, the government’s Spokesman, Mr. Ebrima Sankareh, released an official statement on the government’s purported response to the bankruptcy of the UK travel company, Thomas Cook. It was probably the most substance-free press release by any government. The government seems desperate to project an air of competent body deliberating on a matter of great importance. But the statement is emblematic of a government that goes about the motion of governing rather than being serious about its responsibility.

The statement claimed that upon learning about the declaration of the bankruptcy of Thomas Cook, the government “immediately summoned a meeting of stakeholders to seek remedial actions to respond to the emergency”. To impress us, it further indicated that the stakeholders included the “International Monetary Fund, the European Union, the World Bank and the Ministry of Finance.”

The first thing that stands out from laughable press release is how empty it is of any substantive detail. For instance, not a single remedial action was mentioned. The statement mentioned that the stakeholders agreed upon a strategy but there was no mention of any aspect of that strategy in the press release. It is also important to realize that even if there was some agreed strategy, its impact on airlines or tourists visits to The Gambia for the upcoming season is likely to be very limited. First of all, there is not much the World Bank or the IMF could do for The Gambia in the short to medium term with regards to this issue.

To be clear, any action by the government to be of any significance in this issue, it must directly affect the incentives of the holiday travelers and the airlines. The decision by individual travelers to go to any destination this winter is almost firmed up by point in the year. If British travelers cannot find alternatives to Thomas Cook in a matter of weeks, then the bankruptcy of the company will have a disastrous effect on the upcoming tourist season. If, on the other hand we are lucky, then other travel groups would step into the void left by Thomas Cook and the effect of the company’s bankruptcy would only have limited effect on our tourism sector.

It is important to note that there is almost nothing the government can do in the short-term to incentivize an airline to add The Gambia to its route or list of destinations. That decision is completely commercial and is determined chiefly by profitability, which is driven mainly by demand (i.e. number of passengers). Adding a new route is risky because passenger forecast has not always been reliable. And given the small size of the Gambian market and the fact that the demand would be seasonal, the country becomes even riskier for an airline with no existing route here. This means that even if the government were to completely waive landing fees (one of the few incentives it has direct control over), it wouldn’t be sufficient to make some new airline add the country as a destination. Other incentives sometimes used in other countries such as guaranteeing a minimum revenue is not feasible for us because we do not have the resources.

So the claim that the government “has since developed modalities to increase the frequency of flights to Destination-Gambia by other carriers as a direct measure to minimize the impact of Thomas Cook’s collapse on The Gambian tourism market.” is nothing but hot air. It is possible for extra flights to land simply because travel company can easily arrange charter flights when there are sufficient passengers willing to fly to a destination even if no airline has an established route there. After all, this is how many of our tourists actually fly here for their vacations.

But notice again that not a single detail was provided to substantiate the claim that modalities have been made to increase flights by other carriers. For instance, the name of not a single airline was mentioned that would increase its flights or the introduction of a new airline. If a particular airline were to increase its flight to the Gambia as a result of the exit of Thomas Cook, that decision would be independent of whatever strategizing the press release was referring to.

What makes all the absence of substantive details stand out is that the press release had ample room to unnecessarily devote a whole paragraph on the history of Thomas Cook. Yet it couldn’t add a sentence or two on the actual strategy, nor the modalities to increase flight.

Whatever miraculous measures that this Emergency Response Team can device within a short time period to have any effect on employment would have been needed even in the absence of Thomas Cook’s bankruptcy. After all, employment security in the tourist sector has not improved an iota since the arrival of the Barrow government. This has not been helped with the appointment of a veritable clown as the tourism minister.

Indeed we should be greatly concerned about the bankruptcy of Thomas Cook for the event has the potential to cause a major disruption in an important sector of our economy. But the government’s attempt at re-assurance that “the situation is under total control and there is no need for alarm” should be last thing anyone should rely upon to be put at ease.

Ousman Gajigo is an economist. He has held positions with the African Development Bank, the UN, the World Bank and Columbia University. He holds a PhD in development economics. He is currently an international consultant and also runs a farm in The Gambia.

 

 

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