Business News/ Opinion / Views/  Opinion | Thomas Cook India’s guilt-by-association moment
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he major corporate news story of 23 September was the collapse of Thomas Cook UK Plc., the 178-year-old British airline and tour operator. While newspaper headlines were dominated by reports of this unexpected collapse, there were smaller articles highlighting the fact that Thomas Cook India Ltd (TCIL) was not part of Thomas Cook UK , and will not be affected by the collapse.

Now TCIL, through public notices and press articles, has been at pains to highlight the fact that it has been owned by Fairfax of Canada since 2012. The brand name, for which TCIL was reportedly paying a fee of 2 crore per year, turned into a liability for it overnight. The company has issued press releases sharing its healthy financials, but its stock fell by nearly 2.7% at the end of the day’s trading in the immediate aftermath of the news (bit.ly/2mkdH1E).

The iconic Thomas Cook brand has been synonymous with world travel for decades. Its logo, the blue-coloured globe, was recognized in most parts of the world. Thomas Cook UK had revamped its brand identity and changed its logo in 2013 to a golden heart with a silver line, meant to reinforce its high-tech high-touch transformation, while TCIL continues to use the older logo.

Brands represent a promise of value to the customer. In most cases, the legal entity behind the brand is not on the radar of end consumers. They only go by the brand name and all that it embodies in making their purchase choices. In some cases, the brand name may be derived from—or linked to—the company name to gain from the latter’s reputation, while in some, individual brands stand alone with no overt link to a corporate name. TCIL’s website has the Thomas Cook logo with the line “A Fairfax Company" below that. However, if one goes through Thomas Cook advertisements of the past year, there is usually no mention of Fairfax near the name or logo. A brand as powerful as Thomas Cook was an asset to be leveraged in the travel industry. So, it made sense for TCIL to continue to use the brand and pay a licence fee for it. There was no reason for it to distance itself from such a strong heritage or highlight its new parent, which was not so well known in India.

Using a brand name not owned by you or not entirely controlled by you is a double-edged sword. While the going is good, you can reap the advantages of high awareness and strong associations of an established brand, without investing heavily in building a new brand. In this case, the name itself was enough to provide clear differentiation and cut through the clutter of market competition. The payment of a significant licence fee was well worth the price, and had served TCIL well so far. However, when the unexpected happens, which could be a brand crisis or—as in this case—the collapse of the business, the sword swings the other way.

Overnight, the Thomas Cook brand has moved from assurance to uncertainty, and from leader to loser. This has obvious implications for TCIL not just in temporary stock price movements, but also by way of consumer perceptions and trust. Not all consumers take pains to read the small print in business newspapers. Thus, the immediate aftershocks are bound to be felt for some time. How quickly the company emerges from this will depend on its ability to assure customers that it is business-as-usual at TCIL.

Should TCIL continue to use the Thomas Cook name is a question that deserves careful thought. On the one hand, the brand still has its strong heritage and a lot of love from consumers. On the other, it is now likely to be viewed with suspicion and as less reliable, which could sound a death knell in a service industry such as this. Legal issues apart, the answer to the dilemma, “To be or not to be Thomas Cook", will depend mainly on two factors.

How global is the customer base of TCIL? If it is largely Indian, it might still be able to pull off the same brand name after the initial brouhaha has died down. However, a global customer base that has more directly been impacted by the collapse of Thomas Cook UK may harbour negative associations of the brand for much longer.

Who will own the brand name now and what will be its future?

Even if TCIL can legally continue using the brand, it will need to take into account whether the brand will live or die across the world. If the brand is killed globally, TCIL can still continue with the brand if legally permissible. It could even consider buying the name. However, if ownership of the brand continues to reside beyond its control, there are significant risks involved for TCIL. There would be no knowing if the brand will be brought back to the market, and, if it is, what the form and scale of such a re-introduction would be.

Under these circumstances, what should TCIL do? As a first step, it is already moving in the right direction by publicly emphasising its corporate connection with Fairfax. Moving to an endorsed brand structure will help distinguish it from the UK entity, while at the same time avoiding drastic measures or consumer confusion. A personal outreach to customers is a must, reassuring them of the same customer experience and security. This could keep operations from not getting rocked too hard in the immediate future, but in the long run, there are only two options to pursue: either TCIL purchases the brand Thomas Cook outright, or transfers its equity to a new brand name.

Ruppal W. Sharma is marketing professor and head of SPJIMR Delhi Centre. These are the author’s personal views

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Updated: 24 Sep 2019, 10:46 PM IST
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