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Thomas Cook India sidesteps millions in license fees

Thomas Cook India sidesteps millions in license fees
Thomas Cook India was previously contracted to pay an annual brand license fee of Rs. 20 million to Thomas Cook UK until 2024 for usage of the brand. Not the case anymore.
Today, Thomas Cook (India) Ltd. (TCIL) announced it has signed an agreement with AlixPartners, Thomas Cook UK’s appointed Special Managers, to acquire the rights to the Thomas Cook brand in India, Sri Lanka, and Mauritius for a one-time payment of GBP 1.5 million (approximately Rs. 139 million).

Thomas Cook (India) Ltd. has operated the Thomas Cook brand name uninterrupted in India since 1881. In 2012 when TCIL was acquired by Fairfax Financial Holdings of Canada, TCIL had entered into a Brand License Agreement with Thomas Cook Group UK for exclusive use of the brand name until 2024 across India, Sri Lanka, and Mauritius. The brand license agreement also gave TCIL the right of first refusal to acquire the brand in the event of the Group going into liquidation before 2024.

The acquisition

TCIL’s acquisition of the exclusive ownership of the Thomas Cook brand in these markets means:

  1. TCIL can now use the iconic travel services brand name that they have operated for 138 years in India that enjoys high recall and strong brand equity.
  2. The agreement ensures brand use rights in perpetuity and means that TCIL can use the brand in perpetuity on a royalty-free basis
  3. This move by TCIL also prevents possible new entrants into these markets using the brand name

More brands

In addition to Thomas Cook, TCIL operates leading B2C and B2B travel brands including SOTC, TCI, SITA, Asian Trails, Allied T Pro (ATP), Australian Tours Management (ATM), Desert Adventures, Luxe Asia, Kuoni Hong Kong, TC Travel, Private Safaris East & South Africa, Sterling Holidays, and Digiphoto Entertainment Imaging (DEI), with strategic investments in Ithaka by Travel Junkie Solutions.

Following the UK sale of its entire stake in TCIL to Fairfax Financial Holdings in 2012, the Thomas Cook India Group has embarked on a significant growth and expansion strategy. Today, the Group spans 29 countries and 5 continents, a team of over 9,700, and a combined revenue in excess of Rs. 6718.7 Cr. (over $ 0.96 Bn.) for the financial year ended March 31, 2019.

The TCIL continues to remain financially strong with cash and bank deposits balances of Rs. 10,883 Mn. as of September 30, 2019. On a stand-alone basis, Thomas Cook India is debt free. The Group generates an average annual free cash flow of around Rs. 2,000 Mn.