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Market analyst warns Flight Centre against online competitors


Just last night I had a friend text to ask how she should proceed against an airline that hasn’t answered emails, social media posts or phone calls for over a year. 

 

“Did you book direct?” I asked. 

 

Brian Han, a director of equity research at Morningstar, warned that Flight Centre is set to face a long-term decline as travellers booking direct and online, the Sydney Morning Herald reported

 

 

“Flight Centre has a strong network of services that has driven solid end-user traffic and bookings over the past 20 years, but we do not believe this is sufficient to protect the company against online competitors over the next 10 years,” Han said in a research note published last week.

 

Han said that despite Flight Centre selling almost $24 billion worth of airline, accommodation and tour bookings in 2019, this will likely slide in the face of competition from online travel agencies and people booking direct with suppliers. 

 

But Flight Centre managing director Graham Turner says that the company’s move into the digital arena is well underway, online bookings now accounting for about 20 per cent of transactions compared with 8 per cent before the pandemic.

 

“We are shifting business more into online, and when you look at places like the UK, North America and Europe, we have a significant leisure business but still a very small market share and we’re looking at growing that,” Turner said.

 

According to Turner, those making simple domestic bookings would do so online, but more complicated travel itineraries will see people turning to travel agents, especially when navigating COVID-19 travel requirements and disruptions.

 

And except for a few larger airlines with near monopolies on certain routes, Turner said he expected carriers would continue to pay the same commissions given they would be competing fiercely for passengers. 

 
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