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Flight Centre: "Transaction volumes are back at record levels."


The only way is up for Flight Centre, says 'Skroo' Turner, with considerable pent-up demand not yet translating to bookings.

Flight Centre Managing Director, Graham 'Skroo' Turner

The rebound of the travel industry from the depths of COVID-19 is still “at a relatively early stage on the path to recovery”, says Flight Centre Managing Director Graham 'Skroo’ Turner, with significant pent-up market demand yet to be converted.

Speaking today at the company’s 2022 Annual General Meeting, Turner said that while demand is well and truly back, a lack of competition and capacity is resulting in a lack of seats to sell and “abnormally high airfare prices” which is leaving some aspiring travellers disappointed.

Australian short-term resident departure levels are still well down from where they were prior to the pandemic at 63% for August 2022 compared to the same month in 2019.

Turner said the company’s revenue margins were steady year-on-year despite the massive jump in actual revenue, up 246% on group-wide total transaction value (TTV) for the four-month period ending 31 October 2022.

Decreased commission margins from airlines including Qantas and other airlines reduced the cut paid to travel advisors from July 1 this year to as low as 1%, which Turner said impacted said margins.

While leisure travel was reaching hurdles, corporate numbers were flying high with September and October 2022 proving the two strongest months in Flight Centre’s corporate travel history.

Business travel is booming for the FCM and Corporate Traveller brands.

Turner cited strong customer retention rates and new account wins as critical to this performance while some client activity was still taking its time returning to pre-pandemic levels.

“Wins include a mix of large and enterprise-level accounts that will typically trade with FCM and smaller SME accounts that will generally trade with Corporate Traveller,” Turner noted.

“More than half of the accounts that Corporate Traveller has won in its key Australia, UK and USA markets were previously unmanaged – reflecting the ongoing shift towards managed travel programs in uncertain times.”

Can’t recruit fast enough

Flight Centre Chairman Gary Smith said the company was attracting as many as 5,000 applicants for job openings across the group, with around 400 positions filled across leisure, corporate and support categories and more to come.

Pleasingly, Smith said many were former employees who had remained engaged with the business via its alumni program as well as newcomers, suggesting efforts to promote travel as an exciting career choice was starting to pay dividends.

The company's retail stores are reopening apace.

While initially only intended as a one-year project the Flight Centre Board had voted to extend its Global Retention Rights share-based employee program, designed to ensure employees felt valued and could benefit from the role they play in the company’s success.

“These people are the backbone of our company, and they are again working tirelessly to help their customers navigate the turbulence, thereby reinforcing the value of their service,” Smith said.

Heading in the other direction, Smith paid tribute to Flight Centre’s Supply CEO, Melanie Waters-Ryan, who will depart the business after 35 years at the end of June 2023.

“Mel has been a wonderful asset to our company, a role model and inspiration to our people and she will be sorely missed,” Smith said.

 


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Written by: Matt Lennon
Published: 13 November 2022

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