Travel agency’s leisure revenue surpasses pre-pandemic levels, anticipating a ‘watershed’ year after four years of disruptions
Flight Centre, based in Brisbane, has experienced one of its most successful beginnings to a financial year as more customers embark on travel adventures, even if it entails dipping into savings. The company reported a more than five-fold increase in pre-tax profit to $106.2 million over a six-month period, with revenue from its leisure travel division now surpassing pre-pandemic levels. Additionally, its corporate travel sector experienced significant growth.
Flight Centre’s managing director, Graham Turner, stated that 2024 is poised to be a “watershed” year for travel following four years of pandemic-related disruptions.
“Despite tightening discretionary budgets, travel continues to be an outlier and a priority spend for many,” Turner stated. “Ongoing robust travel demand has been supported by sustained low unemployment in critical markets and a determination among frequent travelers to compensate for lost time due to lockdowns – a phenomenon known as ‘revenge travel.'”
Flight Centre’s data reveals that Australian airfares declined by 13% in the first six months of the financial year, with international fares dropping by 7%. The decrease in prices, coupled with increased airline capacity, is anticipated to drive travel demand, particularly among families purchasing multiple tickets.
Despite rapidly increasing living expenses squeezing household budgets, reductions in non-essential spending are not consistent, as many Australians remain willing to invest in experiences like travel and entertainment. These two categories are the only non-essential items experiencing growth above the inflation rate, according to a report by Commonwealth Bank and data firm Quantium Group, with Australians aged over 65 driving this trend.
The report acknowledges that some of the enthusiasm seen in early 2023, when individuals were booking trips delayed by the pandemic, has begun to diminish. Flight Centre’s results mark its second strongest first-half financial performance in its over four-decade history, supported by expanding profit margins from hotels and tours, as well as strong demand for both leisure and corporate travel. The company’s best first half occurred in 2019-20, just before the pandemic began.
Cruise lines are also reporting record passenger numbers, with short two-to-five day trips particularly popular among budget-conscious travelers. Flight Centre will issue an interim dividend of 10 cents per share, its first since the pandemic disrupted travel.
The results mark a significant reversal from the early years of the pandemic when the travel agency significantly reduced its staff numbers and shuttered hundreds of stores due to flight bans and closed borders, which posed a severe threat to its entire business model. Flight Centre has also faced challenges from a growing number of online competitors and the effects of airlines and other travel businesses selling directly to consumers.
On Wednesday, the company reported successful use of artificial intelligence to scan inquiries, with emails indicating urgent travel needs and “potential revenue opportunities” aiding its consultants in prioritizing their responses.