Flight Centre: Fixed margins replacing super overrides
After moving away from tiered supplier contracts in recent years, Flight Centre said it had again sought fixed margins in its contracts globally and had generally achieved this.
“What this means is that super-overrides, which are additional rewards for clearing dollar-based performance hurdles, now represent a smaller portion of overall margin and our focus in contracting is on guaranteed front and back-end margins,†said managing director Graham Turner.
“We will continue to keep a close eye on airlines’ fuel surcharge policies and also the application of other additional charges that are generally classed as taxes,” he said.
“Our opposition to surcharges is well known and recent court decisions in Australia are likely to force those airlines that continue to treat fuel as somehow separate to the cost of the airfare to rethink their positions.”
“Clearly, Flight Centre and other travel agencies should have been paid normal margin on the hundreds of millions of dollars in fuel surcharges they collected for airlines since 2006.
“While we made a commercial decision to opt out of the Australian class action that was successfully launched against Qantas, we continue to consider our options in relation to other fuel surcharge money that should have been paid to Flight Centre,†Turner said.
“Clearly, Flight Centre and other travel agencies should have been paid normal margin on the hundreds of millions of dollars in fuel surcharges they collected for airlines since 2006.
“While we made a commercial decision to opt out of the Australian class action that was successfully launched against Qantas, we continue to consider our options in relation to other fuel surcharge money that should have been paid to Flight Centre,†Turner said.
Flight Centre: Corporate travel expansion a key target
Niche leisure travel segments also on the radar
When will FLT reach saturation point? The question was asked by managing director Graham Turner at Flight Centre’s annual meeting.
“The reality is we see ongoing growth opportunities in travel and in our other sectors and in online and offline channels,†he said.
Expanding our corporate travel market-share is an obvious strategy, as is expanding in niche leisure travel segments, which we are successfully doing through brands like Cruiseabout, Student Flights and Intrepid retail.
“While we may consider acquisition opportunities from time to time in the future, our focus will generally be on improving and growing the businesses and brands that we already have.
“Any acquisitions in the short to medium term are likely to be niche opportunities that fast-track our growth in segments that we believe we are under-represented in.
“Our acquisition of gapyear.com earlier this month is an example of the kind of opportunity we may consider.â€
Ian Jarrett
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