Flight Centre profit soars to record heights

CANNY SHOPPERS: Flight Centre’s Mike Friend says Kiwis are extremely price conscious travellers.
CANNY SHOPPERS: Flight Centre’s Mike Friend says Kiwis are extremely price conscious travellers.

A strong dollar encouraging more Kiwis to travel overseas helped deliver travel retailer Flight Centre New Zealand its best half-year result since 2007.

The Australian-owned group delivered an overall record first-half profit of A$110.8 million for the six months ending December 31, up 20.7 per cent on the same period the year before.

The flagship Flight Centre brand continued to perform strongly, accounting for half of the A$1.05 billion revenue, with its niche leisure and corporate brands picking up the rest. The figures for New Zealand are not split out in the half-year results but earnings before interest and tax were up more than 80 per cent in Australian dollars and it was said to have had "strong year-on-year growth".

The group is forecasting to deliver its 15th record full-year profit of between A$370m and A$385m pre-tax for the full 2013/14 financial year, up 8 to 12 per cent on the previous year.

NZ managing director Mike Friend, having worked for the company for 18 years, is well-attuned to its high performance culture and is also pushing the 1100-strong team for record growth here in the full year.

He admits, though, there is "lots of work to do to get there".

The New Zealand team delivered $9.4m in profit in the 2011/2012 financial year and $16.1m in 2012/2013.

The good performance to date has been driven by retail with high consumer confidence and a strong dollar seeing more people booking international holidays, to Australia and the US in particular. Of the 2.2 million annual departures Kiwis made for international travel a year, 1.2 million were to Australia.

Kiwi travellers are extremely price-conscious and the arrival of Hawaiian Airlines offering three flights a week from New Zealand since March had fuelled competition and demand for flights to the US, Friend said.

Friend did his bit, having travelled to 63 countries to date, just under a third of the countries in the world.

Flight Centre introduced a new strategic plan last year geared at transforming the company from travel agent to travel retailer.

The big push behind that strategy has been developing its own branded products rather than just on-selling those of other suppliers.

In New Zealand that has seen two Red Label Fares in the past few months which is its exclusive product targeted at leisure customers.

It may offer the same airfares as its competitors but customers are given extra incentives at no extra cost such as lounge passes and credit towards accommodation. One to Rarotonga delivered the company 10 times the number of sales to the Pacific island than in the same period the previous year.

It's currently got one on offer to London via Qantas, Emirates and Singapore Airlines,with a price protection guarantee if the airfare drops within 30 days of booking.

Friend said the company is also opening new interactive stores that don't have the traditional counter between the agent and the traveller and opening hours are being extended to 9pm in some areas in line with customer demand.

The problem with extending the opening hours has been finding staff willing to work at the weekend and later at night, he said.

While it will open a couple more bricks and mortar Flight Centre stores, most of the store openings this year will be niche brands such as its cruising specialist brand Cruiseabout.

And while the company already has a 24/7 call centre available to assist customers with any travel glitches, Friend said it would open a 24/7 sales shop in Auckland in July to gauge demand from those wanting to book their travel at night and early morning.

The move is a bid to counteract a growing trend of consumers bypassing agents to book their own trips online.

Sunday Star Times