Falling fares a plus for Flight Centre as families lead booking bonanza

The travel group is forecasting more kids on planes as falling airfares make long haul international trips more affordable for families.

Falling airfares are expected to see more families on long haul flights, with Flight Centre recording an 18 per cent jump in international ticket sales in July, in response to a 5 per cent dip in prices.

The surge in sales compared to the same time last year was in line with predictions that any impact to revenue from “fare deflation” would be more than offset by an increase in travel bookings.

Flight Centre was also hopeful falling fares would boost corporate travel activity as budgets were able to stretch further.

Managing director Graham “Skroo” Turner says while the rebound in international travel was strong post-Covid-19, it was older couples and singles leading the charge.

“Even a year ago the fares to Europe or North America were quite high in economy, so if there’s one or two people travelling that’s one thing, but if you’ve got a family of four or five that was very expensive,” he said.

“This is coming back now, we’re starting to see specials come out, and I think you will start to see families travelling more because they have probably been under-represented, particularly to the long haul destinations.”

Flight Centre expects to see more children on long haul flights, as falling airfares make international family holidays more affordable.

The other demographic hard hit by cost-of-living pressures was student travel, affecting Flight Centre’s youth brands.

Mr Turner said bookings for Top Deck and Contiki tours were a bit soft among the under 30s, compared to the 50-plus age group, which was travelling widely and often in premium cabins.

The “typical” Flight Centre traveller was now aged 53, up from 49 a year ago, and in the middle to high income bracket.

He said this had driven strong demand for business and first class on airlines such as Qantas, Singapore, Qatar and Emirates, despite those fares remaining high.

“As families come back, (the demand for premium) won’t be quite as strong,” said Mr Turner. “If you want a good price (for premium cabins) some of the Chinese carriers and Cathay Pacific for example are quite good quality now, and they will save people a lot of money if they’re prepared to go that way.”

For the year to June 30, Flight Centre saw its total transaction value reach a record $23.74bn, and underlying profit before tax land within guidance at $320m, up 131 per cent on last year.

After tax, underlying profit was up 111 per cent at $230m, and statutory net profit almost tripled to $194m.

Flight Centre managing director Graham “Skroo” Turner. Picture: David Clark

The corporate travel segment again eclipsed leisure with a $211m underlying profit, compared to the leisure sector’s $188m gain.

Australia New Zealand managing director of Flight Centre Corporate Melissa Elf said there was every reason to think they could build on that result, with the market still yet to fully recover from the pandemic.

She pointed to a survey of clients, which indicated 42 per cent of the 560 respondents planned to spend more on business travel in the 2025 financial year.

“Average fares have dropped about 13 per cent in Australia and without a doubt that does stimulate demand, particularly in the small and medium-sized business space where companies are a bit more cost conscious,” said Ms Elf.

“Even in the enterprise space, everyone’s looking to maximise their dollar and spread it a bit further, so it’ll definitely generate more demand.”

An investor briefing heard how artificial intelligence was being used to help drive productivity at Flight Centre by reducing the time it took to build complex corporate itineraries.

Ms Elf said AI was being incorporated into a single global operating system, and enabling customers to “self serve”.

“We’ve also introduced a new consultant desktop version where AI automatically scans emails, and looks at the type of information customers are requesting,” she said.

“That helps us respond automatically, or direct the email to the right consultant to help with that enquiry. Theoretically, we want AI to replace the simple tasks and allow our people to shine during the more complex.”

Flight Centre shares climbed modestly in response to the annual result, and closed up 3.3 per cent at $19.97.

Originally published as Falling fares a plus for Flight Centre as families lead booking bonanza