Travellers have “been the big winners” over the last year, according to Flight Centre, as international airfares dived to new lows, particularly over the trans-Pacific to Los Angeles.
In a financial update published to ASX, Flight Centre’s Managing Director, Graham Turner said the company’s average ticket numbers per day grew at a record rate last month – the fastest rate recorded since 2014 – and it was due to dirt cheap fares.
To the USA alone, Flight Centre’s tickets jumped by 40 percent in October, and are up 15 percent so far this year.
Graham attribute the sharp increase in ticket numbers to the “low-fare environment”, which is making travellers the “big winners” with fares to destinations such as Los Angeles reaching $734 (ex Sydney) return or Honolulu $376 (ex Sydney) return.
“Travellers have, of course, been the big winners in this low-fare environment and have been snapping up some of the cheapest fares we have ever advertised.”
Graham Turner, Flight Centre Managing Director
Other examples of record low fares available to Aussies over the past year include London return from $899 (ex Melbourne) as well as Europe return from $799 (ex Adelaide).
Travellers aren’t the only ones benefiting from record-low fares, because according to the travel group, the drop in ticket costs has contributed to a rise in ticket volume.
Flight Centre is expecting to reach a record of $20 billion in total transaction value (TTV) during the financial year 2017, up from FY16’s $19.3 billion.
Despite the jump in ticket volume, Flight Centre did note that its TTV growth is expected to fall short of the previous year and will in turn affect profits, which are likely to sit between $105 million and $120 million during the first half of the year, lower than the $145.9 million earned over the same period in FY16.
This is expected to pick up by the second half thanks to increased TTV growth in Australia, improved results in Europe and benefits from the company’s cost control measures that will be implemented during the first half of the year.
For the full year, underlying profit before tax to finish between $320 million and $355 million, which isn’t too far from FY16’s $352.4 million.
“When we released full year accounts for FY16, we said we expected to surpass the $20billion TTV barrier for the first time this year and that we would be disappointed if we didn’t grow underlying PBT.”
Graham Turner, Flight Centre Managing Director
“That remains the case, although the internal and external factors that are currently impacting top and bottom-line results mean that we will not be tracking at those levels by the end of the first half, despite a relatively strong sales performance.”
