New Business Propels Flight Centre to Full Corporate Transaction Value Recovery
In its earnings report for the 2022 fiscal year, which ended June 30, the group reported that a combination of increased volumes and higher travel pricing for its corporate business pushed it to 100 percent total transaction value recovery...
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Corporate travel transaction value for Flight Centre Travel Group have recovered to pre-pandemic levels, and the travel management company said they will stretch beyond that baseline in the year ahead.
In its earnings report for the 2022 fiscal year, which ended June 30, the group reported that a combination of increased volumes and higher travel pricing for its corporate business—which includes FCM and the SME-focused Corporate Traveler—pushed it to the 100 percent total transaction value recovery level in June, six months earlier than it had expected. Total transaction value for customers that have been with the group throughout the pandemic recovered to 78 percent of pre-pandemic levels in June, with new customers signed since the pandemic's onset making up the difference, Flight Centre's global CEO for corporate travel Chris Galanty said in an earnings call on Thursday.
Despite all of this short-term friction, there has been a really active return to travel."
Flight Centre Group's Chris Galanty
As of December 2021, pre-Covid-19 customers' total transaction value had recovered only to 33 percent of 2019 levels, according to the group.
The continued recovery even amid such challenges as increased flight delays and cancellations and slower processing times for passports "shows the resilience of the corporate sector," Galanty said. "Despite all of this short-term friction, there has been a really active return to travel."
By December, the group expects total transaction value will exceed pre-pandemic levels by 10 percent. The projected total transaction value for pre-pandemic customers in December is 73 percent of 2019 levels—a lower percentage than June reflecting expected lower travel costs as the supply-demand equation balances out. The balance is expected to be made up by new customers, including some that have signed but have not begun trading with the group.
By the end of the 2023 fiscal year in June, Flight Centre projects total corporate transaction value will be 20 percent above pre-Covid-19 levels, even with a market recovery to only about 70 percent of pre-Covid-19 levels. That also takes into account current requests for proposal in the final stages that the group expects to win, according to Galanty.
Flight Centre currently is being "invited to more RFPs than ever in [its] history," which Galanty said stemmed from industry consolidation leaving fewer choices of TMCs equipped to handle large corporate accounts.
Total corporate transaction value in 2022 was evenly divided among the Australia-New Zealand, Americas and Europe, Middle East and Africa regions, each representing about 30 percent of total corporate transaction value. The group expects the Americas and EMEA both will overtake Australia-New Zealand "in the near-term" given the group's "small but growing market share" in the larger regions.
Asia made up the balance of 2022 total transaction value, including FCM's new joint venture in Japan. Expectations for the 2023 fiscal year do not anticipate major recovery in Asia, Galanty said.
"This isn't requiring for China to open up, or Japan," he said. "We can't predict any of that stuff. This is just accepting the world as it is today."
The group's corporate business also turned an A$13.5 million (US$9.4 million) profit for the 2022 fiscal year due to a strong fourth quarter, according to the group. The full group reported a loss of A$183.1 million (US$127.8), an improvement of 46 percent compared with the previous fiscal year's loss. The group saw a "modest profit' in the second half of the year, which helped offset losses in the first half when global travel restrictions were more prevalent.
