In The Big Chair - Graham Turner of Flight Centre Travel Group

Graham Turner is a member of the Flight Centre Travel Group.

Graham Turner was working as a veterinarian in London when he and friend Geoff Lomas started operating double-decker bus trips around Europe, North Africa and Asia in 1973. After selling that company, the two launched Flight Centre Travel Group in 1982 with a store in Sydney, Australia.

Today Flight Centre Travel Group is one of the world’s largest travel retailers and corporate travel managers, with company-owned leisure and corporate travel business in 23 countries. The company also operates the global FCM corporate travel management network in 100 countries through company-owned and independent licensees.

The Australia-New Zealand Total Market Report gives a comprehensive view of the region's travel market, including detailed market sizing and projections, distribution trends, analysis of major travel segments and key developments. The co- founder, CEO and global managing director of Australia-based Flight Centre Travel Group spoke to PhocusWire. The conversation has been cut short.

The company is a company.

Flight Centre is a travel group.

There is a location.

There is a city in Australia.

There is a website.

There is a website called FCtgl.com.

Australia had some of the strictest border restrictions in the world. I want to know how Flight Centre's operations are different from pre-pandemic.

Large, long lockdowns were a thing of the past in Australia. The longest city in the world was Melbourne. International capacity in the airlines has been very slow, but we expect to get back to 85% by February, assuming the Chinese carriers come back to some extent. North America, the U.K./ Europe and Australia/New Zealand are the three major areas. Because of inflated airfares, we are back to pre-COVID transaction value. In terms of actual transaction numbers, in our corporate business, we are about 85% back. We have a long way to go, especially since airfares will fall in January. We have had a difficult two and half years. We have to make up for the loss of A$1.3 billion. Our margin hasn't come back for many reasons. The models with more domestic travel have a lower margin.

What have your operations been like?

We don't want to bring all the costs back. In North America and the U.K., we had to close a lot of locations, but in Australia, we went from about 940 locations to about 450. We are starting to grow again and open more locations in leisure, but we are probably not going to get back to the number of bricks and mortar that we had before. We want to keep costs down. New platforms will help us be more productive. The last two and half years have given us the opportunity to improve things.

During the Pandemic in Australia and New Zealand, online penetration exploded. Flight Centre has many locations. Do you think that you will always have storefronts, or do you think that you will serve a different type of customer?

The two main leisure brands in Australia are Flight Centre and Travel Associates. Flight Centre is based in bricks and mortar. We are celebrating our 40th year this year and have grown up that way. The Flight Centre brand is seen in Canada, the U.K., South Africa, and New Zealand as a bricks and mortar shopping center brand and we don't think that will change in the next 20 years. I think pre-COVID Flight Centre did between A$8 billion and A$6 billion in Australia, and between 5 and 6 percent of that was done online. It's closer to 20% now. People will want to speak to a travel consultant when international returns. Online has become more prevalent, but it doesn't suit everyone.

There will be a greater need for expert assistance and the current complexity in travel plays to Flight Centre's strengths in both leisure and corporate. Can you tell me a bit about that and how you are trying to deal with it?

In the last two and half years, we have won just under $6 billion in pre-COVID terms, so we put a lot of effort into winning in corporate. Although we do a lot of transactions online, it is supported by a lot of people. We are a major corporate player and it is very important to us. People are prepared to do business travel online, but it is backed by people.

It is not the same as leisure. It was a lot more complicated when it came out of COVID. We lost a lot of people during COVID. The pictures of customers waiting in line outside of our Flight Centres are not new. Most of the travel here is still under staffed. 500 people are employed by us every month. We need at least three or four thousand more people. The pre-COVID transaction value was about A$ 24 billion with 16,000 people. Most of our customers are more complex than just a single point to point airfare booking.

FCM Travel is the largest corporate travel brand with operations in nearly 100 countries. Business travel has been changed permanently due to the swine flu.

It will take a while for the market to get back to 100% because people have found other ways to communicate. One of our jobs is to help companies save money on their business travel by making it more sustainable. Traveling isn't as much as it used to be. One of our offerings is that. How can you help companies travel less and be more sustainable? For a lot of important things, you need to have face to face, but people are being more careful about how and when that happens.

I've never heard a travel industry CEO say his job is to reduce travel. It is interesting that you see your role in helping your clients be smarter about sustainable living.

You don't advertise so that people don't go, but in corporate it's a key thing. One of the most important things that they look for when they win a contact is how they can do it more sustainable. Most of the large corporations have that platform.

Can you tell me more about the Flight Centre Travel Group's approach to sustainable living?

The airlines have pledged to be carbon neutral by 2050, but there is no indication of how that will be achieved. I don't know if electric plane transport will be here in the next 20 to 30 years. It is very expensive to produce sustainable fuel but it is being produced. If hydrogen can be applied to conventional planes, we might see some progress in this area.

We can't change what the airlines are doing, but we can look at where people stay, how they travel to try to make sure We have small teams that are focused on trying to make our operations more sustainable. There is an issue of what you can do and what you can't do.

Several investments and acquisitions have been made by Flight Centre. How do you make a decision about buying or building?

Most of the time, we grow organically. Winning more accounts is an example of this. We bought a few companies in the U.S. and the U.K. in order to grow our business more quickly. We were mostly leisure at the turn of the century. I think corporate will become more focused on work. We can grow organically if we have the basic business in place. We might look at a small to medium-size acquisition in that case. If you need niche and different technology and marketing, we will look at that. If we see a gap in our own operations or if we don't have the ability to build ourselves, we would definitely look at M&A. The areas that are successful now cost more.

The travel market in Australia and New Zealand is expected to grow.

The report provides a comprehensive view of the Australia-New Zealand travel market, including detailed market size and projections, distribution trends, analysis of major travel segments, and more.