Kiwi bubble adds a 'seventh Aussie state' to Flight Centre business

Kiwi bubble adds a 'seventh Aussie state' to Flight Centre business

The trans-Tasman travel bubble has effectively added a seventh Australian state to Flight Centre Travel Group's (ASX: FLT) market, bolstering the company's New Zealand operations and helping it leverage the boom in Aussies holidaying in their own backyard.

CEO Graham Turner is confident the international border opening will create a rush of Kiwi holidaymakers heading to Australia, giving rise to increased business volumes for Flight Centre in New Zealand.

"Although the domestic New Zealand market is reasonably important for business, leisure has limitations mostly because of its size and because it is a drive-to market," he says.

"Trans-Tasman leisure is quite a large part of our New Zealand business. About 30 per cent of international is trans-Tasman out of New Zealand and probably about 10 to 15 per cent is busines.

"Assuming the border stays open, that will be quite a lot for us."

Turner is expecting the early demand to be heavily focused on VFR (visiting friends and relations) travel. In the first seven hours of the announcement that the travel bubble will proceed, Flight Centre secured 1,000 bookings from Australians ready to jet into New Zealand.

"A lot of these would be VMR desperately trying to get to see their parents or their kids who they haven't been able to see for up to 12 months.

"Obviously in Australia and New Zealand there's a lot of pent-up demand for VFR as well as tourism and business. It's like adding another state of Australia like Queensland (to the business)."

Flight Centre significantly scaled down its operations over the past year, shedding more than 4,000 jobs and more than halving its retail outlets. The company sees itself as a leaner organisation that is ready to upscale if needed, although Turner says the need isn't there just yet.

"Since the end of JobKeeper we've tried to stand up as many people as we can and bring back more people to full time both in corporate and leisure, but we have plenty of capacity at the moment.

"We'll need to bring back more people if things stay stable and keep coming back rapidly over the next few months. At the moment, we are in a very good position."

Turner, who has been a vocal critic of snap lockdowns across Australia disrupting business and tourism travel, is hopeful governments will have learned to better manage future border closures.

"I am reasonably confident that with testing, tracing and contacting now pretty good in both countries and since they trust each other to open up like this, I think lockdowns or border closures will be quite unusual circumstances," he says.

With travel still in a fragile state, Flight Centre is looking to capitalise on customer demand for travel advisors to keep them abreast of any potential issues that could affect their plans.

"Particularly if there is a lockdown or border closure, they will need to have a plan B when a travel adviser can immediately book you onto a flight to get you back home," says Turner.

The Flight Centre boss sees the trans-Tasman travel bubble working as a model that could open Australians to more international travel routes.

"If this works and it has no major hitches for the next month or six weeks, you will see other destinations opening up," says Turner.

"It could be areas like Fiji or it could set the precedent for Singapore or Vietnam, areas that are designated Green Zones."

While Flight Centre has not issued profit guidance for this financial year, Turner has previously advised a return to break-even in both leisure and corporate travel this calendar year.

"We'd like to think if things stay reasonably stable, we'll be at a break even on a month-to-month basis towards the end of this year," he says.

Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Advertisement

Related Stories

Quarantine-free travel to New Zealand in effect from 19 April

Quarantine-free travel to New Zealand in effect from 19 April

Prime Minister Scott Morrison has described the upcoming re-openi...

800,000 half-price airfares to Australia's regions up for grabs in April

800,000 half-price airfares to Australia's regions up for grabs in April

A Federal Government subsidy will slash airfares in half for 800,...

Signs of recovery put wind beneath Flight Centre's wings

Signs of recovery put wind beneath Flight Centre's wings

Tentative signs of recovery in the travel market have injected re...

Travello, Flight Centre join forces on tourism experiences

Travello, Flight Centre join forces on tourism experiences

After booking an $875 million loss due to COVID-19, Flight Centre...