Flight Centre's global managing director Andrew Stark discusses the evolving travel outlook and global travel cost trends.
Video / NZ Herald
A Flight Centre global chief says cheaper flights are returning after travellers have faced some of the highest prices in more than a decade.
“What we are seeing is deals and value are back. The ‘early bird’ deals are coming back,” said Andrew Stark, Flight Centre brand global managing director.
He said the “purple patch” for airlines couldn’t continue as yields were showing signs of declining and seasonality was returning to sales patterns. “We’re seeing all types of airfares starting to come down, which is good news.”
However, the pre-pandemic promotional deals that saw return fares to Europe drop below $1000 and transtasman fares less than $100 one-way were unlikely to come back.
“I think airlines will manage their capacity far better than what they did pre-Covid. They’ve realised they can make more money rather than flooding the market with capacity,” said Stark. Flight Centre is also benefiting from the strong rebound in travel. Its latest full-year profit of A$301m ($328m) was an almost half-a-billion-dollar turnaround on the 2022 loss of $183m.
Stark said more capacity was the key to driving down prices and Flight Centre had been vocal in fighting restrictions imposed on flying by Qatar Airways to and from Australia.
Load factors on international flights to and from New Zealand and Australia were running at 85 per cent and his firm was forecasting a return to full pre-Covid global airline capacity by mid-2024.
One way of saving money was to use different airlines for different stages of the journey.
“We’re seeing customers mixing and matching airfares more so than they have done before.”
Sticking with one airline can often be more expensive, but mixing and matching often needed the expertise of an agent.
Flight Centre NZ general manager Heidi Walker said the return of “early bird” deals was great news for travellers.
In the last week Singapore Airlines’ early bird deals included London return in economy from $2373, Rome for $2364 and Zurich for $2111.
Walker said there were more restrictions on airfares than before the pandemic.
“Consumers do need to work with somebody and make sure they understand what they’re purchasing, especially if you’re purchasing for travel 10 months in advance so you know if your airfare is refundable and other things that [you] need to be aware of.”
Flight Centre New Zealand general manager Heidi Walker. Photo / Dean Purcell
She said the average age of travellers booking with Flight Centre in this country was 54 and there were many women travelling solo.
“There is a lot of travel up to the UK and Europe. Whether they’re going up there to see maybe children or grandchildren or if they want to go and see Paris or Rome, they’ll head off on their own,” she said.
“We’ve got a lot of destinations that are bucket list holidays. People are going to Lapland or different destinations that they’ve been dreaming of when they couldn’t leave New Zealand. We are seeing people ticking off more of the world that they want to see.”
Couples were also travelling in big numbers but the family travel market had been affected by high transtasman prices in the past year. There were signs of these moderating with Qantas and Air New Zealand, which have a stranglehold on the market, introducing some tactical fares.
Walker said the depreciation of the kiwi dollar against the US dollar (now below 60c) meant the US was too expensive for many travellers but families could get good value holidays in Asia. Although airfares were higher to places like Bali or Thailand than closer-to-home destinations, costs on the ground were much lower and there were many all-inclusive holidays on offer.
Cruises continued to be popular and likewise, costs were largely locked in before travel. Flight Centre in New Zealand introduced service fees at the end of last year. For travel across the Tasman adults were charged $75 and $150 for long-haul trips.
“It’s gone really well for us, our customers understand what they’re paying ... for. There’s nothing hidden and we can be open with our customers and that’s worked well for us.”
She said the growing number of weather events meant travel consultants were extremely busy at the time of the disruption but in the longer term it was good for the travel industry, helping prove the value of agents when things went wrong.
Stark said during the pandemic Flight Centre closed most of its stores in New Zealand (from 135 to 35) and halved the number in Australia from 700.
Thailand is proving popular with Kiwi travellers this year. Photo / Grant Bradley
“We have two-thirds fewer shops and two-thirds fewer consultants but we’re 100 per cent more productive. We still can’t service the queues as best as we possibly can.”
He said booking through the firm’s online channel had boomed in New Zealand from 2 per cent before Covid to 10 per cent. Online volumes in Australia went from 15 per cent to 20 per cent.
Walker has key advice for travellers:
“As soon as you know you want to travel, book. The further out you book, the more options you can have for airlines to travel on, properties to stay in and things to experience.”
Look for holidays that are all-inclusive.
Make sure you have insurance. “We are seeing more people travel with travel insurance, but it still is concerning how many people are travelling without travel insurance.”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
