Flight Centre Limited: A Company Analysis
This essay will give an overview of Flight Centre Limited (FCL), followed by a company analysis. The airline industry and FCL’s wholesale and retail operations will be discussed, and finally, the essay will conclude with the company’s global reach.
2. Company overview
Flight Centre Limited is an Australian-based travel company listed on the Australian Securities Exchange (ASX: FLT). The company operates in the international corporate, leisure, and wholesale travel markets. FCL’s primary focus is on providing air travel services, but it also offers a range of other products and services including accommodation, insurance, car hire, and cruises. The company has a network of over 2,000 stores in 11 countries across Asia Pacific, North America, South Africa, the United Kingdom, and Europe. In FY2019, FCL reported total revenue of A$27.2 billion and net profit after tax of A$488 million.
3. The airline industry
The airline industry is a highly competitive and complex sector that is subject to volatile demand conditions. The key drivers of demand for air travel are economic growth, which drives business travel; leisure travel; and population growth. In recent years, the airline industry has been characterised by strong growth in air passenger traffic as a result of favourable economic conditions and favourable oil prices.
However, the outbreak of the COVID-19 pandemic in 2020 has resulted in a significant decline in demand for air travel as a result of border closures and restrictions on movement. This has had a negative impact on the financial performance of airlines and the aviation sector as a whole.
Looking forward, the airline industry is expected to recover from the impact of COVID-19 as travel restrictions are lifted and economic conditions improve. However, the recovery is expected to be gradual and airlines are likely to face challenges including high fuel prices, competitive pressure from low-cost carriers, and capacity constraints as a result of fleet retirements.
4. Flight Centre Limited’s wholesale and retail operations
FCL’s wholesale operations involve the sale of airfares to other businesses that on-sell these to their customers. The company’s wholesale clients include online travel agencies (OTAs), corporate travel management companies (TMCs), airlines, tour operators, wholesalers, consultants, event organisers, expatriate organisations, government departments, non-profit organisations, and small businesses. FCL sources its inventory from over 200 airlines globally and uses its buying power to negotiate favourable rates for its clients. In FY2019, wholesale sales accounted for approximately 40% of FCL’s total revenue.
FCL’s retail operations comprise its network of bricks-and-mortar stores as well as its online booking platform Flight Centre Travel Group (FCTG). FCL’s retail customers include leisure travellers as well as small businesses and individuals booking corporate travel. The company offers a range of services to its retail customers including flight bookings, accommodation bookings, insurance policies, visa application assistance, and 24/7 emergency assistance. In FY2019, retail sales accounted for approximately 60% of FCL’s total revenue.
5. Flight Centre Limited’s global reach
FCL has a strong global presence with operations in 11 countries across Asia Pacific, North America, South Africa, the United Kingdom, and Europe. The company has over 2,000 stores and a workforce of over 19,000 people. FCL’s global reach allows it to tap into a wide range of customer segments and source inventory from a large number of suppliers.
In recent years, FCL has been expanding its operations in Asia Pacific, which is now the company’s largest region by revenue. FCL’s Asia Pacific operations accounted for approximately 45% of the company’s total revenue in FY2019. The company has been focusing on expanding its store network and improving its online booking platform to tap into the growing demand for travel in the region.
In conclusion, Flight Centre Limited is a leading Australian-based travel company with strong global reach. The company operates in the international corporate, leisure, and wholesale travel markets, with a focus on providing air travel services. The airline industry is highly competitive and complex, subject to volatile demand conditions. The outbreak of the COVID-19 pandemic has resulted in a significant decline in demand for air travel, which has had a negative impact on the financial performance of airlines and the aviation sector as a whole. Looking forward, the airline industry is expected to recover from the impact of COVID-19 as travel restrictions are lifted and economic conditions improve. However, FCL is well-positioned to weather the current challenges faced by the industry due to its strong global presence and diversified business model.
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