04 September 2008 - Australia's Flight Centre last week said strong growth in its FCm Travel Solutions corporate travel agency businesses helped drive 38 percent higher after-tax profits of AUD143 million (US$137.5 million) for the fiscal year ended 30 June. Total revenue grew 26 percent year over year, to AUD1.45 billion (US$1.39 billion).
Excluding the January acquisition of Liberty Travel in the United States, total transaction volume jumped 13 percent, to AUD10 billion (US$9.6 billion), marking the company's "largest year of global expansion."
Flight Centre acting CEO Shannon O'Brien claimed FCm has become "a significant and emerging presence" in the global corporate travel market since its launch four years ago.
Although FCm has grown the number of multinational corporate accounts it handles from just a few, the total remains under 40, FCm global executive general manager Anthony Grigson told
The Transnational Wednesday. The company continues to specialize in localized service for small and medium enterprises.
The FCm strategy "hasn't changed too dramatically" said
Grigson, who in June 2006 downplayed the need for scale in order to service transnational corporations. "We still have a bottom-up approach to our international program. We're still trying to be best in class regionally and drive that flexible, people-centered way of doing business rather than using technology or big call centers or processing plants of corporate travel."
Still, "It's fair to say we are trying to get some technology integration happening," Grigson continued. "It's a difficult thing to do across the world and sometimes there's more good intention rather than actually getting things in place. We start locally and see how that fits with clients on a day-to-day basis, and then we escalate that up to the regional level and see what we can do as a region to integrate our technology."
The company has enlisted Datalex to develop a global fares database and today announced a "preferred," annual global distribution system agreement with Travelport. But while FCm is offering some common client-facing solutions, affiliates and offices will not all be required to use them, and fulfillment remains "more of a localized strategy," said Grigson.
Corporate travel acquisitions remain an option for the company, he said, but FCm also is expanding its sales force to generate organic growth. "This last financial year, we put on 30 percent more sales people in the field across international markets, and we're expecting a similar number this financial year," said Grigson, mentioning the United Kingdom and United States as hot spots for hiring.
In the United States, Flight Centre achieved what it called "a small corporate travel profit" during the 2007/2008 fiscal year. The company's 26 percent holding in Garber Travel Services contributed AUD224,000 (US$215,376) in after-tax profits. Flight Centre's Canadian corporate business "improved significantly with strong profit increases from FCm Travel Solutions."
Elsewhere, corporate travel expansion helped Flight Centre improve financial results and boost transaction volumes. In the United Kingdom, the company noted "improved corporate travel performance, following full integration of Flight Centre's organic corporate business with Britannic," purchased in 2003. In India, the corporate travel business "again performed strongly, while the Dubai corporate business, which was launched during the year, recorded promising early results."
Taking into account all global travel operations as of 30 June, "more than half of Flight Centre's shops and businesses were located outside of Australia, a reflection of the company's increasing geographic diversity," the firm said.
