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Flight Centre eyes “pent up demand” as Australia opens up

Flight Centre has seen a “significant” increase in demand as global travel restrictions begin easing, the business said at its AGM.

While trading activity across the business only reached 12 per cent of its normal level during September, bringing in $25 million in revenue, several of Flight Centre’s businesses are beginning to see recovery.

Australia, however, is continuing to struggle – with a delay on opening borders and a “decision-making paralysis” in Queensland causing the business grief.

“We believe there is significant pent-up demand for travel globally,” said Flight Centre managing director Graham Turner.

“Several businesses were tracking above 20 per cent in September, which means they were close to breakeven point given that our fixed cost base had decreased to circa 30 per cent of its prior year level.

“Preliminary figures for October are now available and indicate we are again profitable in both China and the United Arab Emirates and in Corporate Traveller in South Africa. The recovery in China, which has also been driven by domestic travel, is another very positive sign, given it was [our] first business to be impacted by the pandemic.”

The Australian business has continued to be hampered by ongoing curbs on travel, though some states are beginning to loosen these restrictions, such as New South Wales plan to open the border to Victoria on November 23.

And, according to the business’ customers, almost 60 per cent want to travel internationally in the next year, while 52 per cent want to travel interstate. Only 3.5 per cent said they were not looking to travel at all.

While the global business is seeing these green shoots of recovery, Flight Centre declined to provide guidance for the coming financial year, though did say it expects its corporate business to return to profitability in FY21 and its leisure business to follow in FY22.

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