Australia’s largest travel group says the cheapest advertised fares to the top 10 international destinations are down a little over three per cent from a year ago as airlines compete for passengers amid a soft leisure market and weak consumer confidence.
Flight Centre’s analysis showed ticket prices to Asia and Europe had fallen over the past year, while fares to North America had risen slightly.
“From our surveys of cheapest advertised fares for the top 10 international destinations, on average they are about 3.5 per cent cheaper than the same period last year,” Flight Centre chief executive Graham Turner told analysts during the company’s full year results presentation on Wednesday.
“There’s no doubt that the cheap international fares are going to stimulate demand in Australia and other areas.”
The 10 destinations in the survey were Auckland, Bali, Bangkok, Fiji, Hawaii, Phuket, London, Los Angeles, New York and Singapore.
Flight Centre’s Australian businesses posted a total transaction value – which represents the sales of all travel products such as flight tickets, travel packages and cruises – of $9.2 billion in 2013/14, a seven per cent increase on the prior year.
Sales and profits in both the leisure and corporate markets were up in 2013/14, although Turner said growth had slowed in recent months, particularly for leisure travellers.
Meanwhile, some growth in corporate sales had come through new contract wins, which had helped offset some reduced business travel.
“We are blaming the federal budget or the lack of a federal budget affecting consumer sentiment,” Turner said.
“While we cannot predict a timeframe for full recovery, our experience shows that short-term downturns are often followed by healthy uplifts in demand as Australian leisure travellers get itchy feet and take off to ensure they make the most of their holiday time.”
As an indication of the difficult operating environment at the end of 2013/14, Flight Centre chief financial officer Andrew Flannery said profit before tax was up a slender half a per cent in the three months to June 30 compared with the prior corresponding period, which was well down from 15 per cent growth experienced in the three months to March 31.
“So you can see the dramatic slowdown that we experienced,” Flannery said.
Flight Centre, which has operations in 10 countries including Australia, New Zealand, the US and the UK, reported net profit of $206.9 million for the 12 months to June 30 2014, down 15.9 per cent from the prior year.
The company said the statutory result was impacted by one-off items such as a non-cash $61.3 million writedown to goodwill and brand names, an $11 million fine from the competition regulator which is being appealed and a $19.6 million gain within the Flight Centre Global Product business that was flagged in February.
Underlying net profit after tax rose 9.8 per cent to $263 million, while total transaction value was up 12.6 per cent to $16 billion, Flight Centre said.