FLT - Flight Centre Travel Group

[ROE]

Re: FLT - Flight Centre

I think we are seeing slightly different views on the underlying industry versus the company's valuation.

On the industry prospect, it is logical to feel somewhat negative, given the expected fall in people booking for flights, the threat of lower cost on-line operators and changing customer behaviours. One of the key consideration for a business to have a great "moat" is whether there are high customer switching costs. In this case, switching cost (to a competitor or a substitute) is minimal as any customer can go to another provider and book their airfares.

Why would people want to switch if FLT guarantee to beat any price they find any where so their moat is their pricing model.

Why the hell do I wan to shop at Coles when I know WOW will always give me cheaper price at the counter.

People only switch if they can find cheaper stuff else where and FLT pricing model is better than that by beating any price you bring to their attention so it's in consumer interest to find cheapest price and bring it to FLT

 

[So_Cynical]

Re: FLT - Flight Centre

Why would people want to switch if FLT guarantee to beat any price they find any where so their moat is their pricing model.

Why the hell do I wan to shop at Coles when I know WOW will always give me cheaper price at the counter.

People only switch if they can find cheaper stuff else where and FLT pricing model is better than that by beating any price you bring to their attention so it's in consumer interest to find cheapest price and bring it to FLT

That's an old gimmick...and a good one, used often due to the fact that the vast
majority of people wont chase it, and the marketing people know that.

Next time im booking a cheap ticket...ill take flight center up on the "beat any price
deal" just as an exercise to see where the catch is.

So just thinking do flight center do e-tickets?...maybe that's the catch.

 

[Nick453]

Re: FLT - Flight Centre

That's an old gimmick...and a good one, used often due to the fact that the vast
majority of people wont chase it, and the marketing people know that.

Next time im booking a cheap ticket...ill take flight center up on the "beat any price
deal" just as an exercise to see where the catch is.

So just thinking do flight center do e-tickets?...maybe that's the catch.

There is no catch!!! ... they will beat the price for you if they still make profit on the ticket ..... or they will refuse to match or beat the price if they don't make money on the ticket. its very simple ..... just an old marketing gimmick


I have tested their so called "LOW PRICE PROMISE" policy twice, and in both case... they refuse to beat or even match the price for me. 1st time it was a flight from Sydney to Bangkok, British Airway's website had special on for $950 including taxes, and FLT gave me $1150 for the same flight, when i mention the $950 from BA's website they basically refuse to beat or match the BA's price, and she told me to book my flight via BA's website because it will be cheaper ..... 2nd time it was a flight from Sydney to Europe where the price difference was $300, it took them 2 weeks to come back to me and told me that they can not beat the price and they were happy to refund my deposit!!

Don't think for a minute that you are walking to FLT and you are getting the best price ..... you will need to do your homework before going to FLT ..... and in my experience i find their prices are not competitive ..... there are better places to book your ticket!!

 

[So_Cynical]

Re: FLT - Flight Centre

http://www.flightcentre.com.au/footer/misc/pages/links/low-price-promise

What prices will Flight Centre beat?

Flight Centre will beat any Domestic and International airfare and land quote that can be booked through:

* Other travel agents
* Airlines
* Internet (Australian registered websites only)
* Tour operators

Will Flight Centre accept a verbal quote?

No, you will be required to provide a written quote, that is currently available in the market place.
How much will Flight Centre beat other quotes by?

We will beat our competitors quotes by the following:

* we beat international airfares and all packages by $20
* We beat domestic and trans-Tasman fares by $5

As if u would bother for 5 or 20 bucks.

 

[prawn_86]

Re: FLT - Flight Centre

Nick - How long ago did you try and get those price beats? As i said before, i know two people who work as a travel agents for FLT, and they HAVE TO beat a quote brought to them, otherwise they can lose their job, as its a flight centre policy, but is monitored by the ACCC. You could probably go to the ACCC with your complaint. Its a legal requirement that they beat the price, due to the fact that they advertise it (even if it means FLT losing money).

SC - The stores i know will beat domestic flights by $20 and International by $50 at a minimum, and quite often they have cheaper deals anyway. Often i have heard of people coming in for a price beat and them being able to get flights for $100 cheaper anyway (the most i heard was $400 cheaper on a price beat).

 

[ROE]

Re: FLT - Flight Centre

There is no catch!!! ... they will beat the price for you if they still make profit on the ticket ..... or they will refuse to match or beat the price if they don't make money on the ticket. its very simple ..... just an old marketing gimmick


I have tested their so called "LOW PRICE PROMISE" policy twice, and in both case... they refuse to beat or even match the price for me. 1st time it was a flight from Sydney to Bangkok, British Airway's website had special on for $950 including taxes, and FLT gave me $1150 for the same flight, when i mention the $950 from BA's website they basically refuse to beat or match the BA's price, and she told me to book my flight via BA's website because it will be cheaper ..... 2nd time it was a flight from Sydney to Europe where the price difference was $300, it took them 2 weeks to come back to me and told me that they can not beat the price and they were happy to refund my deposit!!

Don't think for a minute that you are walking to FLT and you are getting the best price ..... you will need to do your homework before going to FLT ..... and in my experience i find their prices are not competitive ..... there are better places to book your ticket!!

You got to have written quote, it just too easy for you to come up with any price....they may advertise for that price but when it come to the quote it be a different stories.

JB, HVN and all the business I know in order for them to beat a very low quote you need a proper written quote else you are just bull****ting and try to get a low ball... If a big shop with massive buying power cant beat a quote you give them chance are the quote is bogus and no one else can do it, so good luck to you

 

[So_Cynical]

Re: FLT - Flight Centre

I got my regular *specials* email from travel.com.au (WFT) so as an exercise
i thought i would do a quick online comparison.

At Travel.com.au i clicked the Euro specials and clicked the second cheapest
flight...Asiana SYD to LON 2/3/9 > 31/3/9...got to the last click online booking
screen..ticket price $1279 with tax and all charges $1724.

At FLT front page, put my dates and other info in the "find and book" window
to the right, and that took me to a great list of all the flights on that day.

Asiana was there near the top with a flight price of $1415...136 dollars more, i
clicked inquire, expecting to go to the booking screen and found myself at a
email us about the flight screen. :dunno:

Perhaps there gona offer me a secret off line deal when i inquire.
or perhaps they can do the taxes cheaper.

 

[prawn_86]

Re: FLT - Flight Centre

Perhaps there gona offer me a secret off line deal when i inquire.
or perhaps they can do the taxes cheaper.

You sure are cynical...

If you have free time, take a screenshot, print it out and take it to a FLT agent. They have to beat it legally (otherwise you can report them to the ACCC etc). It may only be $50 but to some people its worth doing.

FLT would rather lose a bit of money on some flights, and that way outprice the competition. Squeeze the argins of the others, its what a market leader can do.

 

[Rainmaker2000]

Re: FLT - Flight Centre

What you guys are describing here is market power and bargaining position.......FLT just like Bunnings, Office works, BigW........WalMart.......work on an 'everyday' low prices model.....

That does not mean outragious specials or even everyday low prices..........it means that, should a consumer be bothered shopping around, FLT cause they are the dominant player wants be to the one with the last 'right of reply'......and as the dominant player can afford to offer the lowest price and make a loss if need be...........what this often means in practice is the dominant player has quite high margins and waits for the consumer, to ignite competition......

From an academic perspective in Competition law, this actually hits upon a fertile area of debate..........some say that a 'price beat guarantee' is actually anti-competitive in its own right.................Why?..........because the retailer is probably not offering the best price to start with but is actually threatening other retailors from undercutting them...........in effect saying, "don't bother competing with us, cause we will always offer the lowest price in the end".............the offers to beat prices "after you buy' something is an even stronger illustration of anti-competitiveness........why would a retailor promise to rebate money after someone has bought something?......Only a dominant retailor could afford to make such an offer...a big threat to the opposition not to discount

 

[sammy84]

Re: FLT - Flight Centre

From an academic perspective in Competition law, this actually hits upon a fertile area of debate..........some say that a 'price beat guarantee' is actually anti-competitive in its own right.................Why?..........because the retailer is probably not offering the best price to start with but is actually threatening other retailors from undercutting them...........in effect saying, "don't bother competing with us, cause we will always offer the lowest price in the end".............the offers to beat prices "after you buy' something is an even stronger illustration of anti-competitiveness........why would a retailor promise to rebate money after someone has bought something?......Only a dominant retailor could afford to make such an offer...a big threat to the opposition not to discount

You could also argue that there is a possible case of predatory pricing. FLT could only offer this special due to its substantial market power. They would offer the special price at a loss with the view of recouping costs later after having competitors exit the market. I do prefer your argument however. I'm surprised the ACCC has never fully addressed this matter.

 

[prawn_86]

Re: FLT - Flight Centre

Ok so i talked to my FLT contact about the price beat issue, here are a couple points:

- Recently FLT changed their marketing campaign from "If you find a cheaper price, we'll beat it" to "Lowest prices guaranteed" since this, there are select few times when the price beats wont be offered:

1. If the website is an international one or the airfare is in a different currency. This makes sense.
2. If the quote brought to them is already a price beat from a competitor. This is due to the fact that FLT would rather the competitor to take a loss than them.
3. If the flight you bring a quote in for is already booked out they cannot price beat as there are no seats left. To get a price beat it must be the exact same flight number, time etc.

Also to get a price beat you have to purchase the same day you bring the quote in, as prices/availability can change overnight.

So if your price is say, $300 lower than what FLT is offering, agents are still advised to beat that price to squeeze the competition. Also the agent gets a commission, even from a price beat, so why wouldnt they...?

 

[Nick453]

Re: FLT - Flight Centre

Nick - How long ago did you try and get those price beats? As i said before, i know two people who work as a travel agents for FLT, and they HAVE TO beat a quote brought to them, otherwise they can lose their job, as its a flight centre policy, but is monitored by the ACCC. You could probably go to the ACCC with your complaint. Its a legal requirement that they beat the price, due to the fact that they advertise it (even if it means FLT losing money).

SC - The stores i know will beat domestic flights by $20 and International by $50 at a minimum, and quite often they have cheaper deals anyway. Often i have heard of people coming in for a price beat and them being able to get flights for $100 cheaper anyway (the most i heard was $400 cheaper on a price beat).

It was around April last year and in 2007. I had written quote for both tickets and still they did not beat the price for me.
I did not bother with ACCC, going through ACCC sometimes could be lengthly process and no guaranteed result.

 

[Rainmaker2000]

Re: FLT - Flight Centre

Bit of an odd ball post........I was watching one of my favourite shows, "Californication (First Season)" and in one of the key scenes........just in background, I could see one of Flight Centres US stores........which I believe have all since been branded Liberty............

Anyway, I started thinking, here you have the US business with the greatest potential off any of FLT's markets, where do you think in FLT's current market capitalisation the US business sits........Since it's an overall loss maker, it's probable that a negative value is placed on it currently.....although I understand the 'business travel' in US makes a profit........it's a funny thing......picture all of FLT's employees in US going off to work each day in a business that would not exist if FLT worked off a franchise model......

I don't really see how the US business is running at an operating loss, I understand it's just write downs on the Liberty acquisition which was apparently solidly profitable on acquisition

Not many Aussie companies kick ass in the US but we keep going over there......It makes sense cause the rewards are so high.......and in an industry that I think naturally tends toward global domination (it's travel after all), I'd put a lot of money on FLT's US business churning out the equivalent of today's market cap ever year, in not a ridiculous future timeframe

 

[JTLP]

Re: FLT - Flight Centre

FLT announced half yearly's today...seems the general populous did not concur with what was touted from management.

Main thing that stood out to me was the divvie cut...which was interesting considering the amount of cash etc that FLT has on hand. I guess they are staying prudent in these times just like everyone else.

From reading the report it didn't seem too bad...everything seemed in line with previous guidance but Mr Market said no.

Also finished on it's daily low as well...mmmm

 

[oldblue]

Re: FLT - Flight Centre

It seems to me that if the SP gets much weaker it may prompt another attempt to take this company private.
I wonder if anyone has the will and the cash to do this.

Any feel for the situation, anyone?

 

[ROE]

Re: FLT - Flight Centre

FLT announced half yearly's today...seems the general populous did not concur with what was touted from management.

Main thing that stood out to me was the divvie cut...which was interesting considering the amount of cash etc that FLT has on hand. I guess they are staying prudent in these times just like everyone else.

From reading the report it didn't seem too bad...everything seemed in line with previous guidance but Mr Market said no.

Also finished on it's daily low as well...mmmm

Not bad result .. I was anticipate such drop with the share price..
FLT has always been pay out below their actual earning a model I like a lot. Retain the cash for expansion and use less debt.

I be picking up more at this price this week...Mr Market said no is a good thing when you are on accumulation phase

 

[ROE]

Re: FLT - Flight Centre

It seems to me that if the SP gets much weaker it may prompt another attempt to take this company private.
I wonder if anyone has the will and the cash to do this.

Any feel for the situation, anyone?

no one will sell out ....unless they paying a hefty price ..NAB just take 5% and PPT has nearly 10% and more with other funds.

I certainly don't want to sell my portion ...good company are rare dont want them to disappear into private hand

 

[persistentone]

Re: FLT - Flight Centre

I expected the decrease in earnings around 50%, but the way they completely hacked off their dividend completely broad-sided me. They have so much cash and such strong cash flow that I think they could have made a better stand on their dividend. Cutting it in half would have been an appropriate combination of fiscal prudence and generosity to the shareholders. Cutting your dividend effectively 75% when your earnings are down 57% seems to me like an overreaction.

I made my initial investment at around A$6 and that was clearly a mistake. I should have waited for the earnings release. By the time this global depression troughs, we may see FLT between A$2 and A$3. Without a strong dividend policy, the stock isn't going to hold at current levels for long.

 

[persistentone]

Re: FLT - Flight Centre Options

Can someone tell me where I can see a complete table of option strike prices and expiration months for stock options that trade for Flight Centre?

Can someone summarize any important differences between how Australian stock options and U.S. stock options trade? Are Australian options European or US style expiration?

 

[Rainmaker2000]

Re: FLT - Flight Centre

Guys.....can I reiterate....Flight Centre has a small debt.......they tell you that at end of their slide presentation......the cash you see on the balance sheet is money travellers have paid, which will get passed on to holiday providers........

The result was not as terrible as expected...........existing business outside of Liberty only declined 14.5% on more costs.....gross profit was actually up on last year........and the Australian business looks like it was stable.....this is pretty good as last year was an out of this world result which sent the shares to about 32$

The Liberty Acquisition was outstandingly worse than anyone could expect and whilst contained a number of deliberate one-offs, will not get that better quickly...............worryingly, it had a trading loss

The bottom line however, is that this company based on a simple competitive advantage based on passing down profit incentives right down to the lowest level sales person...........how does it go ROE......Family, Tribe, Village.....that's FLT centre DNA........

They are implementing this culture on the existing US business.....Can they tame the US???? It would be hard to bet against.......Even if they don't, the Business travel business looks to be more than capable of pulling up the slack in the longer term.....If they can, the potential is enormous.....Liberty is already I think the second largest bricks and morter agency in US

For those wanting some FLT options, I don't know anywhere you can get them.........While FLT may be one of the top 10 travel companies in the world, it's market cap is currently almost small cap status........I doubt they offer such options