I thought Flight Centre was done: Skroo opens up about Covid
For a few weeks during the pandemic Graham “Skroo” Turner thought Flight Centre, the company he co-founded and still leads, was doomed, but the recovery was now in place and he expects sky-high air fares to start falling by early next year.
Turner, who was speaking at the Flight Centre Corporate Illuminate conference in Sydney, said he had asked himself the question: what if Flight Centre couldnāt raise the money to get through the period of closed borders.
āThere probably were a few weeks where I thought, yeah, ok, this might be it for the business,ā Turner said.
But he said the London based Topdeck Travel business he started was also difficult.
āWe started Topdeck in 1973 and that was a tough gig. We lost the odd passenger through road accidents, we used to get fined for not having buses registered and no licences and then we ran buses into Katmandu so everything we went through in the 70s ā¦ the pandemic was pretty piss weak, really,ā he joked.
āWe went from having expenses of $230 million a month and income of $250 million to $270 million to having the same basic expenses but income dropped to nothing.
āWe had about $1.1 billion in the bank so we have about three or four months of cash to survive.ā
Turner also criticised governments for shutting borders and said a big lesson from the pandemic was that business had to be part of the response.
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āShutting state borders is just so ridiculous and having lockdowns when you are protecting 1 or 2 per cent of the population and you locked down badly 100 per cent is just so ridiculous.
āBusiness was not visible in terms of being part of the discussion.
āPublic health officials and politicians making all the decisions ā¦ no evidence, no science for most of their decisions ā¦ we canāt afford to let that happen again.ā
He said Flight Centre was a changed business. Corporate travel was a much bigger part of the business and there was talk within the company to change its core values (irreverence, ownership and egalitarianism) so that irreverence was dropped for āfunā which he admitted was hard to define.
āFun runs a lot deeper than just enjoying yourself,ā he said.
āWe are up to more than pre-Covid sales now (in corporate travel), a bit because of high air fares, which is not great and in leisure we are back to 70 per cent and we are doing this with half the number of people.
āWe are still only 11,500 and we were 21,000 to 22,000 pre-Covid. We are doing more online, we have less shops.
āWe believe we will be back to prior levels this financial year in terms of sales and we will be well-exceeding pre-Covid by financial year 2024-25.
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āBy that stage we will be 25 per cent larger than we were pre-Covid in terms of sales and significantly more profit. We will probably be in another four or five countries.ā
He said Australia still only had 60 per cent of its aircraft capacity back on line āand this is driving pricesā.
āSome airlines want to increase capacity and some are quite happy with it being reduced because they can charge more and fill up seats.
āWe think capacity (without China) will be back to 70 per cent by Christmas and probably 80 per cent by January, February. China will probably start travelling again in January.
āThe fares will start coming off post-Christmas, probably January in premium fares.
āIt will still be more expensive through to summer as capacity comes back to 100 per cent.ā
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āWe still only have 60 per cent of our capac
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