Back to the future for the Aussie industry?

Bruce Piper looks into some of this week's intriguing industry developments, which seem to be turning back the clock in contrast to conventional wisdom about where the Australian travel sector is heading.

CONFIRMATION this week that Flight Centre is planning to reopen scores more outlets from its famed red-and-white branded bricks and mortar network across the country is perhaps an indication that, at least when it comes to the Australian travel market, the more things change, the more they stay the same.

Prior to the COVID-19 pandemic, Australia was a significant outlier globally in terms of the number of physical travel agency locations here. I recall some years ago during a visit to Los Angeles briefing the CEO of a major US home-based agent network, who was keen to explore opportunities to expand into Australia. The executive, who shall remain unnamed, wanted some background on the Australian travel agency landscape, and expressed utter disbelief when I explained that there were literally hundreds of agency high street locations across the country. He promised that when his business launched in Australia there would be no need for agents to continue to pay rent or source leads from passers-by, assuring me that storefronts would go the way of the dinosaurs.

Indeed that has been the popular rhetoric from those “in the know” for many years, expecting Australia to follow other major markets which in many cases have seen travel agency offices almost completely disappear. And yet the model of high street distribution has continued to flourish locally – notwithstanding the huge hiccup from the pandemic which exposed the problem of having to maintain monthly rental payments when businesses had no income.

Flight Centre was forced to accelerate plans to rationalise its shop network, particularly in some major shopping centres where in many cases it was operating multiple brands in various outlets, a strategy which had seen it increasingly dominate its share of the travel voice by eliminating competition. For example, at Sydney’s Macquarie Shopping Centre adjacent to travelBulletin world headquarters, I recall at least five Flight Centre Travel Group stores at one time – under brands including CruiseAbout, Travel Money, Escape Travel, Student Flights and of course the flagship Flight Centre brand too. A nice stream of rental income for the centre’s owner – but also totally dominating the travel mindset of the millions of people who pass through each year.

This week’s announcement that Flight Centre is reopening 35 stores across the country is in no way a return to those heady days of physical real-estate dominance, but is an indication that perhaps the pendulum has not swung quite as far away from high street travel agency presence as may have been expected. Brent Novak, Flight Centre Australia General Manager, noted that while the company was of course continuing to pursue its much-vaunted omnichannel strategy, for some customers there’s nothing quite like a face-to-face consultation.

“While we continue to enhance our online booking experience for customers, we know how vital it is to have real people in real buildings providing expert customer service with a human touch. For many people, that’s their number one reason for coming back to us,” he said.

“At a time when regional and suburban communities in Australia are witnessing services such as banking and telecommunications closing branches and becoming available only online, Flight Centre will continue to provide customers with the choice.”

“Rather than sacrificing bricks-and-mortar for broader online and call centre services, we’re committed to enhancing all our customer channels because we recognise no two customers are the same in terms of how they like to book travel,” Novak added – noting that Flight Centre had already recruited more than 1,000 travel consultants and team leaders over the last year, with over 200 vacancies still to be filled.

As for that US-based executive who was so incredulous at the local dominance of bricks and mortar – well his planned launch has still not happened, and as the landscape evolves I’ll be surprised if it does – unless it’s in partnership with an existing network which, you guessed it, will be underpinned by a physical store network.

MEANWHILE another counter-intuitive approach to the travel industry was further confirmed last week in a discussion with Carly Povey, Chief Operating Officer of startup domestic carrier Bonza. The airline is determined to forge a unique path, with its website not even allowing bookings, in preference to an “app-first” approach for all direct reservations. But in an acknowledgement of the key role travel agents play in terms of being intermediaries, the airline is also now taking registrations from the industry for a dedicated trade portal.

This is recognition that Bonza is likely to be reliant on travel agents for a not insignificant proportion of its business, particularly in some of the regional locations where it is plotting its network. I asked Povey whether Bonza planned to remunerate travel agents for their bookings, and while she said the carrier was not envisioning a “traditional commission-based model” Bonza is likely to facilitate agents charging service fees and is hoping for a strong partnership with the industry particularly for customers who are not technology-savvy.

“From our perspective, it’s about saying to an agent that we’ll make an easy way for you to be able to book us, because an app isn’t realistic in that environment,” she said.

Povey also flagged working with the industry on ways to simplify group bookings, wanting to “give the agent community the ability to actually help people in their local towns who want to fly”. It’s unlikely to produce rivers of gold for regional travel agents, but nonetheless the inclusion of the industry in Bonza’s distribution plans is welcome recognition that personal relationships, face-to-face sales and the ability to influence travel choices mean there are still plenty of ways for advisors to add value to the process.

On a final note, Bonza is also tonight launching a 24-hour Instagram poll to determine the name of its third plane. As a quintessential Aussie moniker which has had a pretty tough time over the last 50 years (just ask the few of us who are left!), I’m advocating for Bruce – please help out by placing your vote at after 6pm.

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