Airfare woes dog Jetset Travelworld

Airfare woes dog Jetset Travelworld
By admin

Jetset Travelworld chief Peter Lacaze has spoken of the “biggest problem” facing the company – the fierce discounting of international airfares.

The firm revealed last week that cheap average airfares were undermining its performance, with total transactional value below expectations.

Speaking to Travel Today yesterday, Lacaze elaborated on the issue and claimed it was “resonating right through the industry”.

“It has not been talked about that much but it really impacts us because we have a biased towards international outbound. We are not as strong as some of our competitors in the domestic area,” Lacaze said. “Those international airfares have fallen 5% or 6% over the course of the financial year. All of our contracts are written in dollars so we are doing more work for less money.”

Asked if it was proving tough to hit volume targets, Lacaze said: “Yes, definitely. You simply get less money. Where we used to get $100 we now get $94.”

March saw a marginal lift in prices, Lacaze said, but it was unclear whether they had carried over into April. “But there is not a stream of airlines putting up fares so I think the discounted environment is with us for a while. Even if airfares climbed 5% they would still be at 10-year lows. It’s an intensely competitive market and you always have someone looking to get some advantage at the margin.”

Lacaze refused to be drawn on how much airfares need to increase but said 5% “would be a step in the right direction”.

Despite the TTV warning, Lacaze insisted the business was still “not doing too badly”.

“It’s not as if we are losing money, it’s not a disaster,” he stressed. “The announcement [to the ASX] was a precautionary statement.”

Lacaze said it was looking to “increase productivity and get the business at less cost”.

A review of its business is underway but Lacaze declined to expand.

“We are not at the point of being able to say anything on that yet,” he said.

Turning to the corporate division, which could be the subject of a write down unless trading improves, Lacaze said it was exploring how it can reduce the “high cost” of servicing government contracts.

Manual, rather than automated functions, was adding to the cost, he said.

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