Flight Center Travel Group
Introduction:
Flight Centre Limited is an Australian-based travel agency, established in early 1980s that has extended its networks throughout countries such as Australia, New Zealand, USA, Canada, Singapore and UAE. The company consists of 30 brands, employs 15,000 personnel globally and has claimed a number of employer and travel agency awards worldwide, in addition to being named best employer in Australia twice (Flight Centre, 2016). The company is listed on the Australian Stock Exchange since 1995 (ASX, 2016). The company aims to provide exciting products and lead the travel market by delivering unique experiences to its customers, employees and business partners (Flight Centre Travel Group, 2015). In recent times travel companies have adopted collaborative trip planning tools as well as utilized user-generated content to enhance user experience while planning a trip (Sigala et al., 2012).
PESTLE Analysis
As stated by Chatham (2015), a PESTLE analysis ascertains how several macro environmental factors such as Political, Economic, Social, Technology, Legal, and Environmental influence an organization as well its competitive position. This analysis assists businesses to develop competitive strategies to exploit optimum opportunities along with assessing the prospective of entering new markets.
P: Political
Between the years 2010 and 2015, there were five different prime ministers in Australia, although only one change occurred at the ballot box in 2013 (Sydney Morning Herald, 2016). This shows that there is political instability in the country, which in turn may have negative implications for the economy as it can lead to unpredictable changes in the market. Tourism can contribute as well as be influenced by international situations such as health scares and terrorism (Sharpley et al., 2014). During the Ebola crisis in 2014, according to the Australian government legislation, a patient with Ebola virus disease could be confined with orders to stay at home (The Guardian, 2015). Laws such as these would discourage tourists from visiting the country and might negatively influence tourism numbers, resulting in decreased profits for the company.
E: Economic
In the year ended June 30, 2015 the company reported a $5.9 billion turnover solely from its corporate travel segment, which represents 33.6 percent of the group’s total transactions. Furthermore, the company acquired Business Travel Development, a travel agency in the Netherlands, hence marking its presence in Europe (Sydney Morning Herald, 2016). Additionally, the company is looking forward to expand into markets such as China, Mexico and Malaysia (Yahoo Finance, 2016). According to Lea (2006), developing countries have been drawn towards tourism as a cure for balance-of-payments deficits and unemployment as well as poverty. As a consequence, travel agencies are competing fiercely for potential markets in countries such as India, China, Mexico, Thailand and Malaysia.
S: Social
The User Generated Content (UGC) produced by consumers of the business includes comments, blogs, reviews and experiences using the website. This content has a significant impact on the traveler’s behaviors and decision-making processes as well as being utilizedfor improving the efficiency of business operations (Sigala et al., 2012). A business such as Flight Centre can utilize comments and reviews as well as complaints from users to improve the customer experience. Additionally, by providing incentives such as travel deals, the company can encourage customers to provide valuable feedback, allowing them to modify existing products and services to focus on the needs and wants of the consumers.
T: Technological
With companies excessively incorporating social media in their marketing campaigns, Flight Centre Limited offers contests, giveaways and travel deals to the people who interact with the company on social media (Flight Centre Canada, 2016). Furthermore, due to recent rise in cyber-crime incidents such as hacking, consumers are concerned about payment security. Hence, an organization such as Flight Centre, which relies on the Internet for a significant amount of transactions, should incorporate measures to counter customer losses due to cyber-crimes (Buhalis& Law, 2008).
L: Legal
The Australian Competition and Consumer Commission accused the company of attempting to induce an infringement of price-fixing sanctions (ACCC, 2015). In 2013, it was discovered that the company and certain competitors competed for the net revenues on the airfares sale. Furthermore, on several incidences between the years 2005 and 2009 the company prevented other airlines companies from cutting prices on international routes, which was against the law and the court considered to be anti-competitive practice. Consequently, the court ordered the company to pay a fine of 11 million dollars. However, in 2015, the company appealed against this decision, winning a refund of the fines (News.com.au, 2015). Due to rising awareness of and the importance placed on competition laws, negative media presence will drastically affect sales of online travel agencies.
E: Environmental
Through reducing energy usage by using sensor lighting in offices, utilizing energy efficient appliances, automatic switch-off time clocks for all signage as well as minimizing after hours air-conditioning use, the company is working to reduce office-related carbon emissions (Flight Centre Travel Group, 2016). Rising awareness about environmental issues results in the rise in popularity of ecotourism, which leads to a demand for ecofriendly travel agencies (Davies and Cahill, 2000). To meet this demand, Flight Centre Limited should incorporate sustainable tourism practices and should recommend environmentally friendly options for tourists to effectively mobilize them as positive change agents (Verbeek&Mommaas, 2008).
Conclusion:
In conclusion, the environmental analysis of Flight Centre Limited establishes the various positive and negative factors affecting the company. The company has recently entered the European market and has a significant turnover. However, to maintain the market share, the company should focus on utilizing social media, UGC, complaints and reviews in order to develop effective strategies aimed at the needs of the consumers. There is rising awareness about competition laws amongst consumers and competitors. As a consequence, negative media presence will significantly affect sales. Additionally, the company should invest in sustainable tourism measures as there is a rising target for ecofriendly tourism.
References
ASX. (2016). Flight Centre Travel Group LIMITED details.www.asx.com.au. Retrieved 23 March 2016, from http://www.asx.com.au/asx/research/company.do#!/FLT/details
Australian Consumer and Competition Commission (ACCC). (2015). ACCC unsuccessful in appeal by Flight Centre. Australian Competition and Consumer Commission. Retrieved 23 March 2016, from https://www.accc.gov.au/media-release/accc-unsuccessful-in-appeal-by-flight-centre
Buhalis, D., & Law, R. (2008). Progress in information technology and tourism management: 20 years on and 10 years after the Internet—The state of eTourism research.Tourism Management, 29(4), 609-623.doi:10.1016/j.tourman.2008.01.005
Davies, T., & Cahill, S. (2000). Environmental implications of the tourism industry (pp. 00-14).Resources for the Future.
Flight Centre Canada. (2016). Flight Centre Social Channels | Flight Centre. Flightcentre.ca. Retrieved 23 March 2016, from http://www.flightcentre.ca/social-channels
Flight Centre Travel Group. (2015). 2015 Annual Report. Retrieved from http://www.fctgl.com/sites/fctgl.com/files/150918%20FY15%20FLT%20Annual%20Report.pdf
Flight Centre Travel Group. (2016). Corporate Social Responsibility. Flight Centre Limited. Retrieved 23 March 2016, from http://www.fctgl.com/about-us/corporate-social-responsibility
Flight Centre. (2016). About Us. Flight Centre Limited. Retrieved 21 March 2016, from http://www.fctgl.com/about-us
Investopedia stock analysis: What’s the difference between Porter’s 5 forces and PESTLE analysis? (2015). Chatham: Newstex. Retrieved from http://gateway.library.qut.edu.au/login?url=http://search.proquest.com/docview/1672265872?accountid=13380
Lea, J. (2006).Tourism and development in the Third World.Routledge.
News.com.au. (2016). Think airfares are too expensive? NewsComAu. Retrieved 22 March 2016, from http://www.news.com.au/finance/business/travel/high-court-of-australia-to-hear-flight-centre-price-fixing-dispute/news-story/cc13819ee92b6d56f448fb5988bb3c8c
Sharpley, R., &Telfer, D. J. (Eds.). (2014). Tourism and development: concepts and issues (Vol. 63). Channel View Publications.
Sigala, M., Christou, E., &Gretzel, U. (Eds.). (2012). Social media in travel, tourism and hospitality: Theory, practice and cases. Ashgate Publishing, Ltd.
Sydney Morning Herald. (2016). Flight Centre expands to continental Europe with business travel buy. The Sydney Morning Herald. Retrieved 22 March 2016, from http://www.smh.com.au/business/flight-centre-expands-to-continental-europe-with-business-travel-buy-20160313-gni1b8.html
Sydney Morning Herald. (2016). Will Australia be caught short as politicians sacrifice the national interest to stay in power? The Sydney Morning Herald | Federal Politics. Retrieved 25 March 2016, from http://www.smh.com.au/federal-politics/political-opinion/will-australia-be-caught-short-as-politicians-sacrifice-the-national-interest-to-stay-in-power-20160302-gn8j0u.html
The Guardia. (2015). Anyone suspected of having Ebola would face quarantine or jail under new powers. The Guardian. Retrieved 25 March 2016, from http://www.theguardian.com/australia-news/2015/may/13/anyone-suspected-of-having-ebola-would-face-quarantine-or-jail-under-new-powers
Verbeek, D., &Mommaas, H. (2008). Transitions to sustainable tourism mobility: The social practices approach. Journal of Sustainable Tourism,16(6), 629-644.
Yahoo Finance. (2016). Flight Centre eyes China for expansion. Yahoo7 Finance Australia. Retrieved 23 March 2016, from https://au.finance.yahoo.com/news/flight-centre-eyes-china-expansion-234826988.html
