Travellers beware – bargain airline tickets could be about to dry up.
The head of travel agency Flight Centre believes airline tickets have hit an all-time low and are about to start climbing.
But while turnaround in fares might upset travellers, it will be good for the global travel agency chain’s coffers.
“There will be some inflation in fares, and I think the move to more premium fares will tend to help our total transaction value growth,” managing director Graham Turner told analysts on Tuesday.
But while cheap tickets have enticed more people to the skies in recent times, some travellers have also been choosing to upgrade.
Mr Turner said since the global financial crisis, many customers have increased how much they spent on travel, with baby boomers in particular opting for premium economy tickets.
“(Passengers) are prepared to pay a bit more for it … so it’s good business for us, good business for the airlines,” he said.
“The overall move from economy to business, particularly in leisure (travel), is a positive move for us and the travel industry generally.”
Mr Turner’s comments came as Flight Centre reported a 13 per cent rise in first half net profit, buoyed by record earnings by its operations in Australia, China, Britain and Singapore.
Net profit rose to $91.8 million in the six months to December 31, from $81.6 million a year earlier.
Total revenue rose to $1 billion from $954.1 million.
The group has continued to enjoy strong trading results in January and believes it can lift its full year pre-tax profit by up to $125 million, to $305-$315 million.
Mr Turner said while Flight Centre was focused on organic growth, it remained interested in acquisitions.
Meanwhile, Flight Centre plans to open its 2500th outlet during the fourth quarter.
Shop and sales staff numbers have increased about five per cent during the past year.
Flight Centre lifted its fully-franked interim dividend by five cents to 46 cents a share.
Its shares closed 79 cents lower at $31.50.