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I'm not sure if this applies to WEB and its online operations but Qantas announced today they were going to make some pretty large cuts to travel agent commissions.
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In reply to: azure on Monday 05/12/05 10:35pm

FLT, TVL, WEB are all going to get hit by this, watch them all drop I reckon

 

 

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In reply to: sabretoothed on Monday 05/12/05 10:44pm

actually WEB charge a fee, which they could increase by say $3, that would equal a $300 air ticket @ the 1% they were getting from QAn.

 

My guess is they will actaually get a REVENUE rise if that happens.

 

Most domestic ticket would be less then my assumed $300.

 

 

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In reply to: spottygoose on Monday 05/12/05 03:58pm

Just need some more buyers Spottygoose.WEB will hit .50 cents within a short period of time with Christmas around the corner and will then launch towards $1 with 6 months. All the fundimentials are there.

 

JGK http://www.sharescene.com/html/emoticons/tongue.gif

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Webjet soars as net factor clips Flight Centre

 

Share Intelligence

By James Kirby

December 11, 2005

 

 

Talk about a reversal of fortune. Three years ago, I talked to David Clarke, chief executive of Webjet, the listed online booking agency. Its share price was trading at an embarrassing 7ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ - the company had floated in 1999 at 15ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ - and Clarke was doing it tough.

 

At the time, the travel agency chain Flight Centre was emerging as one of the big success stories. It was a market favourite and, at $28 a share, a $3 billion company. What's more, Flight Centre had won an employer-of-the-year prize, suggesting it was a great place to work at and invest in.

 

Clarke was the little guy while Flight Centre's founder, Graham Turner, was the big guy. And Clarke was getting beaten up every other day. Clarke, formerly chief executive at travel agency Jetset, had started his own business at the age of 53; Flight Centre's Turner had built a billion-dollar business before Clarke gave up his day job.

 

Back then, I ribbed Clarke about Flight Centre's runaway success. How could Webjet ever win against such competition? His reply was that Webjet would win because the industry was being turned on its head by the internet.

 

He said agents could no longer expect commissions for the simple service of handling transactions, that the internet allowed customers to buy tickets without ever going into a travel agent's office and that it allowed the airlines to squeeze middlemen such as Flight Centre with its 1000 outlets and high overheads.

 

Last Monday, Qantas abolished travel agency commissions for domestic travel and began phasing out commissions for international travel.

 

Flight Centre's share price - already sinking due to profit downgrades - went into a tailspin and will begin trading tomorrow at $9.60, roughly a third of the price it was enjoying when I talked to Clarke in 2002. And Webjet will kick off tomorrow at 35 cents, five times better than when Clarke was struggling.

 

Put the two price trajectories on a graph and you get something that looks like an 'X'.Now it is Flight Centre that is having to play catch up.

 

It has an important project inside the business tagged Full Throttle that is aimed at refashioning elements of its business around the internet. But it's too late: Flight Centre is too big to turn around in mid-air.

The Qantas decision on commissions is a body blow for any travel agent trying to make money using the old model of clipping the ticket in your local shopping strip.

 

Clarke says: "We always had the right model. The internet is changing everything in this business, and next year it's going to change again when Jetstar goes to international destinations. The commissions that underpinned many travel agencies are gone, and if anyone, including anyone at Flight Centre, thinks they'll ever come back, it's a fantasy."

 

So, once again, the internet has destroyed a big chunk of an industry. This time it's the mid-market travel agency, with Flight Centre its biggest victim. Turner built an amazing business at Flight Centre. Whereas Flight Centre has always been a great place to work, I don't see Clarke winning prizes as Australia's favourite employer.

 

But the Flight Centre growth story is over. The future belongs to operations such as Webjet

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In reply to: spottygoose on Sunday 11/12/05 09:38pm

now that is an article that makes me smile goose. well spotted! (no pun intended). let us hope WEB can make the most of it's opportunity and that the punters out there recognise its potential value.

 

http://www.sharescene.com/html/emoticons/ph34r.gif

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