Tony D'Astolfo: Hi, and welcome to Zeno Labs Live, the new live video series from travel booking and expense management provider, Serko. We feature subject matter experts on various topics across the corporate travel industry. I'm Tony D'Astolfo, and today I'm joined from down under by James Kavanagh, managing director Australia with the Flight Centre Group. James, welcome.
James Kavanagh: Hello Tony. Thank you for having me.
Tony D'Astolfo: Now, most everybody calls you JK, so I'm going to dispense with the formalities here and just say, JK, it's great to have you with us. I'm okay with that, right?
James Kavanagh: Yeah. That's fantastic.
Tony D'Astolfo: Now, listen, before we jump in one other thing, when we were doing the little prep session, because as somebody who has been accused of having an accent, I noticed you have one as well, but you're the Managing Director for Australia. It doesn't sound like an Aussie, though. Give us a little more on the background there.
James Kavanagh: Well, I'm from Dublin, Ireland, but I've lived out here for nearly 17 years and I'm coming from our HQ in Brisbane, actually. So you can see the surroundings of our meeting room. It feels like I'm in an airplane, but we may need to get some subtitles for the two of us.
Tony D'Astolfo: Yeah, exactly. All right. Well let's jump in and let's get down to business. Question number one, JK. Has the pandemic changed Flight Centre's service model, and more specifically, has it resulted in a change to your value proposition and how you serve your clients?
James Kavanagh: Tony, in many ways, actually, it's accentuated our value proposition. Because in my view the travel industry is no stranger to a crisis, but nothing ever as big as this in terms of the magnitude of it. But every seven to 10 years something happens. So the ‘why’ of what we do is generally the same in terms of traveler comfort, savings, duty of care, all of those elements. However, what we do and how we do it, I think has had a complete overhaul with some real focus in some key areas.
Our value proposition has changed in a few ways. We've continued to invest heavily in technology and our core essential services like account management in that we've retained them and made sure that they're really important because our customers’ problems are changing and their needs are changing. Some of the things that we've done during this period is really created some bespoke solutions for our clients, including managing hotel quarantine arrangements, through to being onsite in police headquarters with some of the departments that we service, and just being really close to our customers during this period to make sure that we're right in front of what they need during this time.
So I think it's actually really accentuated what we do. I always say we come into our own in a crisis, because on a sunny day a lot of people can do what we do. But in a crisis, that's when we really stand out.
Tony D'Astolfo: No, it's so true. The value of a good travel person is when things go sideways. It's pretty easy to do it, but it's when things are outside the norm that a good travel counselor earns their keep. Now, I read recently, you guys put out a report, FCM put out a report. It was called a fresh approach to business travel. It had a bunch of different sections in there, but it seems to me, as an observer, that the APAC region, particularly down under, is leading the way out of the pandemic. You guys are further along relative to returning to travel. Now, the report referenced one section called lessons, the lessons from 2020. So what are those? Can you give us a quick overview for our North American and the rest of world audience?
James Kavanagh: Looking at this part of the world, different geographies have managed the pandemic differently, tighter measurements around border restrictions here within Australia and beyond. And I think one of the things as a result of that, it means that domestic travel and local travel is certainly returning quicker. When I look to overseas markets like the Northern hemisphere, they certainly had a lot more freedom to travel still during the pandemic and probably more a ‘living with the virus’ position was a little bit more open than in this market here. So, while we went for a suppression of the virus strategy, we were certainly moving more towards an elimination strategy.
But what I see changing now is there's a real focus on things like duty of care, travel risk management, et cetera, et cetera. That's going to be consistent globally. The rollout of the vaccine is going to be really important and that will determine how different countries start to accelerate their international travel.
You can see certainly in the US and the UK, the vaccination rate is certainly taking off. But as a result of that, I actually see that the conversation around digital passports, different technology solutions, is probably more progressive in the Northern hemisphere. And what we might see then is international travel recovering a lot quicker in those markets, whereas in this part of the world, it might be a bit more conservative with international travel. Good news this week is that we saw a travel bubble opening between Australia and New Zealand. We expect to see more of them happening, where we're hoping to connect with Singapore next and then more markets within the region. But it's more than likely going to be with countries who were at a similar rate and pace at how they're managing the virus and what the level of tolerance is with living with the virus as well.
Tony D'Astolfo: Interesting. I'm going to pose the question. What should travel managers consider when looking to their travel management company as business recovers? How do you see yourself changing relative to the needs of the travel managers that are out there?
James Kavanagh: This one is really important. Around the first thing I'd say is actually check on how financially sound your travel management company is, because this position has hit the travel industry worldwide and most travel agency groups, if not all, have downsized in one shape or another, because of demand. But looking at your travel management company, it's going to be important to see what their cash runway is, what their liquidity looks like, because these things will be important around investing in the solutions that are right for your needs going forward. So, can they continue to invest in a proactive way that's going to help you look after all your credits that you need? But also what does the roadmap look like when it comes to future technology investments, enhancements around traveler safety, security, comfort? All of those elements are really, really important now to consider.
When you look at proactive travel management, you really need to look at competency of your account management function and how they're going to guide you through the abundance of information that's out there, and really just make the complex simple so that travel managers can fit it into their program and build a program that's fit for purpose, so the return to travel can be a lot easier for their organization.
Tony D'Astolfo: I think the viability one is a great one. I've been kind of saying the same thing. You don't see it in RFPs, when people put out an RFP for whatever, whether it be in our business, the OBT-expense application or a TMC, but viability going forward is going to be key, because this has been unlike any of the other shocks to the industry. This has been much longer, much deeper, and so I think that's a great one, the viability part.
Let me ask you the question, we've seen a number of corporations here in North America actually turn off their booking tool—which, not great news for us, but they're basically looking towards agent assist, because they don't want the traveler to make a mistake that could cost them time, money, and endanger them. So how do you see the role of technology supporting a return to travel going forward?
James Kavanagh: I think it's going to play a huge role. If we think back to last March, we were seeing adoption rates of generally around mid 70s, in terms of most corporate programs on average or up around there. What we noticed pretty quickly was that this halved. Offline travel became a real thing for a variety of reasons. Be it control, be it getting information at the right time because of the changing nature of what was going on around us. We also really realize that people want to speak to a trusted advisor. So our proposition is really much about a blend of people and technology to create the best solution. When information is changing so frequently, schedule changes, we're actually canceling constantly, our customers want to speak to a person to get certainty and confidence.
But as things stabilize and normalize a lot more, the tech has actually... a lot of the technology is built up now in a way to provide timely, contextual information around what's the state of the borders? What documentation do I need? What hotels, et cetera, are COVID safe? All of these products are being built into the technology that we use here at FCM Corporate Traveller, and also what Serko provides as well. So I think it's about building confidence with our customers again, that the tech, once things stabilize, will have all that information that you need and provide it to you in a timely, contextual way that will actually make your trip a lot more seamless, pre-trip, on-trip, and then as you return home.
I still think it's going to be a hybrid position for a while because the road ahead is going to be bumpy for the next number of months, but once things stabilize, you'll find then the confidence. People will need to use tech to become more efficient in the process, and I think it's going to really take off.
Tony D'Astolfo: Good. I'm glad to hear it. I hope that is the case. I do agree with you. And I think that, like you said, the point of purchase is so critical here. Final question in this section. What advice do you have for travel managers as they think about adapting their program for a post pandemic world?
James Kavanagh: Yeah. Look, this is really important. Deep consultation is critically important. So that means speaking with your executive team about what a return to travel looks like. How much demand will you have? Are there other solutions, alternatives to travel? Obviously, we hope that people will travel. We know that when borders open there is that pent-up demand that happens there.
Some of the things to look at then is real consultation around risks, security teams, insurance personnel, et cetera, to make sure you've got all the right stakeholders around the table to help build the right policy for the future. There's a lot of things that travelers are going to be thinking about, that things have changed, and it's not going to be the same as when you did travel before. Schedules are changing frequently, preparedness is critically important. Doing a health check on all of your tech tools is critically important to make sure that they're programmed in the right way to fit the new policy.
What we're seeing a lot as well, is we're talking through a lot of stuff like scenario planning. What happens in the event that there is a snap lockdown while I'm traveling on this trip? Does my insurance policy cover me if I contract COVID? Well, it might if you're overseas, but it might not cover you for your quarantine in a hotel if that needs to happen. So a lot of scenario planning is really important to make sure that your team is thinking this way. Looking at your supply deals is incredibly important. What are the spot rates that need to be considered now — companies may not have the same volume as before. So what types of spot rates and dynamic pricing can we get to keep the costs down as well?
We can certainly see in our market here, prices are coming down more and more as things open up. Internationally is still reasonably expensive, but that will come down in time as well. Cost management will become more of a focus as we get through thinking about traveler safety, approval to travel, all of those elements.
Tony D'Astolfo: Good stuff. Thanks for that. JK, we're going to switch it up a little bit now, going to move into something we call the Zeno Zone. This is some off the top of your head responses to questions that will hopefully help us get to know JK a little better as the person, not the business guy. You ready to jump into the Zeno Zone?
James Kavanagh: I'm excited, Tony.
Tony D'Astolfo: Here we go. Here we go. Number one question. You have a major business decision to make, and you can make one call to anyone. Who gets the call?
James Kavanagh: Okay. I'm going to break the rules here and go situational. If it's a global corporate travel program, I'm calling Chris Galanty [Global CEO of Flight Centre Corporate] in the UK. If it's a local one, I'm calling my two experts, Mel Elf [General Manager, Australia] at FCM Travel Solutions and Tom Walley [General Manager, Australia] at Corporate Traveller.
Tony D'Astolfo: It's no problem, multiple folks is okay. Now you have three dinner guests, dead or alive from the beginning of time till today, who are the three dinner guests at JK's table?
James Kavanagh: I love this question and I love playing this one myself. So, Darrin Grafton is a lot of fun and I'd love to have him along, of course. He's always good to have there, but he didn't make the top three.
Tony D'Astolfo: Well, he would have picked up the tab, too, because I know he's very gracious like that.
James Kavanagh: Oh, that's good. But look, my top three right now, and they do change a lot, but right now because of the year that we have had, I need a lot of laughs at my table, so number one is going to be Billy Connolly, without a shadow of a doubt. He would certainly make us laugh. David Attenborough, because I just love a lot about what he brings to so many facets of life. And Graham Norton the TV host from the UK to help facilitate it and make sure it's a great event.
Tony D'Astolfo: It sounds like there'll be a fair bit of alcohol with that group. And I'm sure it'd be a blast. Here's the other question as a follow-up to this one, are you guys sitting in a fine dining establishment, or are you in a dive bar?
James Kavanagh: Oh, we're progressive. So because of COVID restrictions, we're starting off in one place and then we're moving.
Tony D'Astolfo: I like it. Last one. I can't let you get away without making a prediction, something you think is going to happen in our industry in the next 12 months.
James Kavanagh: I think the recovery is not going to be linear. It's definitely going to be bumpy and it's going to boom. So, there are my thoughts on it. What I think we all need to be watching out for as well is that the whole sector has changed. So, keeping an eye on things like distribution and the change of NDC coming our way as well. These are conversations that were happening pre-COVID. It's keeping an eye on what they were, how much have they accelerated during this time as we come out of this into the next 12 months. But I'm super excited about it, really optimistic and can't wait to see our great industry return.
Tony D'Astolfo: I'm with you on that one as well. JK, it's been a real pleasure. I want to thank you so much for doing this. I also want to thank everybody who's joining us today, live, and we hope you'll join us on our next installment of Zeno Labs Live. For now, this is Tony D'Astolfo and James Kavanagh signing off.
James Kavanagh: Thank you, Tony. See you soon.
Have feedback for our team or ideas for other guests we should host on future episodes of Zeno Labs Live? Drop us a line.