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Flight Centre Uses Technology Investment to Increase Productivity on Path Back to Profitability and Dividends

Major Australian travel agency Flight Centre Ltd released its annual report this week. The report sees the company return to generating profit and paying dividends after a period of crisis during the pandemic. What some people may not realise is Flight Centre is largely a technology-driven business. The company has a large Software development expenditure annually, noting that:

• Software Intangible asset additions during FY23 exceeded $70M per the intangible asset note in the financial report;
• In addition, Research costs associated with Software Development are expensed as incurred.

An article in the AFR commenting on Flight Centre’s results discusses how they were able to achieve the FY23 result, noting:

• Persistently high labour costs and staff shortages presented a challenge to Australian companies in FY23;
• Successful results require productivity gains (achieving more with less or constrained resources);
• Flight Centre was able to generate 52% more productivity out of each employee in FY23;
• Sales per full-time employee were 52% higher in FY23 than in FY19. Each staff member sold an average $1.8 million in bookings last year versus $1.2 million in FY19.
• Managing director Graham Turner says work on tech platforms had improved productivity, particularly on the corporate travel side of the business, and he was “pretty confident” that a lot of the productivity gains would be kept, even as the total value of its bookings is likely to climb to new highs.

Business Investment in R&D should be a key focus in helping Australia through the current economic challenges confronting the country.

Policymakers should ensure that suitable settings are in place (including business access to resources and the maintenance of a stable, generous R&D Tax Incentive) to assist businesses in playing their role in increasing Australia’s productivity and reducing inflation.

Please get in touch with our office if you would like to speak to someone about a potential  R&D claim, or check out our website for more information.