Financial Daily from THE HINDU group of publications
Saturday, Mar 12, 2005
Marketing - Strategy
Friends Globe eyes retail travel services
Mr Howard L. Stack, Director, Flight Centre Ltd, and Mr Rahul Nath, CEO and Country Manager, Friends Globe Travels Ltd, at a press conference in Bangalore on Friday. - G.R.N. Somashekar
Bangalore , March 11
FRIENDS Globe Travel Ltd plans to enter the retail travel services segment soon. It will, however, retain its focus on corporate travel business, which would eventually constitute 60 per cent of the overall business.
Announcing this at a joint press conference here, Mr Howard L. Stack, Director, Flight Centre Ltd (FCL) of Australia, and Mr Rahul Nath, CEO of Friends Globe Travel Ltd (FGTL), said the new joint venture, FCm Travel Solutions, expects to garner 10 per cent of the corporate travel business by next fiscal.
FGTL, which had a sales turnover of Rs 370 crore, currently enjoys a market share of about 7 per cent in the corporate travel business.
According to Mr Nath, the corporate travel business, which is estimated at Rs 6.500 crore, is set to grow at 10 to 15 per cent.
Mr Stack said India's robust economic growth was expected to fuel the company's topline and also with more and more multinational companies, both IT and non-IT sectors, moving into India, demand for business travel managers was expected to grow manifold.
Mr Nath and Mr Stack said the joint venture would focus on south India for their business, as the region was witnessing a phenomenal growth in corporate travel.
He said FTL would be investing Rs 5 crore by next year to increase its network to 26 locations from the present 10 to tap the market.
FCL of Australia recently acquired 51 per cent stake in FGTL for A$8.5 million.
With this divestment, FGTL will become a joint venture company. Under the agreement, FCL had an option to buy the remaining 49 per cent equity from the Indian company by 2010.
Though the two companies have arrived at a price for the residual stake sale, they declined to specify the figures for the both the current transaction and the future sell-out.
Plans to move IT jobs to India
MR Howard L. Stack, Director, Flight Centre Ltd, said his Australian company could move some of the IT spend to India to outsource key software solutions work.
The high cost of software professionals in Australia has prompted the company to leverage India's cost arbitrage for software support to its travel services business. The company spends around A$10 million on an average on IT.
Talking to Business Line, Mr Stack said the cost advantage would have two fold returns in as much it could drive down of the operational cost and increase margins from higher business volume.
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