Graham Turner: Flight Centre

At a time when the air travel industry is plagued by serious problems, including security issues and soaring fuel costs, Graham Turner is still at the top of his multi-billion dollar game. His success has something to do with staffing policies, caution with cash flow, innovative customer service, and everything to do with entrepreneurial vision.

When Graham ‘Skroo’ Turner hopped on a plane to London as a graduate in veterinary science, he had no idea he was about to throw it all in to gamble on the tourism game. 

As with many entrepreneurs, the gamble paid off, and then some. Turner is now managing director of Flight Centre Limited, Australia’s largest online and retail travel agent, with representation around the world. At last count, FCL has a presence in 10 countries, 1,300 retail shops, around 2,000 businesses, and includes some 11,000 employees.

Turner admits it’s a long way from the orchard he grew up on in Queensland, but a journey he knew he was going to make, no matter what business he found himself drawn to: “I’ve always been an empire builder.”

As befitting the man behind a travel empire, Turner caught the travel bug a year after graduating, so he packed up and headed for London as a veterinary locum. But six months in, and after seeing a yard of decommissioned buses, he realised there were more opportunities in empire building than as a vet. So he and fellow vet, Geoff Lomas, pooled their meagre funds of $1,300 and launched a tour business, Top Deck Tours, using old double-decker buses to take tourists through London.

Top Deck launched in 1973 with one bus, and by 1979 had nearly 80. In 1980, Turner returned to Australia with his young family, selling Top Deck Tours to Aussie tourists. Although he still had an interest in the company, he decided to focus his energies elsewhere after recognising a gap in the travel industry for discount airfares. The travel industry had just been de-regulated, so for the first time there were opportunities to offer fares at discounted rates (until then it was illegal) and Flight Centre was born in 1981.

Turner is pretty nonchalant about his empire-building skills and the quick growth of the company (that first year netted around $300,000 profit), but admits that even he was a little surprised by how quickly the business grew. “We always planned to grow and we had a pretty aggressive plan for organic growth,” he says, which called for setting high goals. “Our five-year plans were outrageous but, amazingly, we exceeded all plans!”

By 1986 the business was on a steady upward path, so he and his colleagues sold their interest in Top Deck—by way of a management buyout—and focused all attention on Flight Centre.

Super Growth

For the next decade, Flight Centre continued on its fast track, growing around 20 to 30 percent each year through acquisition and consolidation of businesses as well as opening new branches. In 1995, the next step in the growth phase involved taking the business public, trading as Flight Centre Limited.

At the time 20 percent of the business was floated, and Turner says the main driver behind the listing was the opportunity to give staff a stake in the company. At the time, shares went on sale to the public for 95 cents, and 85 cents for staff. (As we go to print they are trading over $20).

Turner says many small to medium businesses look to float their business as a means to get a cash injection to grow. “It can be a positive move for SMEs, and it can be negative, it depends on the motivation. We didn’t do it for growth, and as it turned out it was the right move for us,” he says. “I wanted to give staff the chance to own a piece of the brand.”

In 2006 Turner and his team initiated proceedings for privatisation. “The share price fell dramatically and I thought Flight Centre was being under-valued.” After two failed buy-back attempts last year, backed by a private equity partner, a disappointed Turner says he has turned his attention to other roles (he still holds around a 15 percent share in the business). Part of which includes developing new market strategies and expanding international presence. Each market has its own targets, he explains, and growth is driven largely organically. But there will continue to be an involvement in acquisitions, a key driver of early success.

FCL is now made up of the retail travel brand, its corporate FCm Travel Solutions brand, and other brands that include Escape Travel, Travel Associates, Student Flights, quickbeds.com and Overseas Working Holidays.

“We are an international business,” he says simply, and qualifies this by adding that FCL is now represented by wholly owned branches in 10 countries (60 countries under the FCm Solutions brand), and estimates that 50 percent of FCL’s business is now outside Australia.

In terms of market share, Turner estimates that FCL holds a 35 percent share of the leisure travel market and 12 percent of the corporate travel market in Australia. And his plan, as long as the board wants him at the helm, is to continue to strengthen this market share and Flight Centre’s interests in new markets and ventures, including recruitment and other non-travel retail projects.