Can the lessons of the past help travel today? As the industry faces increased turbulence due to mounting pressures caused by conflict in the Middle East, the founders of Flight Centre sat down to discuss the business lessons that saved them from disaster.
Back in the 1980s, Flight Centre Travel Group was “going broke”, with no systems in place and a mounting overdraft, according to co-founder Bill James.
Speaking in Beyond Horizon Three, a new podcast hosted by FCTG global chief marketing officer James Kavanagh, James, alongside founders Graham ‘Skroo’ Turner and Geoff Harris, lifts the lid on the moment that reshaped the business and laid the foundation for its long-standing ‘ownership’ philosophy.
At the time, the company was insolvent. After reading about an Australian business that had survived by restructuring into business units, Turner called James at 3am to suggest they adopt a similar model.
“We broke it into 8 logical business units, we did a balance sheet 1st May 1983 and we were insolvent,” James says in the podcast.
“We should have shut up shop because all the directors are now personably liable if you continue to trade under them circumstances. We broke it into 8 logical business units. We physically gave each business unit owner 25 per cent of the shares of that unit (they thought we were just passing over liability). We convinced them that there was a future. We said if you can make a profit in your division, you get 25 per cent of it.
“We put that into operation on the 1st of May 1983, within 18 months we had turned a negative net worth into a positive net worth by 1.5 million dollars. On the outside nothing had changed, but because those people took physical and emotional ownership over their bit of the business, the whole business changed,” James added.
The podcast series features candid, unscripted conversations, unpacking how Flight Centre’s philosophies were built from lived experience and embedded into the company’s culture across 26 countries.
Kavanagh said the series focuses on the “stories behind the philosophies” that have guided the business over time, with the founders speaking openly about what they built and why.
