Webjet in the news

[QF WP]

Online travel agent Webjet Ltd has upgraded its full year profit guidance after experiencing record levels of demand for travel....

 

[AlphaVictor]

Good for the industry - however trends indicate 08/09 will be a lean year for travel. My concern for WJ is the high proportion of income derived from fees with the commission portion of revenue dropping year after year.

Expedia Aust is mulling getting rid of service fees on international bookings. They'll keep it for domestic bookings but I'd gather that income from domestic booking fees for all Online Travel Agents would be minimal as consumers can avoid these fees by going direct to the airline website. Service fees are where WJ gets 66% of it's income from. The next 12 months will be interesting in this market.

Article from Jan 08

"Service Fees Drive Webjet Results


SERVICE fees now comprise 66% of Webjet’s revenue, while commissions earned by the online retailer have slumped dramatically in the six months to December 31.

According to Webjet’s half-year report, service fees generated $4.8 million revenue compared with $2.2 million for the same period in 2005.

Commission revenue was down 30% from $2.3 million to $1.6 million. At this rate interest income (which increased 670% to $773,000) on the $25 million Webjet has in the bank will overtake commission revenue sooner rather than later."