Travel is clearly the space to be in online in India, but that by itself is no guarantee of profit. And so, even as new Indian travel portals such as Travelchacha.com and Flightraja.com (now renamed Viajustgo.com), established global ones such as Travelocity.com and Expedia.com emerge (they plan to launch their services in India by end-2007) and existing ones such as Makemytrip.com, Travelguru.com, Cleartrip.com and Yatra.com are yet to break even, at least as far as their domestic travel business is concerned.
All are betting that the use of new delivery mechanisms to make up for the low number of Internet users in the country and focusing on products such as holiday packages and hotel bookings will help them turn profitable.
Flightraja Travels Pvt Ltd, an 18-week-old company founded by Ashwini Kakkar, the vice-chairman of travel agency Mercury Travels Ltd and the former CEO of Thomas Cook (India) Ltd, is betting on mobile telephony and direct-to-home (DTH) television. “DTH can be a very lucrative way to sell travel and going forward, people will end up buying tickets and packages on TV and mobile phone in a big way,” he says.
On Tuesday, Flightraja announced that it had secured funding of $5 million (Rs20.5 crore) from the Vinod Dham-owned California-based fund, NEA IndoUS Ventures, and changed the name of its site from Flightraja.com to Viajustgo.com.
All are betting big on the use of new delivery mechanisms such as mobile telephony, DTH
India has 170 million mobile subscribers and 110 million TV households of which around five-six million have DTH, a new delivery mechanism that facilitates some amount of interactivity, thereby lending itself for such things as selling products and services, including air tickets and holiday packages. According to PhoCusWright, a technology research firm focused on the travel business, travel portals in India did business of $800 million (of the total $15.5 billion travel market in the country) in 2006. The firm expects this to increase to $2 billion by 2008.
In 2006, India attracted 4.43 million foreign tourists; the same year, around 350-400 million domestic tourists are estimated to have travelled around the country. The year also saw the emergence of several low-cost airlines and the air passengers in the country increased from 22.788 million in 2005 to 32.172 million in 2006. On the back of an economy that grew 9.4% in 2006-07, Indians are travelling and spending more, within and outside the country.
Other challenges