Mumbai: Log on, compare, book. Until recently, Sarina T., who works with a consulting agency in south Mumbai and travels by air at least thrice a month, routinely checked off these items on her travel booking to-do list to ensure she got the best deals on airfares.
However, while researching best fares for a flight last week, she realized she could do even more to cut her travel expenses than just scout websites—avail of cashback offers.
To compete with airline companies such as state-run National Aviation Co. of India Ltd, which runs Air India, that offer cheaper fares for online bookings, online travel agents, such as MakeMyTrip (India) Pvt. Ltd, Yatra, Cleartrip Travel Services Pvt. Ltd, Travelguru.com, Ezeego1.com and the Indian units of Travelocity.com Lp and Expedia Inc., are making their offerings more attractive through cashback schemes.
The cashback offer is on the base fare of the carrier. With the peak season starting mid-April, airlines have increased base fares to up to Rs2,000 a ticket.
So, how does a travel website make money by giving cash back to its customers?
Airline bookings work as a hook to market other, higher margin products such as travel packages and cruise holidays. What’s more, online travel revenues in India will likely reach $5.7 billion (Rs29,127 crore) by 2010, according to a presentation made by Ankur Bhatia, executive director of travel solutions software firm Bird Group, quoting travel consulting firm PhoCusWright Inc.
“It makes lot of sense to bundle the service as online travel (booking) is witnessing a 70% growth for the last three years,” says Bhatia.
Credit card companies, too, stand to gain as customers make multiple transactions. The returned money is either credited to the customer’s account within 21 days of the transaction or the travel website charges only the discounted sum for the ticket.