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Travel portals offer bargains, hoping to make a killing later

Travel portals offer bargains, hoping to make a killing later
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First Published: Fri, Oct 12 2007. 12 41 AM IST
Updated: Fri, Oct 12 2007. 12 41 AM IST
Joy Basu, 45, an executive at a Mumbai-based company, does not buy tickets through travel agents or from the websites of airlines. He has figured out that the best place to get a good bargain is a travel portal. Basu says that this gives him “a better deal and more options” on airlines.
For the past year, Basu has been buying tickets online, from Travelguru.com.
Even as domestic airlines are increasing fares to cash in on the ongoing festival and holiday season, travel portals are offering tickets at half prices, freebies and loyalty programmes.
Most travel portals operating in India—the list includes Cleartrip, MakeMyTrip, Yatra Online, Ezeego1, and Travelguru—are funded by venture capital firms, and they are willing, as Neelu Singh, Ezzego1.com’s CEO, puts it, to “take the hit initially”.
Singh adds that her portal offers up to 50% off on some tickets. Ezeego1, promoted by tour operator Cox & Kings, has an arrangement with India’s largest low fare airline Air Deccan, where customers buying one ticket through the portal get another ticket free.
Competitor Travelguru offers up to 50% of the cost of a ticket back, as cash, and will continue to do this till the end of this year for tickets booked on Jet Airways, Air India and Kingfisher Airlines.
“This is jointly done with a card payment company. We don’t lose money or make money in this promotion,” says Ashwin Damera, co-founder and CEO of Travelguru.
According to the estimates made by various online travel portals, more than 6% of total travel population currently makes use of these portals, up from 2% two years ago, and it is likely to touch 10% by 2008, by which time the industry is expected to be worth $20 billion by revenue.
The portals have other tricks up their sleeve, including offering promotions to attract passengers on days when the traffic is lean (this also means they can get the tickets at even lower costs from the airlines) and offering loyalty programmes, much like a virtual airline.
Cleartrip recently entered into an arrangement with Mumbai-based low fare carrier GoAir to offer 50% discount on tickets for flights on Saturdays and Sundays. Most people in India travel on work and avoid travelling during the weekend.
“We had similar tie-ups with low fare airlines such as IndiGo and SpiceJet,” says Noel Swain, vice-president (marketing) at Cleartrip.
And Yatra Online has its own loyalty programme. “It is just not discounts; we are aiming at offering value-added services,” says Dhruv Shringi, CEO & co-founder, Yatra Online Services Ltd.
Executives at the travel portals say they do not get preferential rates from airlines yet. They add that their ability to get a better deal depends on the number of tickets they buy. Meanwhile, the representative of an industry body that represents travel agents says the portals are burning money in the hope of cashing out at some stage.
“It is not (as if) airlines are giving them huge discounts for their bulk purchase. But they (the portals) have money to burn. They have received lot of money from venture capital funds,” says Ajay Prakash, general secretary of the Travel Agents Federation of India (TAFI).
“This could also be a way to attract other domestic or international companies to buy them out by showing the volume business. But this hype for gaining popularity is going to be very short time,” Prakash adds.
Himanshu Singh, managing director of Travelocity, a portal that plans to enter the business, admits that all portals are losing money.
“However, our strategy would be different (from discounting). Services would be the differentiating factor,” he says.
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First Published: Fri, Oct 12 2007. 12 41 AM IST