IRCTC plans to become full-fledged online travel agency2 min read . Updated: 13 Jun 2012, 09:12 PM IST
IRCTC plans to become full-fledged online travel agency
New Delhi: Indian Railway Catering and Tourism Corp. Ltd (IRCTC), a public sector unit that offers e-ticketing and catering services for the railways, plans to become a full-fledged online travel agency (OTA) after revenue dropped by one-third in two years following the loss of a big portion of its catering business.
As a full-fledged OTA, IRCTC will handle air and train tickets, hotel bookings, car rentals and tour and travel packages. At the same time, IRCTC will remain in the catering business.
The company’s revenue dropped to around ₹ 500 crore in the fiscal year that ended 31 March from ₹ 722 crore in 2009-10. In 2010-11, IRCTC lost 252 out of 285 trains in its catering portfolio in line with a new railway catering policy.
According to the company, it has a customer base of around 20 million travellers for online ticketing. The company recorded 5.56 million bookings in April, compared with 2.26 million bookings in the year earlier, said a recent report by the Internet and Mobile Association of India.
In the first step towards its goal of becoming a full-fledged OTA, IRCTC revamped its air ticketing business.
Earlier, IRCTC was providing air tickets through the so-called white label route, or providing services that were sourced from other providers, Shinghal said. It expects to start managing such services through its own systems, starting?with?air?ticketing, he said.
IRCTC is hosting its own air ticketing service and has been dealing directly with airlines through a global distribution system since May.
Apart from airline ticketing, IRCTC also provides hotel bookings and cab rentals. It plans to revamp these segments as well.
“We launched hotel booking last year. This business has been stable, but once our ticketing business stabilizes in the next few months, we will go back and revamp our hotel business. We will take it one step at a time," Shinghal said.
The other potential growth areas that IRCTC is looking at are corporate travel and educational tour packages for children and teachers.
“It is good that IRCTC is trying to diversify and distribute its products, but at the end of the day, this will be only incremental to revenue generated from its core business, which is rail ticketing," said Chetan Kapoor, a research associate at PhoCusWright, a travel industry research firm. “People who travel by first or second class may migrate to air travel, but most of the people are buying small-value products on IRCTC." He added, “The bigger issues going ahead will be the online content such as hotels, which all other OTAs have gathered after a number of years, and the user experience."
According to IRCTC, the railway catering business that used to make up around 70-80% of its revenue now contributes only around 50%; half the catering revenue is being generated by non-railway catering. Of the rest, around 35% of revenue comes from online ticketing and 15% from the tourism business and other avenues.
“Although there is a decline in our revenue from 2009-10 to 2011-12, we expect to pick up again," Shinghal said. “We are looking at massive expansion in tourism and ticketing business. As these verticals will grow, we will be able to reach our earlier revenue levels. On the non-railway catering side, along with the public institutions and ministries we are currently catering to, we are looking at lounges at railway stations. This is the project that is being worked on (a) pilot basis," he added.