Expedia India may renegotiate contract with Cleartrip2 min read . Updated: 01 Aug 2012, 02:57 PM IST
The local arm of the world's largest online travel firm Expedia Inc. plans to bring low-fare inventory directly onto its platform
Expedia India, the local arm of the world’s largest online travel company Expedia Inc., may renegotiate its contract with Indian online travel agency Cleartrip as it soon won’t need access to the latter’s low-cost carrier (LCC) inventory.
As part of plans to push its customized travel package business in India, Expedia will bring the low-fare inventory directly onto to its platform.
The $3.5 billion ( ₹ 19,530 crore) group entered the country in 2009 and has been raising its brand presence in the country since last year to grab a piece of the $5.9 billion billion Indian online travel market. It has already earmarked ₹ 60-75 crore in 2012 for marketing and technology. It aims to invest $20 million over the next four years in the Asia-Pacific region, half of this amount being earmarked for India.
“In India we are partnered with almost all the full-service airlines, so now we are working towards getting low-cost carriers on board as well," Vikram Malhi, country head of Expedia India, said in an interview.
“When we entered India, we wanted to make sure that we had all the airlines’ inventory. We knew that it would take us some time from the technology perspective to do that, so we went for third-party service contract with Cleartrip," said Malhi. “But as we are increasing our brand spend and marketing spend in India, we have realized that we should have our own inventories. This way, we will have more control and direct relationship, which is very important for us to push our dynamic packaging further."
Dynamic packaging allows travellers to build their own itineraries by picking flights, hotels and activities of their choice.
“At present, we do not have transactional relation with LCCs. With them on board, we will start pushing heavily LCCs packages that will include accommodation," Malhi said. “Because of the direct relationship with them, we will be able to get better pricing, so the prices may come down for packages."
The company said nothing has been decided on the contract with Cleartrip.
“Our getting LCCs on board directly will have no impact on the contract. There are other air-related services which we are getting from Cleartrip. We don’t know exactly where we will go. Our deal with Cleartrip is in place till the end of this year, so we will evaluate that," said Malhi. “The evaluation is most likely to be done by November."
Cleartrip said it didn’t want to comment on the issue.
“From the perspective of becoming a one-stop shop, it is important to carry all the different products, including bus and rail, even though they may not add a ton to your bottom line or revenue," Malhi said. “It is because customers expect us to."
He said the company is already in talks with private bus service providers as well as state-owned Indian Railway Catering and Tourism Corp. Ltd (IRCTC) for bringing their services on board. IRCTC handles all online rail reservations.
“If the company is moving away from third-party services, it shows that it is strengthening its India business with focus on packages, of which air travel is a very significant part," said Chetan Kapoor, research associate at PhocusWright Inc., a travel research firm.
“It will be very beneficial for the company, as LCCs constitute around 60% of total air passengers," he said. “If they are also getting rail and bus services, and customizing services for Indian customers, it will be good for their business as well as challenging, because other online travel agents are already providing such services."