Enterprising trio takes redBus to success

Enterprising trio takes redBus to success

Bangalore: In January, 2002, when the Indian Railways launched an online portal to hawk tickets, the move was met with loads of scepticism. There were plenty of teething troubles with tickets often failing to get delivered on time, recalls Amitabh Pandey, the brain behind the Internet ticketing service of the world’s largest railway network by passengers. However, a transparent reimbursement policy helped win the trust of customers and today the railways’ ticketing site at www.irctc.co.in is the busiest in the country and turned in Rs350 crore ticket sales in 2007.

Five and a half years later, a bunch of entrepreneurs are trying to replicate the railway tickets initiative in a bigger, and much more fragmented, travel market—long distance bus services. Some nine billion tickets are sold each year, in India, on routes connecting cities, towns and villages—about 50% more than the tickets sold on the railways.

There is no accurate estimate of the value of all such tickets, but advance bookings are worth Rs15,000 crore, estimates Phanindra Sama, who in an earlier avatar as a chip designer, has spent five years at the Indian units of ST Microelectronics NV and Texas Instruments Inc.

Today, as chief executive of start-up Pilani Soft Labs Pvt. Ltd, which runs redBus, an online bus-ticketing portal (redbus.in) that links 135 bus operators to customers in southern and western India, Sama is chipping at that market.

Since it started up, redBus has sold some Rs2.5 crore worth of tickets, and is averaging 400 booked tickets a day now, says Sama. In December, the peak month for long-distance bus-ticket sales, redBus expects that number to ratchet up to 1,200 daily. About 7% of redBus’ bookings are made on by phone and the rest, online.

Set up by Sama and two college buddies—Sudhakar Pasupunuri, an International Business Machines Corp. alumnus, and Charan Padmaraju, formerly with Honeywell International India Pvt. Ltd—from Birla Institute of Technology and Science, Pilani in Rajasthan, redBus intends to expand to North India from the southern and western markets, where it has been establishing operations until now and has covered 2,000 destinations. With a commitment of $1 million or Rs4.1 crore capital from Seed Fund, an early-stage venture capital firm in February this year, redBus will, later this month, offer customers the facility to book and pay for bus tickets on their mobile phones.

Sama plans to focus on just bus tickets—except, perhaps, for insurance for low budget travellers—and not expand into other segments such as railway and airline tickets.

“The idea is to use technology to aggregate the fragmented service providers in the bus transport space onto a single platform for the consumer," said Bharti Jacob, partner at Seed Fund. According to a study commissioned by redBus, the value of bus tickets sold by both state-run and private transport operators in the four southern states and Maharashtra adds up to Rs6,000 crore. “At least a tenth of those booking are now made online, giving us (an addressable) market of around Rs600 crore," said Sama.

Until now, redBus hardly employed tech on the back-end with bus operators. It blocks ‘ticket-inventory’ at different operators and sells them—similar to how offline ticketing agents work. But, says Sama, that will change in the next month when it links up with operators ABT Ltd, KPN Travels Ltd and VRL Logistics Ltd, all of who have computerized systems for ticket management. Even state road transport corporations, which don’t have an online ticketing presence or whose servers cannot handle traffic surges, are open to partnering with redBus, Sama says.

It helps that bus operators view online ticketing as a low-cost means to win and retain customers. “Online sales account for about 15% of bus tickets sold on our luxury bus routes," said N. Shanmugasundaram, chief executive of ABT, a Rs500-crore travel services operator in southern India that uses redBus.

Others are starting up online bus ticketing operations, too. While electronic ticketing for railway and airline tickets has taken off in the last few years, bus transport is emerging as the fastest growing online segment, says Ashwini Kakkar, chairman of Via, a travel services company. Earlier this year Via, formerly Flight Raja, raised $5 million of venture funding from NEA-Indo US Ventures and changed its name to reflect a multi-product portfolio that included online bus ticketing, travel insurance, cruise liner bookings as also e-ticketing for airlines.

The next six months will see other travel portals entering online bus ticketing, say industry insiders. Travel portal yatra.com has just added online bus ticketing to its portfolio.

As connectivity improves on the country’s highway network with 6,000km of four-lane highways being added under the Golden Quadrilateral project, passenger traffic is expected to grow by 15%, according to the department of road transport and highways. Says Via’s Kakkar, formerly a chairman of Thomas Cook’s India business, who expects bus ticketing to emerge as the largest volume segment in the travel services industry in the coming years, “If I can reach Goa from Mumbai in five hours on a dual carriageway road, even I would prefer to take a bus."

K.P. Narayana Kumar contributed to this story.