Spate of visa rejections have led MakeMyTrip to offer ticket cancellations if visa is rejected

MakeMyTrip introduces 'visa guarantee' product for travellers to ensure full refund in case of visa rejection, addressing a common issue faced by Indian outbound travellers. Company reports strong revenue growth in Q4 FY24 driven by sustained travel demand in India.

Varuni Khosla
Updated17 May 2024, 09:10 PM IST
High visa wait times and rejection rates have led OTA MakeMyTrip to offer a paid service for refunds to anyone whose tourist visa could be rejected.
High visa wait times and rejection rates have led OTA MakeMyTrip to offer a paid service for refunds to anyone whose tourist visa could be rejected.

About 10 months ago, a user took to social news website Reddit to complain about how online travel agency (OTA) MakeMyTrip had not refunded his money for a holiday package to Greece booked with the OTA. Despite concerns about visa delays, the traveller paid in two installments and submitted his visa documents, verified by the travel agency's visa team. However, he did not receive a visa in June and promptly wanted a refund. This isn't an isolated case. Many users chimed in to discuss the same experiences they had with this website and others. The visa cancellation issue is a big problem for holidaymakers. Many have sought a refund when their holiday visa has not come through, even when they have booked non-cancellable tickets and hotels.

Following a spate of cancellations due to visa challenges and lack of availability, the online travel service provider has launched a new third-party insurance product for its travellers called “visa guarantee”, which ensures a full refund of the flight fare to the customer in case their tourist visa gets rejected by the embassy, the company’s co-founder and group CEO Rajesh Magow said. 

In the company's recently announced Q4 results earlier this week, Magow said India is one of the top three fastest growing outbound tourism markets and is expected to become the fourth largest global spender on travel by 2030. With the country being a key source market and major tourism destination, foreign tourism boards have been trying to lure Indians with incentive campaigns, simplified visa requirements and new initiatives to attract more Indian outbound travellers. 

Also read: Visa waivers, special deals: The global rush to woo the Indian traveller

However, tourist visa rejections remain a huge issue and that is probably why the company decided to introduce this feature. The add-on feature at an additional cost is a third party insurance product and the insurer offers a 100% refund if the traveller cancels 24 hours prior to departure. This includes regular tourist and e-visas but not visa on arrival. Of course, there has to be a formal rejection letter which needs to be presented. The option does not provide coverage for the inability to fly resulting from a delay in visa processing by the embassy or delays in the visa application process by the traveller.  

Interestingly, there is no standard fee. It can range from anywhere from a few hundred to a few thousand rupees to less popular locales in Europe to several thousands to regions like Australia. In general, while travel agencies are not responsible for any visa issues, the consumer complaints authority or Jago Grahak Jago by the ministry of consumer affairs and consumer courts come down hard on travel agencies when they do not provide these types of refunds. 

The company said it generated revenue of $202.9 million in Q4 FY24, reflecting a 36.6% increase over $148.5 million in the corresponding quarter last year. The increase in revenue was primarily due to the sustained elevated travel demand in India for both domestic and international outbound travel in the Q4. Magow added that the company's international air ticketing business has also registered a strong growth of 33% year-on-year in this quarter. But while it continues to maintain its market share of over 30% in the domestic air ticketing business, during Q4, there was some reduction in overall departures possibly owing to the general elections and high airfares. For the entire year, its domestic ticketing business improved 5% year-on-year. The total number of domestic departures remained similar to Q3. 

The company had mentioned in its last earnings call that the domestic supply situation will only gradually start improving and reiterated the same this quarter. It expects domestic departure supply only to improve in the second half of the current fiscal. "Go First has been grounded. So it seems like that despite all those issues that we see and hear (about engine issues, pilot and staff strikes), both IndiGo and Air India, and also SpiceJet have been able to get alternatives in place and have been able to replace some of their planes where there were engine issues earlier or the new planes coming in as part of their expansion plans. So  the potential of growth is higher. I'm not necessarily overly worried about the mid-term to long-term outlook on domestic air supply. Keeping aside the short term headwinds, the long term outlook for the Indian aviation sector is robust, driven by the expansion of aviation infrastructure, as well as record planes ordered by the Indian carriers," he added.

Also read: Airfares, hotel rates to remain high in the short term: Thomas Cook's Menon

On the hotels and homestays and packages front, the company saw a 41% year-on-year (y-o-y) growth in adjusted margin in constant currency terms. "Hospitality in India continues to be strong with most global and local hotel management chains and have set ambitious targets of signing more properties, especially in tier two and three cities. In the last couple of quarters, these chains have announced plans to add over 650 properties in India on a base of about 1,000 properties," he added. This will also increase its supply and now has 84,000 plus properties on its platform, MakeMyTrip said.

Overall, for the year, MakeMyTrip said it had an all-time high gross booking value of $8 billion and posted a record adjusted operating profit of $124 million compared to an adjusted operating profit of $70 million in FY23. Interestingly, its marketing and sales promotion expenses and customer inducement costs (or discounts) went up 12.5% for the entire year at $94,093 versus $83,618 it spent last fiscal. Overall, it generated a gross revenue of $782.5 million in the year, showing an increase of 32% over $593.0 million last year. 

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First Published:17 May 2024, 09:10 PM IST
HomeCompaniesNewsSpate of visa rejections have led MakeMyTrip to offer ticket cancellations if visa is rejected

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