India is on its journey towards ‘travelution’. The psychographics for leisure and business travelers are changing, with most of them preferring to reach the right destination at a right price in just one click. Booming in the business are e-commerce sites like irctc.com, indiatimes.com who made this lucrative plunge early. However, with the entry of “no frills” airlines offering their ticketing services purely through Internet, the online booking is booming and taking over the traditional booking.
On how the transition has happened, Deep Kalra, CEO MakeMyTrip, an online travel company that is currently facilitating NRI clients, said, “With the Internet penetrating the households, e-commerce numbers have really grown. Previously, the typical net mentality was that of ‘lookers and not bookers’. This has really changed.” Kalra, quoting a study, said, “The Internet users in India are 45 million and are growing at 50 per cent per annum. The mobile phone usage is growing at 100 per cent and the credit/debit card owners have crossed the 30 million-mark, growing at 35 per cent per annum.”
Kalra said the reasoning behind MakeMyTrip expanding its Indian operations in August is because there is a gap in the market. “The travel market is very fragmented with the top five travel agencies controlling a combined market of 18 per cent. Therefore, there is an exciting opportunity for a transnational brand to leverage technology and drive distribution by selling directly to customers through Internet,” he added.
In fact, the established sites have started considering online travel as a complete profit making entity. Rajesh Sawhney, COO, Indiatimes, said, “We consider travel as a separate vertical company and do not compare it with other e-commerce business. For airline auction, alone we find 65-70 per cent repeat of customers.” The site has planned to further expand this business and the focus of attention is going to be on facilitating online hotel bookings and leveraging through in-bound packages.
Sawhney said, “If airline auction has proven to be big business, then the online hotel bookings will prove to be a bigger business. This is what we are concentrating on and are looking at 1,000 hotel partnerships for the online bookings in next one quarter. Also, we would be taking in-bound packages very seriously.”
Meanwhile, the happiest of all are the airlines, which have been encouraging customers to be e-savvy and book tickets online. Ajay Singh, Director, SpiceJet, said, “On the first day of reservation, we sold 37,348 tickets. We have got almost 50-60 per cent of travelers on an average coming online and booking tickets everyday.” The numbers have been encouraging for Air Deccan too. On the rationale behind using online-distribution, Vijaya Menon, Head-Corporate Communications, Air Deccan, said, “We opted for online mode of distribution and this has really worked in our favour. We get transaction worth over Rs 2 crore in a day.” Menon pointed out that the airline opted for the online mode for its ticketing as the distribution cost comes down by nearly 10 per cent. “Firstly, it is a paperless transaction and secondly, it saves the time from haggling with the travel agents. We found that customers are certainly positive about booking online,” she said.
However, price is the key-determining factor involved in the business transaction. Kalra said, “Seventy per cent of the travel decision is based on prices. The net mentality is basically that of ‘here and now’ and price and availability are the sensitive issues in such circumstances.”
The success of the e-commerce sites is having a rub off on tours and travel companies too with them initiating the online services too. SOTC, for instance, has initiated this new service called SOTC Holiday Pass. However, this online service is not directly for the customers but for the travel agents. Neelu Singh, Business Head, SOTC Holiday Pass, said, “We realised that with the internet boom setting in web was a platform which gave us a wider and better reach. Also, it helps in increasing the distribution and makes the booking process a lot faster and smoother.” Thomas Cook spokesperson said that the scenario has changed and customers are getting increasingly confident in making net transactions. “We have a plethora of products ranging from Rs 1,500 to Rs 1,00,000 and they all are selling,” she said. Asked if the online travel brands will be more important than to the consumers than the brands they sell like Kingfisher airline or Singapore Airline, she said, “It works well because it is a combination of two factors—the concept of the one stop online travel shop coupled with the reliability and assurance of the Thomas Cook brand.”
Meanwhile, most online travel sites and airline services are also looking at call centres as back up so that there is a voice to sell the bigger packages. Air Deccan, for instance, has a call centre to facilitate the online ticketing service for the not so e-savvy. Asked if it is essential for a voice to sell the ‘big packages’ involving huge transactions, Sawhney said, “When the product is simple people aren’t too insecure about doing online transactions but when the product involves bigger transaction, a voice helps, which is the reason why we have a call centre services. However, the distribution remains through the same system which is the online mode.”
At the end of the day, truly the ‘traveler is the king’ and with just a click he literally gets to travel like a king.