Large firms may start business travel from FY22: MakeMyTrip's Rajesh Magow

"I think this winter, domestic traffic should come back to the pre-Covid level," says CEO Magow

Online travel company MakeMyTrip, which has been in news for the Competition Commission of India (CCI) asking it to relist Treebo and FabHotels, is preparing to strengthen its balance sheet for the next phase of expansion. Ahead of the CCI verdict on Tuesday, MMT co-founder and group CEO Rajesh Magow spoke to Nivedita Mookerji on how the company coped with the pandemic blues, its profitability, fundraise, and more. Edited excerpts:

It’s been almost one year when the lockdown was announced in March 2020. Where does the travel industry stand now?

From the time hell broke loose last March to now, things have definitely improved. Some segments are recovering nicely, largely led by domestic travel though. We are hoping international travel will open up at some stage.  The recovery is about 65 to 70 per cent in domestic traffic while the capacity is capped at about 80 per cent. The hope was that in the coming summer, we would have pre-Covid level of travel. But in the last ten days, some of the places have again become hotspots, impacting Delhi-Mumbai, Delhi-Bengaluru traffic etc. So, it may take some more time. I think this winter, domestic traffic should come back to the pre-Covid level. While leisure and essential travel is picking up, business travel is yet to come back. Even student travel is yet to come back.

What’s the buzz on business travel resuming?

There are two segments—small and medium enterprises including traders and large-sized companies. While we are seeing good recovery on the small and medium enterprises side, large corporates haven’t really begun travelling. What we are hearing is that beginning of the new fiscal, they will start bringing back business travel. Global MNCs, who have announced long-term work from home, will probably start to travel even later.

Capacity cap has been a controversial matter. What’s your stand?

Yes, there are two schools of thought. The civil aviation ministry is opening up gradually like in other areas including the railways. But ultimately even at 80 per cent capacity, that’s allowed now, the load factors have not caught up with the pre-Covid level.

How do you look at Jet’s re-entry with the challenge around slots?

We would love to have Jet back. But from an industry perspective, we need to ask what the ideal number of airlines should be. Almost every three to four years, we have seen one carrier go down. Any debate that happens in this area should be from that lens—what should be the ideal number of airlines. Perhaps a bit of consolidation will help the industry improve its health.

But, should Jet get back its slots?

I think the focus should be on a fair and transparent process and whether equal opportunity has been given to every carrier.

Coming to MakeMyTrip, there’s been a surprise turnaround in terms of profitability during the pandemic. Can you explain that?

While it may come as a surprise to an outsider, this journey to achieve breakeven had begun before Covid-19. During the pandemic, we were looking for opportunities like it happens in any down-cycle or crisis period. Rather than concentrating on growth, the crisis  forced us to look at the basics to find out where the opportunities were. This helped us accelerate what had already started and we turned the corner.

Along with that, the co​mpany also raised funds—some $200 million. What would fund-raise and profitability mean for the company?

As we walked into the crisis, we quickly went to the drawing board. We were looking at different phases—surviving the crisis, revival and then expansion once the crisis is over. Right now, the survival issue is behind us and we have been reviving nicely. For the expansion and growth phase, we have to make our balance sheet stronger. We used the opportunity when market was good to raise the capital, but we won’t need it for our core operations at this point. The idea is to have more resources and figure out deployment over the years.

Do you see consolidation happening in the industry?

In the travel and hospitality sector, we are already seeing some movements. Even in the intermediary space, where we are, there could be potential consolidation but the market is also pretty big. And the consolidation may be more organic—people taking share away from others—than inorganic.

What’s the takeaway on prices and discounts?

While it’s a function of the market dynamics, there would be attractive deals in the short term. As the industry recovers, prices will firm up.

What’s your assessment of the government response to the demands of the travel industry?

It’s been a huge wish list, but the badly hit travel and tourism has been down in the government’s priority list. We will keep trying.