Thriving on e-ticketing growth

E-COMMERCE: With almost 100 million tickets being sold online annually, new players are being enticed by the play.

The lure of the online travel industry has even caught up with travel major Cox and Kings. This November, it plans to launch www.ezzego1.com -- an online travel marketplace for service providers, tour operators and travel agents to sell their products online.

The online travel sector may comprise a mere 2.2 per cent of the domestic travel market, but it is set to grow from $796 million in 2006 to around $2 billion by 2008, according to a recent report by PhoCusWright.

The online travel industry grew at 126 per cent from a base of $295 million in 2005 to $796 in 2006. In 2007, it is expected to record a 66 per cent growth to be a $1,325 million industry and by 2008, it will grow at 51 per cent to be a $2,004 million (around $2 billion) industry, reasons the report.

The figures in the adjoining tables (a little over $600 million) suggest the PhoCusWright figures are on the higher side, though. Despite this, online travel portals already appear to have picked up the growth cue.

For instance, Rediff.com recently launched faresearch.rediff.com, a tool that searches for the lowest airfare across all travel, airline and auction web sites, thus marking its entry in this fast-growing space.

The company has also enabled anytime anywhere access for Rediff FareSearch by making it accessible on GPRS-enabled mobile phones.

Earlier this year, Sify acquired US-based Globe Travels which issues e-tickets in the India-US travel space.

The company is further firming its presence in the online travel industry as it recently announced a tie-up with Indian Railway Catering and Tourism Corporation (IRCTC) to make their online railway ticketing services available at over 3400 iWay cyber cafes across 154 cities in the country with cash payments.

And this July, cleartrip.com was launched by veterans from the travel industry, one of them being Sandeep Murthy "� a partner at Sherpalo Ventures.

Even carriers like Jet Airways are moving into the space. following the success of low-cost airlines Air Deccan, GoAir and Spice Jet in e-ticketing (see box).

Subho Ray, President, Internet and Mobile Association of India stresses upon the importance of the segment by sharing, "Airline travel is the biggest sub-segment in the online travel market. it accounts for 80 per cent of the travel industry."

Amit Saberwal, VP Business Development, Makemytrip.com confirms, "Flight tickets contribute to over 90 per cent of our revenues."

The company has 50,000 unique visitors per day and a conversion rate of 20 per cent for air ticket bookings, and 5-6 per cent for hotels booking.

"We will grow at 400 per cent to record revenues of over Rs 500 crore this financial year (FY) as against Rs 100 crore in FY 2005-06," discloses Saberwal.

Touted as the driver of the e-commerce industry in India, the online travel market accounts for Rs 2,760 crore of the total sales of tickets at Rs 12,253 crore annually for carriers and travel portals, industry sources tell Business Standard.

It represents an online penetration of 26.4 per cent. As for travel portals they account for total online sales of 17.5 per cent for air tickets selling 3,780 tickets per day as compared to sales of 22,580 tickets per day by carriers, says an industry source.

It's evident that the online travel industry is attracting new players while existing ones are ramping up their operations to meet the demand. Stiff competition is in order.

Some industry players, though, see it differently. With the domestic travel industry growing at 25 per cent per annum and recording close to 400 million people who went on a domestic holiday in 2005, according to the ministry of tourism, Himanshu Patel, MD of Kesari Travels stresses there is plenty of scope for everyone in the travel business to grow, whether it's offline or online. "The growth is in the entire industry," he says.

Figures bear out his story.