Disruption of Travel: Why Indian Startups are Creating Global Waves

Sangeet Paul Choudary writes regularly on strategies for online two-sided markets: platforms, marketplaces, and communities, at platformed.info and works closely with startups in these spaces in India, Singapore, and the US. Follow him on twitter.

Travel has been one of the most successful consumer internet verticals in India. Despite the fact that the country’s road infrastructure leaves a lot to be desired, trains have a history of not being on time, and airline operators are constantly in the red, the online travel industry in India is a great growth story.

Here are a few points that stand out:

1. MakeMyTrip (NASDAQ:MMYT) continues to be a market leader in online travel and had one of the most successful Nasdaq tech IPOs in recent years.

2. The IRCTC, the government’s rail booking site, accounts for nearly 20 percent of internet traffic in India and accounts for an average of 400,000+ ticket bookings a day.

3. RedBus, an online bus-ticketing platform, has been listed among the 50 most innovative companies in the world. It is the largest bus-booking platform globally and the fastest growing company in India with a CAGR of 4,800 percent till 2010.

Flights – The impact of affordable air travel

MakeMyTrip launched in 2000 but a combination of the dot com bust and 9/11 dried up business and funding for the company. It was only around 2004 that the company got a foothold in the travel market when local low-cost airlines launched in India for the first time.

Traditional travel agents did not book for low-cost carriers, enabling MakeMyTrip to become the travel agent for these airlines. Low-cost airlines made air travel more affordable for the masses in India, and their popularity spurred the growth of MakeMyTrip and the online travel industry.

Trains – Creating the category

Almost simultaneously, Indian Railways created the category of online ticket bookings when it launched IRCTC and spearheaded evangelism for online ticket bookings. IRCTC’s timing couldn’t have been better for the online travel industry as consumers were wary of transacting online and it would have been difficult for a startup with an unknown brand name to create awareness for an entire category.

Payment solutions

In the early days of online travel in India, online payment was a key consumer concern. Credit card penetration was really low and there was a general discomfort with purchasing online. IRCTC realized that it needed to serve the users in their current context to successfully create the online booking category and started setting up offline booking terminals where consumers could pay an agent a certain fee in cash for booking their ticket online. This was a critical transition as the offline presence gradually eased consumers into the concept of booking tickets online. Over time, a significant chunk of those users started booking online themselves owing to the increased ease of usage.