In the last three years, the Indian online travel agency (OTA) space has gone through some drastic changes. Travel industry was one of the worst affected sectors hit by Covid-19 and the fall in tourism impacted booking platforms globally. With many players facing a decline in their revenues, bookings and profits, the only outlier was ixigo, charting strong growth and profits in FY21 despite the challenges of Covid.
ixigo maintained its growth and profit momentum in the first quarter of FY23. The company navigated the pandemic with 3.4 times growth in revenues from FY19 to FY22, emerging as the fastest growing OTA in India and the second biggest OTA in India in terms of operating revenues in Fiscal 2022.
ixigo has focussed on building product experiences based on cutting-edge technology to make travel a seamless experience in India. Post pandemic, as more people travel, ixigo’s growth engines are firing up. This is the story of a company that has not just weathered the storm of the pandemic, but is now cruising to success.
Launched in 2007 by Aloke Bajpai and Rajnish Kumar, ixigo is a technology company focused on empowering Indian travellers to plan, book and manage their trips across rail, air, buses and hotels. The travel platform makes this possible by leveraging artificial intelligence (AI), machine learning (ML) and data science-led innovations on ixigo’s OTA platforms, including websites and mobile applications. The company started off as a search engine for travellers who mainly used buses or trains. But ever since the firm got into ticketing, there has been no looking back.
The 1997 batchmates of IIT Kanpur, Bajpai and Kumar, had earlier worked together at Madrid-based travel company Amadeus. Moving back to India, the duo had their eyes set on building an innovative product with a meta-search model, as they assumed it was more consumer-friendly. The intention was to build something more efficient than what was already out there in the market. That’s when ixigo was born in 2007.
From search engine to OTA
“We have had an interesting journey from being a meta-search engine to evolving into an OTA. We started off as a content and utility platform allowing users to view and compare best possible deals and access additional functionalities like train running status, PNR status and other meta information. Over time, we added the convenience of booking tickets for trains and flights, in addition to hotel and cab booking services, to foray into the OTA space. Today we are one of the most downloaded and most used travel apps among the prominent travel apps in the country,” says Bajpai, co-founder & group CEO, ixigo.
The increase in internet and smartphone penetration played a big role in the initial stages as it added millions of first-time users from beyond Tier I cities for whom train travel was the most convenient option. Undoubtedly, the train travel segment provides a greater opportunity for volume growth, in terms of the number of travellers, than the flight and hotel segment in India. It is only rivalled by the bus segment for higher volumes.
While other OTAs focused on airlines and hotels, ixigo chose to prioritise railways by providing useful intercity railway information to its customers. Through this, it gained word-of-mouth popularity between 2014 and 2018. The company realised the long-term potential of the next billion users by taking a deeper bet than incumbents on trains, a category in which it is now the market leader.
ixigo further launched innovative AI-based data-driven features, such as a multilingual UI, travel assistant (TARA), live running status, Siri shortcuts, and an AR feature, which allows train passengers to locate their coach positions at more than 7,000 railway stations across the country.
These innovations caught the eyes of users and the app started gaining good traction in a short time. Later in 2017, ixigo started selling tickets as an additional service for IRCTC along with its existing travel offerings such as flights, buses and hotels. That saw ixigo become a complete ‘one-stop-travel’ solution platform.
Kumar, co-founder and group CPTO, ixigo, says that “one of the biggest advantages ixigo has is its product and tech intensity. We took bold bets on building a research team that worked on AI and data-driven predictive use cases such as train seat availability prediction, flight fare prediction and automated seat selection. Today these advanced algorithms and the millions of data points we feed into them every day ensure that our users get better information for making buying decisions”.
ixigo is the OTA for the next billion users, with its focus on localised content and app features that aim at solving problems of Tier II/III travellers, with 95.26 per cent of its transactions in FY2022 driven by smaller towns and cities. The travel company has a deep penetration in the ‘next billion user’ market, which comprises users predominantly from Tier II and Tier III cities and rural India.
“We have been serving the next billion users for a while now. The initial users were a flight and hotel-centric audience, whereas the next billion were more of a train and bus-focussed audience – more utility-driven. We were one of the first companies back then to solve all their problems and concerns across planning, booking and travelling,” says Bajpai, focussed on addressing travel-related issues, a fact reflected by 22.58 monthly average sessions per user per month in July 2022, which was the highest engagement among all OTAs in India in this period, according to a Frost & Sullivan (F&S) report.
ixigo also saw huge opportunities in ground transportation. In February 2021, the firm acquired ConfirmTkt, a fast-growing train-focused business, and together they became the number one OTA for train bookings in India with over 42 per cent market share among OTAs by the end of FY21. In August 2021, ixigo added another important leg to its next billion user growth story, through the acquisition of the bus business of AbhiBus.
These new acquisitions are playing out well for the travel company as can be seen from the results of ConfirmTkt which has grown revenue by approximately 245 per cent during the year. With the AbhiBus acquisition, ixigo is now the second largest bus OTA in the country with a strong headroom for growth.
“We are committed as a team towards our joint vision of serving the underserved market segment of the next billion travellers in the country, for whom trains and buses are the primary modes of transportation. Together, we endeavour to drive more synergies in selling buses, trains, and flights across the entire group to the next billion users from Tier II/III/IV towns in India,” says Bajpai.
New milestones
As per data.ai (formerly App Annie), the app with maximum downloads for FY22 is ixigo (including ixigo Trains, ixigo Flights, ConfirmTkt and AbhiBus) with 46.12 million app downloads. ixigo is ahead of all other Indian OTA apps in this metric. ixigo group apps (ixigo Flights, ixigo Trains, ConfirmTkt and AbhiBus) have collectively seen the highest usage and engagement in July 2022 among all key OTA players and standalone transactional train mobile apps in India in terms of monthly active users, daily active users and monthly average sessions.
“The company was also the fastest growing OTA in terms of app downloads, with 5.18 million monthly app downloads in July 2022, which were more monthly downloads than all other OTAs in that month,” states the F&S report.
“We are proud of touching some new milestones when it comes to scale. We have also been able to improve conversion and cross-sell rates to monetise our large user base better, resulting in rapid growth in transactions and revenues,” says Kumar pointing out that the company’s financials have also charted growth despite two waves of Covid.
ixigo’s navigated the pandemic with 3.4 times growth in revenues during Fiscal 2020-2022. The gross transaction value (GTV) net of discounts and cancellations of R474 crore places ixigo on the second spot in the market with respect to the comparative GTV for FY22. The company managed to continue remaining adjusted EBITDA positive, with an adjusted EBITDA of R6.2 crore in FY22. Its entry into net positive numbers shows it will be one of the handful of profitable companies to hit the IPO market in the next few quarters.
“In terms of recovery, we were probably the fastest to not just recover but also exceed pre-Covid levels of transactions, traffic, revenue and GTV. It has been a tough 2 years for most travel businesses. If you look at our history and how we have built the company – we have been one of the more frugal and least funded players in the industry. We are also culturally a lot more aligned towards growing in difficult times. We have been very customer-focussed and we decided we are going to treat customers extremely well during Covid waves – instead of letting go of our employees, we hired more resources for our CX teams. We introduced traveller-friendly features like travel guidelines, ixigo Assured, etc. We have been serving the more resilient Tier II/III/IV traveller market which was impacted less by the pandemic and bounced back faster,” says Bajpai.
Riding the new travel wave
Post Covid, there has been a surge in travel as people who have been confined to their homes for nearly 2 years have now started travelling with a vengeance. New carriers such as Akasa Airlines are making their presence felt.
Bajpai sees the entry of new airlines as an exciting, stimulating chapter for India’s travel industry post the pandemic. “New airlines are bets on long term growth as overall penetration of around 11-12 crore passengers is still low as a percentage of population compared to other developed countries. Emergence of new airports in places such as Darbhanga and Jharsuguda as well as religious travel to places such as Shirdi and Deogarh will drive growth,” says Bajpai.
The technology-focused company is now looking at ramping up operations for its next leg of growth by improving efficiencies in business processes and operations. The travel company is looking to raise Rs750 crore for organic and inorganic growth. ixigo has been continuously investing in technology using artificial intelligence, data science and machine learning to transform its travel information and crowd-sourced data in business intelligence in order to enhance its travel offerings.
One of its important solutions has been the rollout of its 100 per cent AI-driven, personalised travel assistant TARA, which is powered by deep learning. This differentiates it from the typical chatbots that are offered by other players. ixigo is also focussing on offering its users greater convenience and flexibility through the launch of value-added services.
The travel company has recently launched its ‘ixigo Flex’ feature offering flyers fully flexible and freely reschedulable airline tickets starting at a nominal price point, giving users flexibility to reschedule their travel bookings if they wish to for any reason. In addition to rescheduling with ixigo Flex, the travel app also offers no questions asked, full refunds on all domestic flight bookings at a nominal charge through its feature ‘ixigo Assured’ which was launched in 2020.
ixigo’s use of artificial intelligence, data science and machine learning to transform its travel information and crowd-sourced data into business intelligence has enhanced its travel offerings and improved its operating efficiency. The company is seeing faster growth as well as lower acquisition costs leading to more than 85 per cent of organic traffic every year (through non-paid customer acquisition channels). ixigo is spending lower amounts on customer acquisition cost, which has reduced from Rs94.95 per customer in Fiscal 2020 to Rs84.22 per customer in Fiscal 2022 despite the year-on-year increase in new customers.
ixigo’s multi-app strategy has also allowed it to differentiate itself from other players in the market. Unlike other OTAs, ixigo has separate apps to deal with trains, buses and flights, which allows it to focus on its rail and bus segment while keeping other facilities under its umbrella as well. Its multi-app strategy has allowed it to be relevant to both the most evolved Tier I travellers and the aspiring Tier II/III/IV travellers.
While the industry has faced some noteworthy headwinds, there are many indicators for recovery as well. Domestic travel, fuelled by revenge tourism in FY22, has aided the growth of the Indian hospitality and tourism industry. A decline in Covid cases, resumption of international flights from March 2022, strong leisure demand and rising corporate travel demand are positive factors that will lead to further growth in the sector.
“The size of the Indian travel market was worth Rs4.9 lakh crore for flights, hotels and buses in FY20. However, it was impacted by Covid-19 in FY21 and FY22. We expect it to make a full recovery by FY24, growing to Rs5.2 lakh crore. By FY25, we expect it to be Rs6.2 lakh crore, growing at a 39 per cent CAGR from FY22-FY25,” points out Santosh Sinha, Axis Capital, in a report.
That’s no doubt good news for one of the prominent brands in the OTA space, and should keep the winds in favour of ixigo over the long haul.