To understand the significance of this rollout, sample this – the Indian Railways did $102 million in online transactions last month. It’s the scale that excites OTAs like Cleartrip. Hrush Bhatt, co-founder of Cleartrip told MediaNama that at over 160,000 transactions per day, the Railways does double the transactions that the Airlines do in a day. The opportunity is also othere because of fewer points of sale for Railways. Comparing the two: flights have their own sites, an agency facing site, third parties, affiliates and downstream distributors.
The monetization is going to be by charging an additional service fee to customers. IRCTC charges Rs. 13-25, based on the fare class, and Cleartrip intends to charge a similar service fee on top of that. In fact, that’s a model that’s being considered for the flight ticketing as well, if the zero percent commissions model is imposed, though the IATA and the airlines haven’t finalized anything yet.
Contribution to revenues
Cleartrip has estimated a topline contribution of 10-20 percent from rail ticketing, which Bhatt says is a conservative estimate, with a bottomline estimate of 5-10 percent. Bhatt says that it’s still a very large number, if the top 3 OTAs to account for even 20-30 percent shift in IRCTC transactions – of around 40,000 – 50,000 transactions per day. By the end of the year, the company expects a topline contribution to be split as follows: 75 percent from Flights, 15 percent from trains and 5-10 percent from Hotels.
Cleartrip piloted a train search earlier this year, and Bhatt says they got 2500 visits/day without really spending anything at all on promotions. They’ve upgraded their search several times, based on user feedback. The OTA doesn’t intend to launch a TV campaign for train ticketing – “The margins here do not justify such large investments in marketing.” They do have plans for online marketing, though.
Bhatt also added that Hotels are a nascent market still, currently contributing 10 percent to revenues. They offer a margin of between 12-25 percent, depending on the deal with the hotel.
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– IRCTC Does $102 Million In Online Transactions In August; Payment Trends
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