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Will IRCTC’s Flight Booking Site Impact OTA’s?

The Indian Railways & Tourism Corporation is entering the airline ticketing space, and will launch air.irctc.co.in this week, reports IBNLive. We tried, and while there is an advertisement for air ticketing at RailTourismIndia.com, an IRCTC website, which links to air.irctc.co.in, but on clicking, the site doesn’t load. While this initiative might suggest that this is going to be just another online travel agent, readers must keep in mind a few things:

– The scale at which IRCTC operates: being the primary online ticketing service for India’s monopoly railways business, IRCTC reported 15.3 million transactions in March 2012 alone. To give you some context of revenues, in August 2008, when IRCTC did only 4.9 million transactions, it reported $102 million of online ticketing (gross) transactions for the month. More on that here. The IRCTC has since stopped reporting monthly revenue information.

– The opportunity in connecting flights and trains: IRCTC can offer its existing user base an integrated travel solution, and allow them to combine different modes of travel, based on availability of time and tickets, and travel preferences of the user. This is particularly useful for those travellers who want to travel to cities not connected by air, and the air ticketing site can thus offer a combined air and rail offering. This saves a traveller from figuring out trains separately. Of course, other OTA’s could also do this, but so far, they’re keeping railway and airline ticketing options separate.

– Retail outreach: online payment ventures like Itz Cash have deployed significant retail payment operations, which allow customers to buy tickets online on IRCTC through retailers. While they also have tieups for flights, the same retailers would probably now be able to offer airline and railway tickets from IRCTC.

– The Airline ticketing market is far more competitive: typically, the lowest price wins. Even though online travel sites have focused on loyalty (like MakeMyTrip’s hastily aborted zero cancellation policy) and usability (like Cleartrip’s Expressway), a lower price is likely to still win. So we’re not sure how IRCTC will differentiate its offering, in terms of pricing. The IBNLive report quotes an unnamed IRCTC official as saying that there will be cashback offers (which are common), no service charge and lower cancellation charges. In case IRCTC does implement these initiatives, there is a possibility that other online travel agents will follow suit, again, not leaving much room for differentiation.

The challenge for IRCTC will be, in our opinion, launching a functional site. We’ve come across complaints aplenty about difficulties with booking railway tickets, and of significant website downtime. While customers may grin and bear it for a monopoly business like railways, they have several other options for flights.

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