One in four air tickets will be booked online by next year

It looks like boom time for the country’s online travel industry, with sales expected to shoot up to $5.5 billion in the next fiscal year from $3.2 billion in FY09, according to PhoCusWright, a US-based travel research company.

Industry analysts say this growth will be driven by a sharp increase in online travel penetration — from around 21% in FY09 to 27% in FY11, which means one out of every four tickets will be booked online.

“As an industry, we are expecting a jump of 10%, in terms of market share, which was at 2% in 2006, due to the shift in the purchasing base and an incremental increase in the number of internet users,” said Neelu Singh, chief operating officer of Ezeego1.com, a B2B and B2C travel marketplace.

In conjunction with the rising share of online sales, experts also point to the rise in the average ticket size in the domestic segment. In the June 2009 quarter, the average ticket size was Rs 4,000-4,200, up from Rs 3,000-3,500 in the previous quarter.Average ticket size is the average price of a ticket for a particular route that an airline flies for a particular month.

Currently, the online share of the domestic travel segment is at 35% and the industry is expecting it to rise to 43% by 2011, said Tarique Khatri, vice-president business development at online travel firm Cleartrip.com.“As for the international segment, we (the industry) are currently at 4% (market share) and expect it to increase to 8% (by 2011).”
Online players are expecting the increasing market share and rising ticket prices to lead to a surge in revenues.

“We are expecting 50-60% growth (in revenues) year on year,” said Sachin Bhatia, chief marketing officer at Makemytrip.com, one of the country’s top three online travel companies.

Analysts add that the reason for such optimism is also due to the fact that many of these travel portals provide customers with options that most booking agents refuse to disclose.
“Also, it happens to be convenient for our users, who can book tickets as per their choice and according to their convenience,” said Vijay Kesavan, CEO, Akbar TravelsOnline.

The country’s telecom revolution is another factor driving growth in online travel sales. “The growth in telecom infrastructure, coupled with innovations by travel service providers will result in increased online bookings.

From the consumer perspective, increased transparency and value for money will be the intangible benefits while better and increased travel deals will be the prominent tangible benefits,” said Ram Badrinathan, general manager, Asia-Pacific, PhoCusWright Inc.