Govt austerity, AI woes force Balmer Lawrie to start travel portal

Move over MakeMyTrip and Cleartrip.

Balmer Lawrie, the main travel agent for netas and babus in the country, is planning a travel booking portal, a company official told DNA.

“We are developing our own online travel portal, which would be up and running soon, and we expect significant business coming from it due to the strong brand equity we have in the travel business,” the official said.

The Kolkata-based diversified public sector company is the monopoly ticketing agent for the government departments. Its portal would also offer holiday tour packages, which can be booked and paid for online.

Currently, travel portals like MakeMyTrip, Cleartrip and Yatra hold 90% stake of the online market, while the offline segment is dominated by global players like Thomas Cook and Cox & Kings.

But why has Balmer Lawrie, which also draws revenues from diverse sectors like tea and logistics, among others, suddenly woken up to the online world, an opportunity that was created way back in early 2000, with even PSUs like Indian Railway Catering and Tourism Corp firmly established in the e-world?

The reason lies in the dwindling business from the government, first due to austerity measures, and second, because of the predicament of Air India, with whom Balmer Lawrie does most of its business.

“The major clients of the company are government departments and PSUs. Austerity measures instituted for control of government expenditure in 2010-11 were lifted only to be reintroduced in 2011-12, restricting travel by government employees. This depressed overall sales to a large extent,” Balmer Lawrie said in its annual report for 2011-12.

This has also forced Balmer Lawrie to look for new opportunities.
“The aviation sector is facing major crises. The national carrier, Air India, is being sustained on the life support of state aid, whereas Kingfisher Airlines is passing through extremely challenging times. The sector as a whole is not generating sustainable revenues one would associate with a large high-growth market. In fact, nearly all domestic airlines on an annualised basis, have reported huge losses,” the report said.

The shift of the travel services industry from the offline to the online mode can be gauged from two recent developments. UK-based travel major Thomas Cook Group PLC was recently forced to sell its India operations due to falling business volumes, and the sinking of Raj Travels, a leading domestic player.

Meantime, the boom in online space continues. The US-based Expedia Inc, the biggest online travel company, plans to set up country’s largest research centre.