VCs – 922

Cleartrip.com introduces Train Search

My favorite travel site has come up with yet another feature. Train search. Now I have alternatives to irctc and indianrail.

Try it here.

You cant book the tickets just now. You can just see a list of stations the train would go through.

What does it mean for cleartrip?
1. They move beyond just air fares (and occasion hotels) and go a step closer to being a complete travel solution provider.
2. Get more traffic (of people interested in trains).
3. More conversions from train travelers. If cleartrip could introduce another widget right next to the train search results and show the traveler that air travel is real cheap, bookings rate would shoot up. And I can bet, this feature is on its way.

Currently, apart from IRCTC, Makemytrip.com offers trains. But they also are limited to rail tours. They don’t have a listing of stations (the way Cleartrip has). After all the hoopla about train bookings, looks like Cleartrip has emerged the winner. Yet again.

Keep watching. The online travel operator war is just beginning to start.

Online Travel Agents in India

TOI has this piece on Online Travel Agents in India.

The survey about locations of users is important. It shows the readiness towards e-commerce in India and where a location specific service (local search, order aggregation, ) might work. More on this later.

There is something even more interesting. The number of tickets that leading OTAs book per day. MakeMyTrip.com books 8000 tickets a day. ClearTrip.com books 6000 tickets a day. This number has been reported by the company themselves. There is no reason to doubt the accuracy. After all they are not like social networking websites where the number of members is the only way to evaluate these companies.

Going by these numbers, Cleartrip.com books approximately 22 lakh tickets per year. I assume this number to be correct (don’t know if these many people fly in India per year) and going by earlier post on Cleartip.com earnings, average billing per ticket is 3200 bucks.

And again assuming that they get between 1% and 5% of the ticket as commission, they make anywhere between 50 and 250 bucks per ticket. This is a big range but without data, this is the best number.

Anyone thoughts?

Related Posts
Cleartrip.com earning report

Cleartrip.com earning report

According to Sandeep Murthy, CEO, Cleartrip.com, “We are expecting to close this March 2008 with a Rs 700-crore turnover”. Link

700 crore is a huge number for an online ticketing website. Lets see how much of this 700 crores is actually earnings for Cleartrip.

I will make following assumptions.

1. Average ticket price is Rs. 2,500 (The actual would be higher)
2. Cleartrip.com makes Rs. 100 on each ticket (I know for a fact that ticketing agents make all of Rs. 50 on each ticket. I am assuming that Cleartrip.com has the muscles to get better margins).

Time for some simple maths.

Turnover: Rs. 700 Crores aka Rs. 700 00 00 000
Number of tickets: 700 00 00 000 / 2 500 = 28 00 000
Margin per ticket: 28 00 000 * 100 = 28 00 00 000
Net Earning: 28 Crores

28 crores in first few years of operation is actually not bad for an online ticketing company. After they recover their investment costs (which should not be more than 20 odd crores if they are prudent), all revenues are theirs to keep.

There is zero or negligible operating cost for a business like theirs. No raw material costs, no managing the back end, no overheads. All they need to do is pay the licensing guy and put money in marketing. Further once they reach a traction point, even the marketing costs would start reducing.

Actually no. Theirs is a business with zero competitive advantage. Any website offering better deals will get the chunk of the business. How can they build moats around their castles? If they cant build those moats, they will have to somehow figure out a balance point between marketing spends and revenues.

Recently Yatra.com paid 10 crores to Mahesh Murthy‘s Pinstorm for online marketing. Keeping in context Cleartrip’s earning at 28 crores , I wonder how much is Yatra making and is Yatra breaking even with this kind of marketing spend?

The business looks really lucrative. No wonder everyone wants to get into online ticketing. The long term winner will be the one who can leverage marketing effectively.