Tag Archives: india

Daily Deal Aggregators – what is your business model?

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Deal Aggregators – what is your business model?
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Movie 300 – One of the most inspiring scenes, when King Leonidas asks his army – Spartans, what is your profession?
watch it here – http://bit.ly/4csyEj
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Post the series of daily deal sites that have come up in India (or across the world) – there are many deal aggregation services that have been launched. There are on going debates – is there a business model for deal aggregation services?
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While daily deals and coupon services are growing in India and else where – many users/customers of daily deals services as well as critiques of this business models have complained that people usually end up buying things that they do not want or would not have purchased otherwise. Which is little illogical because you buy it for the deep discount – and you buy it by your choice.
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My example – I am a regular eCommerce transactor – at least 10-12 product/books (non-travel) transactions per year. However I am yet to buy a deal/coupon as most services are offering deals that are not relevant to me or not close to my location. As a consumer, here is my take – I will not be interested in a coupon that gives me Rs 200 off at a restaurant in Andheri (Mumbai). The economics does not work for me, total travel time of 4 hours, commuting cost between Rs. 100 to 500 depending on mode of travel and accessibility of the service provider.
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There are two primary needs of consumers in this space that are not yet solved completely:
– Relevance of the Deals
– Location of the Deal
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While this is the problem that most daily deals and coupon services are themselves trying to address – the aggregators can do a better job at this for following reasons:
  • Most deal sites are limited to anywhere between 1 to 5 deals at any given time. That limits their reach to about 5-10 suburbs in a city like Mumbai (Mumbai + Navi Mumbai + Thane) or Delhi (Delhi + Gurgaon + Noida)
  • A deal aggregator can get such 5 deals from 5 different websites – and will have 25 deals to showcase and in most cases the span of reach will be wider – about 20-30 suburbs (which covers 40-50% of Mumbai)
The above statement is very logical, however deal aggregators now have to think beyond just aggregation and focus on distribution of such deals to relevant audience – relevancy by deals and location. At least in India, it may not be the daily deal websites that can take this business hyper-local but definitely the deal aggregators can if they wish to.
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If deal websites are focusing on – Deals in Mumbai; aggregators should focus on Deals in Andheri, Bandra, Chembur, Colaba, Ghatkopar and more!
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My two cents – Business model for Deal Aggregators should not be aggregation of deals. That is a simple job and that is minimum expected out of them. Your business model should be Distribution – distribution of deals, thats where they start testing their capabilities and adding value to the ecosystem!

Predictions – Biggest Exits in Indian Internet Space in coming years

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There would be multiple Consolidations, Mergers, Change of Strategies by lot of VC-invested companies by 2015.
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Product based eCommerce companies:
Lot of interest seen in recent times by VCs. LetsBuy, Snapdeal, FashionAndYou, Flipkart, and so on, Infibeam as well (though still not part of any portfolio yet). Future of eCommerce companies will depend completely on two factors:

– Internet penetration in India > 200 Mn by that time
– Improvement in eCommerce transactions (Infrastructure + User Comfort)

The rate at which investments are made are much higher than rate of growth of both the factors mentioned above – which in a way may be good – as all invested companies will act as catalyst in growth and get new set consumers on-board.

If we see an IPO exit for atleast one of product based eCommerce companies that will be awesome;  One or Two VCs in India (without naming any here) have been actively investing in eCommerce space. There may be a very high possibility that they may merge two or more portfolio companies to form an large entity, which may be just a good acquisition target for Amazon or an IPO exit.
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Group Buying companies:
Was surprised (like many others?) with GroupOn‘s decision of acquiring SoSasta. There are established players in Group Buying space, I’m sure GroupOn has seen some merit and synergies. For existing leading players like SnapDeal, Deals and You and Taggle – they will continue to grow and have to.

Possible exit for them will be Google (since they are starting with Google Offers) or an acquisition by eBay; or maybe GroupOn India may now want to expand presence with one more acquisition. Not to forget that LivingSocial will also come knocking. Now that eBay has ventured into Group Buying space – it has much higher accountability as deals are now served by eBay and not marketplace. eBay India may acquire someone if they decide to have an experienced them to execute this business vertical.

Expect one very large player to enter Group Buying space in next 1-2 months, if well executed – in all probability it may give tough challenge to current market leaders.

Unfortunately many small players will hit the dead pool (few of them have already) due to execution challenges, expansion costs, and lack of operating revenues to keep going as the model is very easy to replicate, but not easy to scale with thin-margins and high acquisition cost.
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Online Travel Companies:
Clear IPOs for Yatra & Cleartrip. Will be great exit for all invested players. GoIbibo and ezeego1 are also leading players in travel domain – Goibibo’s exit may depend on ibibo’s overall plans, ezeego1 may raise capital through markets directly bypassing VC route.

Redbus is promising, they are very high on number of transactions – ticket size may be lower compared to Airline tickets, but % margins will be definitely higher. In all probabilities – Redbus may too hit an IPO or will be an acquisition target for Yatra or Cleartrip (listed travel companies by then as MakeMyTrip has acquired Ticketvala)

I hope someone in Indian Government thinks of the opportunity of listing IRCTC on stock markets.
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Ticketing eCommerce:
BookMyShow will expand to more geographies – they have presence in Malaysia & New Zealand. To get to more such markets, they will require more capital – further investment and definite IPO candidate. Reliance ADAG is trying to make it big in entertainment through BIG – they might knock doors.
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Technology Companies:
Pubmatic (industry’s first yield optimization player) may get acquired in few years. It faces good competition from AdMeld & Rubicon Project, however none of these yield companies are focusing on small publishers (the long tail) which may be the key to larger success.

iYogi by all speculation is IPO bound. Slideshare is leading in its segment and may be a great exit story. Fusion Charts is another one that may be acquired for technology and customers; and so is Martjack.
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Advertising Networks:
Existing players – Tyroo, Komli, Ozone Media, AdMagnet and others. Do not forecast a immediate exit for these players – the number of players in this segment has been same for long time (no new entrants) – and otherwise too existing players seem to looking outside of India, are they hinting saturation of market? The frequency of acquisitions of pure advt-networks has decreased outside India (no big news in so many months?).

There is no distinct advantage over each other and offerings (if Vizisense is treated as product outside of Advt-Network). Would have been great to see an situation like AdMax Network (owns up majority market share in countries they operate – very tough competition to Google as they have leveraged on local language audience which is majority).

Google has played a flattener by opening up its unlimited inventory on Doubleclick exchange through Google Certified AdNetworks program. Post which the publisher development story may have taken some hit, but wondering why have not the Indian Advt Networks integrated on Google’s Doubleclick exchange yet – expand you publisher network!

InMobi which is now the largest mobile advt network (outside of Google/AdMob) – maybe one of the biggest exits through Nasdaq IPO. There is no immediate need for Google to buy another mobile advt network – that leaves IPO as only logical exit unless AOL, Yahoo or Microsoft realize that they haven’t looked at the mobile monetization business seriously.
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Matrimony Portals:
BharatMatrimony (Consim Group) would be going for IPO in coming times. Not aware of any investors in Shaadi.com (although there are in Mauj & Fropper), if business is profitable and there are no investor pressures – unlikely to see an IPO from them (at least before BharatMatrimony).

Read somewhere that Jeevansathi has abandoned markets in South India (not sure of this), however its already a part of listed InfoEdge group, spin-off very unlikely as numbers are reported as part of InfoEdge.
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No Clear Exits:
SMS GupShup, Guruji, mCommerce companies (PayMate, mChek and others) are few companies I am not convinced of having an clear exit strategy. (Someone do throw light on this)
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Promising Startups:
The next wave of promising startups in India will be product-driven companies. Although the eco-system to fast acceptance of technology products is not so strong right now – it will be in coming years. Emergence of interesting start-ups like Practo, Zaakpay, Grexit, emo2, Workasaur are first steps in that direction.
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Hoping to see many success in next 5 years! Best Wishes
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This opinion was posted originally as an answer on Quora at: http://www.quora.com/Which-Indian-internet-company-will-have-the-biggest-exit-by-2015

Why Indian Languages Failed to make a mark Online!

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Why Indian Languages have failed so far to create much desired impact on Internet?

With due respect to companies & entrepreneurs working in Indian /Indic languages – let me put practical thoughts on Indian Languages proliferation in Indian Online industry. Technology is nice, great infact – we love it when we type in English and the text gets converted to an Indic language. Technology does makes us say – WOW!, but it is not enough to assume that millions of Indians will adopt it and it would bring about an revolution in Indian Internet Industry.

Revolution in Indian Internet Industry will be when about 100Mn Internet users in India grows to 500Mn (not in next 20 years, but in next 3 years) & about 1XX Mn Mobile Internet users grow to 500 Mn (not in next 10 years, but in next 2 years). Hope the revolution of this sort does happen – but will acceptance of Indic languages lead to it – answer is definitely NO! The ecology for this change is simply non-existent in India today; and is far from created.

Having worked in the Internet domain – we have repeatedly heard that Indian languages to be the next thing. These predictions actually looked more like “me-too” product offerings – thats worked-in-US will work-here-too. Because China has Baidu does not mean we need one!

Coming back to Indic languages, in my opinion – the languages space has been highly misunderstood. We saw several efforts in this direction over years:

  • Rediffmail introduced feature to send and receive emails in multiple Indian languages many years back. However the usage of this service is not more than 1% of overall service. Ajit Balakrishnan, CEO, Rediff.com said earlier – “Lets not assume that (Indian) users want Indian Languages!”
  • Microsoft started offering its Windows Operating System and MS Office Suite products with Indian language versions since last few years. The adoption rate of same is questionable – to my best positive guess it will be still <0.5% of overall installations.
  • Keyboards / Input devices with multi-lingual keyboards were at one time were hailed as innovations to drive computing to rural India.
  • Indian fonts also saw its own best days when they were introduced to the market.
  • Bi-lingual (English+Hindi) mobile phone keypads were once a rage. Nokia introduced a series of phones and around same time we saw a huge interest in mobile applications working on Indian languages

Most of these services/launches were well received, were thought and perceived to be game changers. Maybe at times even I did think in same way – but while I have studied this space and have interacted with few wise people in Indian & International scene – Can strongly put forward the conclusion that Indian Languages will NOT make a mark in Computing, Mobile or Internet domain. It will not happen very soon – the ecology for such change to happen in India does not exist.

Here are of fews considerations that makes me form such strong opinion and conclude on absence of ecology favoring Indic languages adoption:

Diversity of India:

While this is what makes us proud of India – this is one of the strongest reasons why Indic languages have failed to make a mark.

Consider emerging markets like-

  • Brazil: Over 99% of population speaks in Portuguese
  • Other Central & South American countries like Argentina, Venezuela, Peru, and many other countries have Spanish as the official language with over 90% population in these countries speaking in Spanish.
  • Similar with French – it is widely accepted in many European countries as official language.
  • Consider China – it is as diverse as India, but all most popular versions of Chinese languages are based on standardized version of Mandarin (based on Beijing dialect)

Consider India – while Hindi is leading official language, but no single language has adoption across the country. State governments have endorsed respective regional languages as official, Hindi failed to find the common ground – but English did!

How Innovation starts in Local Language:

Take market like China – The innovators, the early adopters, the influencers, the decision makers, the entrepreneurs – all of them DON’T KNOW English!  So innovators developed softwares, websites, products in Chinese; early adopters used Chinese products and so did the influencers, decision makers, and everyone else in China.

Take India – we know our Mother Tongue (our Mother Tongues are different) + we know English!

English is Aspirational language!

English is an aspirational language. Nothing official about it!

It can be confidently said that the percentage of users who will read/write/speak English language will keep growing for next 50 to 100 years. The same cannot be said about Indic languages.

How new users are learning computers:

For applying to government jobs that involve computer related work, few state governments in India have provided guidelines / benchmarks or minimum criteria based on examinations/programs acknowledged by them. Once such program with examination is MS-CIT for Maharashtra Government.

Had a chance to visit once such center – the communication with students may be in local language – however many users prefer to give examination in English language and during their classes learn computers that have English versions of Windows / Office and other software applications.

Indian languages are complex; Do not follow standard / global script:

One of the most favoring factor for languages like French, Spanish, Portuguese, etc was the fact that they followed alphabets from English language (ABCD…XYZ). No additional fonts, hardware or input devices were required to be created when uses adopted computers usage in these languages – both reading and writing.

In contrast, all languages in India do not follow standard script and are very complex to input and still be grammatically correct. To a small extent, another disadvantage is – like English we cannot drop vowels (AEIOU alphabets) to make shorted and communicable form of any Indic language, an convenient SMS lingo of Indic languages could not be developed.

Even Devanagari script is very complex to be standardized for its multiple languages on a input device like keyboard; even if it were – all languages in India are not based on Devanagari; while in China most Chinese languages have standard Mandarin script.

Internet was built on Content; Indic languages lacked adoption by early movers:

Internet was built over years – the most popular activity till date on Internet has been creation & consumption of content – through content sites, social content, or services & products that communicate through a content (language). While content was created in other global languages based on English alphabets from early days of Internet – it took a long time before content in Indian languages started appearing on Internet. By the time ability to create content in Indian languages was available – English had taken a mighty lead in its adoption as Internet’s mother-tongue for India.

In early days of Internet in India, most early adopters had English as first/second language. It made more sense for these users to adopt English language than create content in Indian languages as content was readily available elsewhere to. Most early and popular Indian websites too focused on creating content in English.

Even if they were to adopt Indic languages – the question will always be – which one to start with?

Indian Languages are great for Consumption; Not for creation!

As users we consume all regional languages through other Media – Television, Radio, Newspapers. Its very easy to consume on traditional media and the ecosystem exists for – content (TV programs, news content, audio content for radio), publishers (multiple TV channels, news papers & radio stations) and advertisers (promoting products in Indian languages). There is huge amount of content produced, audience availability & consumption, and advertiser interest.

Indic languages are great for consumption; not for creation! Ask yourself –

  • How many times have you sent an official email in Hindi? No business may deny communication in lndian language if it gets you more business – but did you send?
  • How many times have you sent an email to an friend in any Indian language?
  • How many times have you composed and sent (not forwarded) an SMS in Indian language?
  • You may talk with your friends in any language – like Hindi, Telegu or Bengali – but did you write email to them in that language?

No Rewards for creating Content for Publishers

Even if large publishers now take efforts to create content in local language – the cost & economics associated with this may not justify the efforts. The questions to ask would be –

  • Is there audience that would accept content in Indian language. If there is – are they online today?
  • Are advertisers willing to include these in media buying plans, develop creatives in multiples of Indian languages – would the right advertisements be displayed to correct audience?
  • How will they get traffic? How will they optimize for SEO? If they post an message on their Facebook fan page – will the users reply back in local language or in English?
  • The monetization – how will they?

Monetization for local language content publishers:

Should we charge consumers to access our content in local Indian languages – that will not work. The debate if content should be free or paid has been ongoing since we have known – its best concluded that content should be free as it has been.

Coming to online advertising opportunities, agencies and publishers need to take extra efforts if they have to cater most of the Indian languages – the time and effort required in doing so may not justify the returns on many metrics.

Even current large publishers like Yahoo, BBC, etc having local Indian versions of its service – feature display advertisements in English itself and have comparatively less advt spots than their English versions. Many small and medium publishers will rely on Google Adsense for revenues – but Google does not do any wonders here. No robust technology available to content sense Indian languages – and even if it were available – there are no advertisements available in languages to match up and show them in relevance. Fill rates for advt-spots would been lower and with fewer revenue generation options – small publishers will think twice before putting efforts on creating Indic language content.

Take a look at large portals in Brazil, France, Spain or China – the ecology exists with an huge array of content providers, publishers and advertisers communication through respective local language.

Literacy Rates of India:

While most predictions about Indian languages are made that it will increase penetration of Internet users in India – we forget to acknowledge the fact that there still exist an huge population that is illiterate. Unfortunately, 35% of world’s illiterate population is in India.

As of 2007, India’s youth had literacy rate of 82%, while that of Chinese youth was 98%. Literacy rates are based on an individual’s ability to read and write, not on his ability to understand or use computers! Hence the addressable Internet market in India for any language will be far lower than the entire population.

Our Generation is learning to give up Indian Languages:

Few factors around us might be making us give up our inclination towards Indian Languages. One of the strongest is influence on Cinema / Bollywood – Indian audience is bombarded with promotions of movies close to its release date, most promotions today feature names of Indian Movies in English characters!

Did you notice that – Ghajini, Dabangg, Golmaal, Rajneeti, or many latest blockbusters from Bollywood came out with posters/promotions focusing with name of movie only in English (or Hinglish). And so are television programs and contests .

While sending SMS’s even to our friends – its easier to type a local Indian language in English (Hindi + English = Hinglish), not just for Hindi but for all languages.

We are slowly learning to give up Indian Languages when it comes to usage on Mobile or Internet.

The Litmus Test for Indian Language Usage !

Amitabh Bachchan on KBC (Kaun Banega Crorepati) asks viewers a question for winning 1 Lac, users are expected to send SMS KBCQ followed by options A, B, C or D.

One fine day if he declares that only SMS in local languages will be accepted. How many users you think will send the answer as  (केबीसी क्यू क, ख, ग, घ)  or any other local Indian languages? Will there be a SMS responses go up or fall drastically?

For a simple message like this – there will be multiple variants in multiple languages.  Try composing this on your phone in Hindi or in your own mother-tongue. Now – Did you get my point about Indian Languages?

Concluding Notes:

There is definitely a pain area that has to be addressed here knowing the potential that can be unleashed will be tremendous. The challenge that needs to be addressed is not about creating a tool to translate content to Indian Languages or simplifying the creation in Indian Languages – but it is about creating an ecology that enables creation, consumption and monetization of Indian Languages!

Notes from above article:

  • Indian languages are based on complex scripts – it may be easier to read content, but not to create it.
  • There is no common ground for one Indian language – hence English takes a lead and will continue to.
  • Although there are technology innovations that lets one type in English and then auto-translate in a local language – but the minimum criteria to use the same is knowledge of English!
  • For Indian languages – it would definitely be the Mobile Story! Mobile Penetration in India is already about 50% of entire population – is the rest 50% a addressable market is questionable – even the new mobile operators in India have to prove themselves.

But with Indian youths – 82% literacy rate and high mobile penetration already are key factors. A solution for proliferation of Indian languages usage needs to be out before English becomes the De facto communication medium and an lost opportunity for Indian languages!

Social Buying: Attack of Clones & Indian Market

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Group Buying in India: Attack of the Clones

Happy, Merry and Cheerful on success of Groupon. Social shopping was the way forward, most of them spoke of this since mid-2007; however the way Groupon solved the puzzle, no doubt earns them a success.

Came across Andrew Mason’s take on Groupon Clones on TechCrunch and through links stumbled upon Sanjay Mehta’s review on one of the India offerings – Wanamo that incidentally was also one of Groupon clones. An interesting discussion between Sanjay and Wanamo’s founder follows the review.

So back to my crunching game – how large can Social Commerce or Group Buying become in India. What potential lies in it?

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Current Scenario:

Market Stage: Chicken or Egg? Still nascent stage, but already crowded – too many chickens and too any eggs.

The Players: Snapdeal, Wanamo, Mydala, Mobstreet, Grabbon, Koovs, Group2Deal, and others I haven’t noticed yet.

First Thoughts: Star Wars – II. Attack of the Clones (or Cousins). Incidently one look at all of them, and you see all design elements, features and placements are similar with each other and with Groupon. A few of them actually ripoffs.

What would differentiate: Quality of deals, execution of ideas & ability to innovate this space.

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Group Buying: What is the market size in India??

Known group buying websites in India: 7, Estimated: 10
Average Transaction Size offered:  Rs. 500 (80% of them are under Rs.400)
Average Successful Coupons sold: 50 (as claimed)
Current Cities Catered: 4 (Top Metros only)

Total Market Size: 10,00,000 INR per day = 1 Million INR per day
Thats a kewl: 365 Million INR per year or 7.3 Million USD per year

These numbers are assuming that all ten Group Buying services see 50 Transations per day in all 4 Metros. This is were the analysis starts…

Will this model be successful in India… NO (Not till the point attack of clones continue)

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Why Groupon succeeds and has potential to grow:

  1. Original concept & product. First mover advantage.. and its huge!
  2. Groupon has plans to move to 100+ cities across world
  3. Groupon sells about 200 to 2000 coupons per day from $10 to $125 in each city
  4. They are already in 45+ cities as of today

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What Group Buying services in India need to re-think upon & probably revise their business strategy:

  1. It worked in US, it will work in India too approach
  2. The front end UI has been adapted/copied. Hopefully some player has built a robust backend too.
  3. India does not have 100 (or even 20+) highly penetrated ‘Internet’ cities. It would pinch beyond the IPL cities (Cities with representations in Indian Premiere League – IPL Cricket) on both sides.. Consumers & Partners.
  4. Most rely on Social Media for marketing & buzz. Good.. but Social Media is notoriously known for buzz and communication, and not conversions. However for Group Buying deals – this might just work if the deal fits right.
  5. Most deals in US are for Food, Spa, Coffeshops. Unlike US, in India we have choices not just in restaurants but also cuisines… Punjabi, Mughlai, Goan, Chinese, Indian Chinese, South Indian, Goan, and so on. Deals, typically on food & restaurants need to be much wider to appeal to wider audience.
  6. India.. We still don’t know how many users we have (Claimed 50 Million Internet Users)
  7. Others concerns – Internet Transactions, Security, Credit Card Penetration. But for the kind of audience they choose.. this might not be significant issue. But would be when they expand to more cities.
  8. Indians by culture and by nature love to bargain by themselves! And take pleasure in doing that 🙂
  9. We love to choose – don’t we? One deal per day might not fit our appetite.
  10. Cricket & Bollywood; Cricket & Bollywood; Cricket & Bollywood
  11. You are not alone to solve these problem.. at this early stage itself you have huge competition!

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Ending Remarks:

So now that you have started, get started on the execution. Few cues to work for this model in India are:
Multiple Deals in a City, Payment Options, Alternate Revenue Channels like Advertorials & Advertising, Go beyond Internet… (Mobile) and much more.

Innovation and adapting to Indian market will hold the key for Group Buying services. And they need to execute that fast, as many deep pocketed services that are remotely and closely associated to related domain (like city event trackers, and hotel review sites… & you know who else?) will find it much easier to replicate this business model overnight.

A clone will be clone… so Innovate & Differentiate 🙂

Adapting to how consumers think offline (in real world)

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Driving is fun for me and a great stress-buster ever since I discovered it (discovered… stress). And throughout the day I at least check one automobile site besides being a huge follower of Team-BHP since last 2-3 years now; and amongst the portals, Carwale.

While talking with a friend who was trying to finalize a car to buy, I realized there such few instances of how differently people think and how conveniently we develop an online product.
And I checked multiple sites, screenshots below.

car-portals

Most of car portals provide users only 2 options – Select Cars by Manufacturer or Select Price Range. With some noted differentiations by Carwale & Gaadi that have tools to recommendation a car.

Just one basic flaw in this which I realized post my conversation with a friend who said it straight – “I can spend up to Rs. 12000/- per month in the EMI.”

This was exactly that I thought while I purchased my car. Wouldn’t it hold true for most of the middle-class Indians who thrive on hatchbacks and mid-size sedans as well? Over 80% of new automobile purchases in this segment are done through Car Loans paid in EMIs.

  • Could the right product approach for Indian price conscious market be this as well?
    o    Allow users option to enter the amount they can spend on EMI per month
    o    Change EMI period and Down payment and show relevant options to users.

Something like this:

emi-recommendations

The reason I like this approach is that’s the way consumers think while buying, and it also allows consumers to see more options when they stretch their budget 🙂

Everyone wants to have a have a piece of German Engineering, but what they buy is different alright!
PS: Ignore my design skills.

Dissection of Online Travel Agent (OTA) Business: What is Market Size?

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Once an VC-favorite business domain in India, Online Travel Agents (OTA) business model has been quite silent since last 2-3 years in this activity. Primarily cause Aviation industry suffered huge losses in this time and most of the plans to expand the aviation businesses in India fell flat post the recession on 2008-2009.

Of course the direct impact of this was on OTAs. Consolidation is expected to take place, naturally since the number of players in market today are probably equal to or more than the number of airlines operating in India. The big 3 of course are Cleartrip, MakeMyTrip & Yatra, however the question is are other players in market big enough or valuable to get acquired or carry any differentiators to be acquired.

Nevertheless, this post is about some number crunching and to answer the question – How big exactly is the OTA market for domestic flights? Taking a reverse approach on this… from Supply to Demand.
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Domestic Airline Fleet in India:

As of Airline Fleet Flights
Dec-09 Jet Airways 89 400
Dec-09 Jet Lite 19 110
Dec-09 Jet Konnect 19 125
Dec-09 SpiceJet 19 125
Dec-09 Indigo 24 155
Dec-09 Kingfisher & Red 66 400
Dec-09 Paramount Airlines 5 28
Dec-09 Go Air 8 55
Total All Private Airlines 249 1398

Note:
*indicative data only, gathered from various sources available like company websites, news, etc. Consider all numbers as indicative figures
* Data excludes Air India / Indian Airlines domestic flight operations
* Actual flights per day may be an lower number since most carriers operate multi-destination flights, like Mum-Kolkata-Guwahati
*Jet Airways fleet size may be fleet in service for both domestic/international operations.

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Maximum Tickets Available for Sale:

Airline Flights Seats Total
Jet Airways 400 200 80,000
Jet Lite 110 200 22,000
Jet Konnect 125 200 25,000
SpiceJet 125 200 25,000
Indigo 125 200 31,000
Kingfisher & Red 400 200 80,000
Paramount Airlines 28 60 1,680
Go Air 55 200 11,000
All Private Airlines 1398 275,680

Total Tickets available for sale each day = Total Seats available = 275,680

*indicative data only, gathered from various sources available. Consider all numbers as indicative figures
* Actual number of seats available may be lower than mentioned since flights operated may be lower, as mentioned in previous slide
* Most airlines in India operate Airbus/Boeing aircrafts with which seating configuration varying between 180 to 220
* Full service airlines like Jet Airways & Kingfisher operates flight with business class seats, and have ATR aircrafts in fleets as well
* Paramount  Airways flies smaller Embraer  aircrafts

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PLF – Passenger Load Factor:

Total tickets available for sale, indicates maximum inventory available or max supply  From time to time, airlines in India have raised concerns on the occupancy levels of seats,  that’s passenger load factor.

Mostly the number has hovered between 68% to 72% for most full service airlines & between 75% to 82% for low cost carriers . Assuming 75% PLF for India, total sold out tickets in India per day would be: 2,06,760

Total Seats Offered:  275,680
Passenger Load Factor: 75%
Seats sold: 206,760

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Sale Distribution through Different Channels:

Having said that 206,760 tickets are available for sale, lets not assume that all sale happen through online channels. Different channel includes – Offline Travel Agents & Tour Operators, Tickets sold as part of travel packages, Big Corporate Organizations booking tickets for its employees through offline travel partners, Ticket Counters at airports and yes – Online.

Assuming a healthy 40% of all airline ticket sales as online sales. However, consumers in India are price sensitive and do book directly from airline’s websites as well.

Doing the division
– Ticket Sales on airline websites = 15%
– Ticket Sales on OTA websites = 25%

Tickets sold by OTAs daily = 51690

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So What are Daily Transactional Sales like?

Total Ticket Sold by all OTAs per day =  51690
Assuming average price of ticket sold online at =  Rs. 5000      (not all get a Rs.3000 ticket)
That’s daily sale of Rs. 258,450,000   ->   ie.  Rs. 25.84 crores
Monthly =  775.2 crores
Yearly= 9062.4 crores
Market size for Indian OTA Industry in Domestic Flights:  9000 crores  approximately

On a 5000 INR priced ticket, you pay 2000 INR tax  (that’s 40% ). Hence removing the tax factor, the number will be 5400 crores per year

Figures based on assumptions & numbers used in this post.

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Interesting take aways from this dissection…

  • this could have been extended to predict profitability of an OTA but has been restricted to predicting the market size only. However it’s a volume game!
  • On an average, every aircraft in India does 5.6 flights per day
    If airlines could further manage route optimization and do 1 more flight per day, at 6.6 flights per day, OTA Industry Sales will be up by 15%
  • If an airline adds one more aircraft to its fleet, OTA business increases by 0.4%
    Note that the airlines listed here itself (excluding Air India, Indian Airlines (now part of Air India)) have over  250+ air crafts in orders with Airbus / Boeing and others. This is equivalent to number of aircrafts in operations now.  If market conditions remain positive and airlines accept deliveries of these aircrafts over next 5 years, the market size will be double of existing today!
  • Nevertheless, Online Booking of Tickets will only increase in coming years. This presentation assumes 40% of ticketing happening online, this percentage share will increase with increase in consumer’s likeness for online transactions. The share of online reservations between airlines & OTAs will be deciding factor.

PS: The flow has many assumptions, however if one has or knows the right numbers – logically the market size can be concluded. I feel the numbers I have taken here are little on higher side.

Thank you 🙂

Online Travel Industry in India – Market Size