Indian OTAs under serious threat – Is consolidation in the air?

Indian OTAs are under a serious threat as commission per ticket, after falling from 10% to 5% is now heading towards 0% (starting October)!

More on Indian OTA Industry:

• 2,860 International Air Transport Association (IATA) affiliated agents in India and roughly around 40,000 sub IATA agents purchase tickets from IATA affiliated agents
• 90% of booking is done via the agents.
• Around 35,000 agents and sub-agents will be forced to shut shop, because of commission erosion.

Declining Travel Industry

• Domestic air travel has registered a steep fall of about 40% during the last one year
• Passenger demand growth fell to 3.8%,
• Passenger load factors too dropped to 77.6% [ET]

Essentially, OTAs like ClearTrip, Yatra etc are focusing on positioning themselves as a travel portal – a planner of sorts which works across train/bus journey/hotel booking as well.
Similarly, travel search players too are moving beyond the airfare search and are offering a comprehensive offering across flight + train + bus and hotels.

The model, to me will evolve (there is an interesting startup working on hedging concept), and the bigger chunk will lie in travel packages – but I believe consolidation is in the air (now that US based portals, like kayak/Travelocity too have entered the market and haven’t seen any big successes– so will lookout for inorganic growth).

What’s your opinion?

» Coverage of Indian Online Travel Industry

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