Friday, January 9, 2009

Advance bookings surge 30% on air fare cuts

Major Indian carriers have seen advance bookings on travel portals surge by 30 per cent since the fare cut announcements last week.

While portals such as makemytrip, cleartrip and ezeego have seen a rise of 30 per cent in advance booking in the first week of January, others such as yatra and travelocity, with a 10-15 per cent surge, are also expecting more bookings in the coming weeks.

�Domestic and international bookings have surged since Kingfisher, Air India and Jet Airways cut fares, and the low-cost carriers announced Rs 99 and Re 1 tickets for advance travel,� said Himanshu Singh, managing director, Travelocity.

The cleverly-introduced advanced booking fares have induced passengers to book tickets until as late as November.

For instance, Delhi-based makemytrip sold around 51,000 domestic airline tickets from January 1 to 5. Of that, around 82 per cent were booked for January, while the rest came for the five months from February till June. The portal has seen around 10 JetLite tickets getting booked for as late as November. Last year, 95 per cent of the bookings came for January and only 5 per cent were for the rest of the months. Also, there was no booking beyond March 2008.

Similarly, Mumbai-based travel portal cleartrip, which sold 70,000 tickets between December 26 and January 5, saw 70 per cent of the tickets being booked for the current month, and around 3-10 per cent for the months till April. cleartrip booked 5 Jet Airways and Kingfisher tickets each for November.

�Given that this is only the first week of January, we expected most of the bookings to be for this month. But, we have never seen bookings this early before. We usually see advance bookings for only as late as 30 days from the announcement of the fares,� said Noel Swain, vice-president, marketing, cleartrip.

Portals now expect advance bookings to account for a larger chunk of their revenues.

��Prior to the announcements last week, only 10 per cent of our total bookings were advance. Now, this has shot up to 30 per cent,� says Keyur Joshi, COO and co-founder, makemytrip. Portals also said that unlike before, airlines are offering an increased chunk of their inventory on such fares.

As a result of the bookings, airlines have made around Rs 3-5 crore of upfront cash on each of these travel portals in the first week of the month itself.

While SpiceJet has already sold around 20,000 tickets on two portals together, giving it upfront cash of more than Rs 8 crore last week, IndiGo Airlines has sold more inventory but has earned revenues worth Rs 6 crore since their average prices offered are lower than SpiceJet.

Full service carrier Kingfisher, along with Kingfisher Red, has also sold tickets worth Rs 8-10 crore on just cleartrip and makemytrip. The actual revenues earned would be much more substantial since the portals account for a mere 3-5 per cent of a full service carrier�s total sales and 5-8 per cent of the sales of a low-cost carrier.

Travel agents also said their overall bookings have gone up by 20 per cent. �Earlier, given the competition and abundant capacity, airlines felt their pricing should be more dynamic, so spot fares emerged. But now that capacity has reduced considerably, and competition is not so tight, airlines are back to offering advance purchase fares,� says Anoop Kanuga, chairman-western region, Travel Agents Association of India.

Industry experts said there would be some shift in travel trends as the railways would lose some First AC passengers to the low cost carriers, which in turn would lose some of their customers to the full service carriers, as the gaps in fares among the three have narrowed.

According to a recent study done by Yatra, a Rajdhani Express first AC fare on Delhi-Mumbai would come to Rs 3,300. JetLite is giving away an all-inclusive fare of Rs 3,200. While IndiGo�s average fares across sectors in January comes to around Rs 3,815, a Kingfisher Airlines average ticket in the month of January costs Rs 4,008.

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