Online travel firms see 40% demand revival in flight bookings

Online travel firms see 40% demand revival in flight bookings
June 19, 2020
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Online travel aggregators (OTA) are seeing a 30-40% revival in demand, with only a few firms booking over 5,000 air tickets on a daily basis, as domestic flights try to resume operations in a staggered manner after a two-month break.

However, a sizeable chunk of these flight bookings are also getting cancelled by airline operators, affecting revenues of OTAs. The government had imposed a nationwide lockdown starting 25 March, which was extended til May. Operations of all domestic and international flights were temporarily suspended during this period, causing much distress to online travel firms who make a large chunk of their sales from airline ticketing. Domestic flights resumed from 25 May.

OTAs are now betting on reopening of domestic tourism and intrastate leisure travel to increase sales on their platforms.

Nishant Pitti, chief executive office (CEO) of EaseMyTrip, said the company witnessed a spike in flight cancellations initiated by customers when the lockdown was announced in March. These customers then rescheduled their flights to April hoping that travel norms would ease after the first phased of the lockdown that ended on 14 April.

Later, when the lockdown was extended, aviation regulator Directorate General of Civil Aviation (DGCA) issued a stern circular directing operators to not undertake bookings during the lockdown since air travel was banned. By mid-April, refund requests piled up and OTAs scrambled to process cash refunds to customers.

Airlines such as Indigo, GoAir operate with OTAs using a wallet model for bookings. OTAs deposit a chunk of cash in the airlines’ wallet, and they process air tickets on the basis of this outstanding balance with each operator.

“When we saw a sudden spike in cancellations, airlines refunded the money in the same wallet itself. But we can’t really provide refunds in credit to customers, hence, we started providing cash refunds directly to users, and our wallets balances with flight operator piled up to almost ₹120 crore in April,” added Pitti.