Mumbai-headquartered Cleartrip claims that with the acquisition of Flyin, it will have a market share of 60 per cent in the online travel market in West Asia. Profitability too will be better due to better unit economics and larger scale of operation in the region where it has had a presence for almost five years.
The larger ticket sizes of transactions and the propensity of customers to travel multiple times in a year will hopefully allow Cleartrip turn a profit in the region. This could potentially help the company offset some of the losses it is making back home where it has to compete with deep-pocketed rivals such as MakeMyTrip and Goibibo.
“One of the issues in India has been while there is rapid acceleration of online customers, the frequency of travel is still very low and hence profitability is challenging. But when I look at the West Asia, that frequency is much higher,” added Crighton.
For the next 12 months, Cleartrip will look to integrate Flyin’s services with its own while also introducing some of its own services such as local experiences to its customers in Saudi Arabia. It said that the acquisition of Flyin could be seen as a stepping stone for Cleartrip to look at an inorganic mode of growth in newer markets.
Back in India, Cleartrip says its business grew at around 31 per cent in the year that ended March 2018, but profitability was still a few years off due to intense competition in the market that is forcing all players to get into a discount war. Despite this, the company says it is operating at a close to break-even level and is well capitalised to operate for at least the next 24 months.
Cleartrip is following in the footsteps of several Indian Internet-based services such as Ola, Practo and others who are tapping overseas markets to offset losses being made serving customers at home. While West Asia and North African markets make sense for Cleartrip, it says the competition in neighbouring Southeast Asia is again similar to India making it a money pit.
While remaining mum on Cleartrip’s funding strategy, Crighton did say that the company will look at knocking on investors’ doors similar to how it did for acquiring Flyin, as and when it comes across potential acquisition targets. For now, the company however isn’t in any active discussions with investors to raise funds.