EaseMyTrip realized early on that the convenience fee is perhaps the most inconvenient part of travel bookings and were willing to let go of it in return for loyal customers.
Having started as a mom-and-pop travel agency, EaseMyTrip today figures among the largest online travel agencies (OTA) in India with a market capitalization of $1.1 billion while being completely bootstrapped.
And Prashant Pitti, the EaseMyTrip co-founder, said this has a lot to do with its “no convenience fee” model that has helped the company earn a high volume of return users.
The convenience charge or booking fee is a standard among all online travel agencies and airlines in India.
In its filing with the Indian market regulator Securities and Exchange Board of India, in 2021, the company claimed to have overtaken Yatra.com, in gross booking volume and revenue, to become the second largest online travel agency in India.
Having started in 2008 as an offline market for travel agents EaseMyTrip, founded by the three Pitti brothers — Prashant, Rikant and Nishant, entered the consumer business three years later.
Pitti said they understood pretty soon that most of the travel business would move online. However, venture capitalists were not ready to back them up as the Indian online travel market was already populated by companies like MakeMyTrip, Cleartrip, Yatra and GoIbibo.
However, the travel agency experience stood the company in good stead, according to Pitti, as he called it the secret sauce for the company’s success.
Focus on Customer Experience
While other online travel agencies are focused on the online part of the business, ensuring that their websites look pixel perfect, EaseMyTrip pays more attention to the travel agent bit as it looks to provide a perfect after-sales customer experience, he said.
“Most online travel agencies have outsourced their call center, but we run our own call center because we believe that customer loyalties are built and destroyed at call centers,” he said, explaining that while they sell travel products online, the after-sales customer service is provided through these call centers.
This, according to Pitti, has also led to EaseMyTrip’s growing number of return users, which he currently pegged at around 93 percent.
This high repeat-user base helps the company save precious marketing dollars, allowing it to not charge a convenience or booking fee, according to Pitti.
How The Refund Risk Paid Off
According to Pitti, EaseMyTrip took a huge risk during Covid deciding to refund airfares to customers for cancelled flights even before the airlines had processed the refunds.
“We had about $25 million worth of cash reserves in the bank and we managed to refund $16 million in airfares, while hoping that none of the airlines would shut down.”
This, said Pitti, helped EaseMyTrip earn goodwill in the market.
And while he acknowledged that Covid had been tough for the company, Pitti said EaseMyTrip managed to bounce back really fast, “In June 2020 when domestic travel returned, we managed to break even during the first quarter itself.”
After a successful listing in the Indian bourses in 2021, EaseMyTrip’s market cap crossed $1 billion in September 2021 helping the online travel agency enter the much-coveted unicorn club.
In the second quarter of the financial year 2023, EaseMyTrip posted gross booking revenue of $243 million, which the company said was its highest-ever in any quarter. The company’s revenue from operations was $13 million compared to $7 million in the corresponding quarter of the previous fiscal.
Online Travel Market in India
The online travel market in India is set to grow annually at 12-13 percent between 2023 and 2027 with online air ticketing set to grow at 15 percent during the same period, according to investment advisory firm ICICI Securities.
“In line with the industry trend, EaseMyTrip is likely to grow at a healthy pace. We believe the low-cost model and no convenience fee strategy would strongly support the company in gaining market share further from competitors, going ahead,” the advisory firm noted in a report.
Pointing out the key risks and concerns the report noted that while there isn’t much competition currently, the entry of new players like Flipkart and Amazon having a larger pool of users could lead to intense competition.
EaseMyTrip is now looking to grow its non-air business by acquiring companies that are profitable, tech driven, asset-light and disruptive.
“Even though we sell hotels, buses, trains and holidays, people use us more for flights. We want to grow our other businesses as well,” said Pitti, announcing that the company would also be launching its forex platform.
Expanding International Footprint
A Mordor Intelligence report noted that EaseMyTrip is looking to capitalize on growing inbound and outbound trips to and from India while expanding its international footprint, particularly in international cities where Indians travel the most.
“With an expanded international presence, EaseMyTrip expects to provide better service to their customers as well as provide better rates on local hotels and restaurants that are reluctant to work with companies outside their home countries,” the report said.
Calling EaseMyTrip’s prospects bright, Sandeep Dwivedi, the chief operating officer of InterGlobe Technology Quotient, the official distributor of Travelport in India, said, “The company is on a global expansion mission, using new capabilities and delivering best options for the world to travel hassle free.”
Having opened an office in Thailand, EaseMyTrip opened a Dubai office in March 2022 and Piti said that within six months of its launch the company’s revenue jumped from $100,000 in March to $1.2 million in September.
“The Middle East is a completely new market for us but our business has only been growing because the incumbent players are charging a lot of convenience fees.”
With an office in UK, EaseMyTrip has now sets its sights on the European market. “We want to disrupt any country where people have been paying hefty convenience fees for travel products,” Pitti said.
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Photo credit: EaseMyTrip is looking to capitalize on growing inbound and outbound trips to and from India. Shalender Kumar / Pexels