While MakeMyTrip achieved record annual gross booking value and adjusted operating profit, the online company still incurred losses for fiscal 2023, highlighting ongoing challenges.
Indian low-cost carrier GoFirst’s recent filing of voluntary insolvency resolution proceedings is unlikely to have a large impact on the market, said Rajesh Magow, co-founder, group CEO and director of online travel agency MakeMyTrip.
Little wonder then that the promotion spend that MakeMyTrip reports against the air segment has consistently moved up from about 2 percent of gross bookings pre-pandemic to now about 3.4 percent of gross bookings.
The GoFirst event may temporarily affect market supply, but Magow said other airlines have started to fill the supply gap with additional deployment of planes on key routes.
Recovery Momentum in Aviation
MakeMyTrip’s recovery momentum in the aviation sector continued during the fourth quarter despite seasonal factors such as the quarter being a lower leisure season. The company noted an uptick in both domestic and international air traffic, especially in March.
“We’ve been growing faster than the market on the back of our innovative product and brand strength. Also, for two quarters in a row, our domestic flown passenger traffic is above pre-pandemic levels,” said Magow during an earnings call on Tuesday.
MakeMyTrip’s air ticket gross bookings for the fourth quarter stood at $1.1 billion, which amounted to a growth of 85 percent year-on-year.
With Indian aviation projected to see strong and sustained expansion, aviation consultancy and research firm CAPA India forecasts the country might need to have the capacity to handle more than 1.3 billion passengers, requiring a commercial fleet of nearly 4,000 aircraft within two decades.
MakeMyTrip also cited robust recovery of all its business segments, except outbound travel.
The recovery in outbound has been slow mostly due to high fares, mostly for the long-haul sector and because of visa issues, Magow said.
In some categories like the premium segment of hotels, domestic flights, homestays and domestic packages, MakeMyTrip stated that the recovery has already crossed pre-pandemic levels.
MakeMyTrip also expects international air bookings to get back to pre-pandemic volumes in the new fiscal year.
With international outbound travel picking up, MakeMyTrip has also started to expand its direct contracting for destinations frequented by Indian tourists.
Vietnam is one such emerging destination where the company is now building inventory through direct supply contracts.
Robust Recovery Year
Calling fiscal 2023 a robust recovery year for the Indian travel industry, MakeMyTrip witnessed consumer sentiment improving with each successive quarter.
The company announced that it has achieved its highest-ever annual gross booking value and adjusted operating profit during the reported fiscal year.
Gross booking value for the year was $6.6 billion, a growth of 122 percent, while adjusted operating profit for the year was $70.3 million, growing to over 200 percent as compared to fiscal 2022.
While the profit for the fourth quarter was $5.4 million, as compared to a loss of $4.1 million in the fourth quarter of fiscal 2022, MakeMyTrip still suffered a loss of $11.2 million in fiscal 2023 compared to a loss of $45.6 million in fiscal 2022.
And finally putting all initial public offering rumors to rest, Magow said, “We are an Indian company with a strong India brand and a predominantly India business. So, while there could be valid reasons or arguments for us to list in India, we currently have no plans to pursue this thought at this stage given the strong cash position on our balance sheet.”
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Photo credit: GoFirst recently filed for voluntary insolvency resolution. Praveen Thirumurugan / Go First Airlines in the apron