MakeMyTrip-owned RedBus Plans Integrated End-to-end Online Travel Solutions

With plans to expand its footprint in the travel sector, MakeMyTrip-owned online bus ticket booking platform RedBus announced the launch of the RedRail app, a dedicated platform for booking railway tickets. Launched in November, redRail was a part of the redBus app until now.

As the company works towards leveraging its bus-booking user base to significantly grow the rail-ticket business, both the services also have a complementary relationship, Prakash Sangam, chief executive officer of redBus told Business Standard in an interview.

Sangam finds that a large number of customers of redRail would seek bus facilities after reaching their destination, as they provide last-mile connectivity with a greater penetration than railways.

“Given the fact that we have a lot of RTC (state road transport corporations) inventory available on our platform, we can empower people with that information and also enable end-to-end ticket booking,” Sangam said.

“Our aspiration is to be the biggest partner for IRCTC (Indian Railway Catering and Tourism Corporation). In the next two years, we want to be their number one ticket-booking partner.”

While the company has ambitious plans, it appears to have entered a space crowded with many players like RailYatri, Paytm, and IRCTC itself. Sangam is betting on the app’s focus on user experience and the pandemic-induced shakedown in the sector for redRail’s success.

“In the last two years, there has been a consolidation in this space. Some companies have merged with each other, some players have zoomed their focus out of this category in favour of others — so there’s been a shakedown. Moreover, a lot of price rationality has come about. Now, the only winner will be the products that rely purely on product strength and customer experience. In this view, it is a good time for us to make an entry.”

According to the firm, most players are either heavily transaction oriented or dependent on advertising for monetisation, as the market is one with margins significantly thinner than other modes. The latter takes away from user experience, which redRail is aiming to zero in on.

“There are also a lot of information services that we are designing, like live position of trains, coach positioning, etc. While some of these solutions are there in the market, the reliability and accuracy of that are where we see gaps — those are the spaces we plan to plug with redRail.”

Ripe time to enter rail ticket-booking space

The pandemic ignited a rapid shift towards digitising a host of functions that were done physically earlier. Sangam shares that while online activity numbers naturally went up, the horizon of these also broadened during COVID-19.

“Over 2021, customers booked online tickets from 5500 unique towns, and our contribution from Tier-II and Tier-III cities increased from 50 per cent before the pandemic to over 60 per cent during and after the pandemic. So there are new and different customers who are accessing travel products online.”

There is also a concern of entering the rail ticket booking space at a time when the national transporter has only begun to recover from the crisis induced by the pandemic. Recent data from the ministry of railways shows that passenger booking in January 2022 reached only 48 per cent of the pre-pandemic levels of January 2020.

The redBus chief finds that while the numbers are yet to see pre-pandemic levels, the quantum of train tickets available for online bookings has significantly increased its share. “Data from IRCTC shows that online ticket booking has risen to 85 per cent of tickets booked. Moreover, 80 per cent of the tickets are in the non-AC segment.”

Based on these indicators, the company wants to tap into the non-metro-city space and cement itself as the premier online bus and rail platform. Sangam believes the firm has built an app which takes into account the various limitations that its large and diverse target audience may face during booking, such as network and memory or performance issues on devices — the platform can process booking requests in low bandwidth areas and consumes minimal storage.

Growth and overseas expansion

RedBus, which had the aim to increase its overseas operations’ share in revenue to 35 per cent, is in the process of finalising the process of procuring a operating licence in one more country, details of which will be announced shortly.

“Earlier, we did not want to expand at a time when things were looking uncertain. We are already witnessing healthy growth over pre-pandemic levels in our existing overseas markets. We plan to build on this moment by entering into newer markets.”

The contribution of international markets today, while in double digits, is nowhere close to the company’s target.

“Our plans have shifted by a couple of years due to COVID, but they are still the same. We want to get there (35 per cent overseas share) in the next three years or so,” Sangam said.

The company saw a 56 per cent spike in its net revenue in the October-December quarter at $14.1 million, with a gross booking value of $163 million.