With the intention of expanding its presence in the travel sector, the online bus ticket booking platform RedBus, owned by MakeMyTrip, has announced the launch of the RedRail application, a platform dedicated to booking train tickets. As the company strives to leverage its bus reservation user base to significantly grow the rail ticket business, the two services also have a complementary relationship: RedBus CEO Prakash Sangam told Business Standard.
Sangam finds that a large number of redRail customers would seek out bus services after reaching their destination, as they offer last-mile connectivity with higher penetration than trains. Sangam said that they have a lot of RTC (State Highway Transport Corporation) inventory available on their platform, they can give people that information and also enable end-to-end ticket booking.
Their aspiration is to be the largest partner of IRCTC (Indian Railway Catering and Tourism Corporation). For the next two years, they want to be the number one ticket booking partner. Although the company has ambitious plans, it seems to have entered a space filled with many players like RailYatri, Paytm and IRCTC itself. Sangam builds on the app’s focus on user experience and the pandemic-induced impact on the industry for redRail’s success.
Over the last two years, there has been consolidation in this space. Some companies have merged with each other, some players have diverted their attention from this category for the benefit of others. In addition, a great rationality of prices emerged. Now the only winner will be the products that rely solely on the customer experience. From that perspective, it’s a good time for them to make an entry.
According to the company, most players are very transaction-oriented or rely on advertising for monetization, as the market has significantly lower margins than other modes. The latter removes the user experience, which redRail intends to focus on. There are also a lot of information services that they design, like live train position, coach position etc. Although some of those solutions are already available in the market, the reliability and accuracy of those are questionable.
The pandemic has resulted in a rapid transition to the digitization of a number of functions that were previously performed physically. Sangam shares that while the number of online activities has naturally increased, the horizon for online activities has also expanded during COVID-19. In 2021, customers booked tickets online in 5,500 unique cities and their contribution from Tier II and III cities grew from 50% before the pandemic to more than 60% during and after the pandemic.
Entering the space of booking train tickets also raises concerns at a time when the national carrier is just beginning to recover from the crisis caused by the pandemic. Recent data from the Ministry of Railways shows that passenger bookings in January 2022 were only 48% of pre-pandemic levels in January 2020. The redBus chief believes that the number of train tickets available for online bookings has significantly increased, though the numbers have not yet reached pre-pandemic levels. IRCTC data shows that online ticket booking has increased to 85%. In addition, 80% of the tickets belong to the non-AC segment.
Based on these indicators, the company wants to use the space outside the metropolis and consolidate itself as the most important online platform for bus and train. Sangam believes that the company has developed an application that takes into account the various restrictions that its large and diverse audience may face when booking. The platform form can handle reservation requests in low-bandwidth areas and consumes minimal storage space.
RedBus, which aims to increase its overseas sales to 35%, is in the process of completing the process of obtaining an operating license in another country, details of which will be announced shortly.
Previously, they were unwilling to expand at a time when things looked uncertain. They are already showing healthy growth above pre-pandemic levels in overseas markets. They plan to seize this moment by entering new markets. The company reported a 56% increase in net income to $14.1 million for the October-December quarter on a gross book value of $163 million.
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