How Ixigo’s Partnership with PhonePe Will Revolutionize the Travel Booking Industry

Travel Technology Platform Ixigo Poised for User Growth with PhonePe Partnership

Expanding Horizons: Flight and Bus Segments

Travel technology platform Ixigo, fresh off an impressive market debut, is set to attract more users, particularly in the flight and bus sectors, thanks to a strategic partnership with digital payments giant PhonePe.

Originally powering train bookings on PhonePe, Ixigo has now extended this partnership to include flight and bus bookings.

“We see a significant long-term opportunity in our flights business, especially with the steady addition of new flight bookers in India each year. Consequently, we are expanding our distribution channels,” stated Aloke Bajpai, Ixigo’s Group CEO, during the Q4 and FY24 earnings call on July 4.

Market Share Gains and Strategic Partnerships

“The PhonePe partnership is enabling us to capture market share in the flight and bus sectors. Similarly, we’ve partnered with Meesho, an ecommerce platform,” Bajpai added.

He noted that payments apps are focusing on a super-app strategy, offering high-value services like travel bookings to enhance customer experience.

“PhonePe’s rapid growth and our ability to attract new bookers through this partnership are promising. We’re already seeing potential in these early stages,” Bajpai commented.

Ixigo’s management mentioned that increased volumes from smaller carriers could provide leverage to negotiate better deals.

International Travel on the Rise

Bajpai highlighted a 77 percent growth in the flight passenger segment in FY24, driven by the AU-Ixigo co-branded credit card, which has become a favorite among frequent travelers, including international ones.

One-third of Ixigo’s international flight bookings in FY24 originated from tier II, III, and IV airports. International air traffic grew faster than domestic, with a 22.5 percent increase in the overall market.

Ixigo’s international flight passenger segment saw a 100 percent year-on-year growth, fueled by inventory and supply side expansion.

“India’s domestic air traffic hit 15.34 crore passengers in FY24, marking a 13.5 percent YoY growth. With over 1,100 planes on order, India is set to become the fastest-growing air market. However, short-term capacity issues, grounding of planes due to engine troubles, high load factors, and high airfares are limiting market growth,” Bajpai explained.

Upside in Train Bookings

Ixigo sees potential in the train segment due to eased booking restrictions.

On June 28, IRCTC announced that the restriction on online travel aggregators and agents from selling advance reservation period train tickets (booked 120 days early) and tatkal tickets (next-day bookings) for the first 15 minutes would be reduced to 10 minutes from June 29.

“OTAs now have five extra minutes for bookings during peak demand times in the morning, which should boost bookings. This move reflects the government’s effort to bring more parity to the sector,” Bajpai said.

The management also noted that overall market growth might slow this year due to capacity constraints. Traditional operators aren’t significantly increasing supply, but the entry of new-age operators like Freshbus, Flixbus, and Nuego could be beneficial.

“Capacity additions in trains have typically been in the low to mid-single digits, but momentum may pick up in the coming years with the introduction of freight corridors and new trains like Amrit Bharat, Vande Sleeper, and Namo Bharat,” the management said.

Strong Financial Performance

In its Q4 and FY24 results announced on July 4, Ixigo reported a profit of Rs 73 crore in FY24, up from Rs 23 crore the previous year.

Total income reached Rs 665 crore, a 28.6 percent increase from Rs 517 crore.

Gross Transaction Value (GTV) surpassed Rs 10,000 crore in FY24, growing 38 percent YoY for the year and 34.9 percent in the March quarter, driven by a 75 percent increase in flight GTV for the year and 63.6 percent in Q4.