From the outside looking in, it would seem that the Covid-19 situation is getting worse in India which it is from the rate of infections but somehow one travel company, Ixigo, the Indian e-commerce website for flights, buses, hotels and trains has managed to get through it not only intact but stronger.
As of July, Ixigo, which was founded in 2007, reinstated full salaries of its team of 150, which it held on through the crisis, sold its airline technology business, Travenues, to SpiceJet, the low cost and cargo operator which was its first customer signed last year, developed three products (two new, and one enhanced) in quick succession and proved it could increase traffic despite not spending anything on Google the past five months.
Indeed, it was one of Ixigo’s marketing videos that caught my attention. The travel safety video, based on the Super Mario Brothers game, went viral and got the company lots of publicity. It was among 10 videos it produced during lockdown.
In an interview with WiT’s Yeoh Siew Hoon, CEO and co-founder Aloke Bajpai tells the story of how Ixigo navigated Covid-19 as it unfolded in India.
Hunkering down for the first storm
Q: Let’s start at the beginning, how did you prepare for the crisis you could see was coming?
Back in early March, with the first signs of Covid coming to India, we got mentally prepared that at some point there would be a lockdown. We prepared Plan B and assumed it would be at least no revenues for six months.
We made adjustments. The founders debated the idea of letting people go or finding a way everyone could stay and see this through together. We agreed we should make a collective sacrifice. We had done this before in 2008, we didn’t let people go then but got them working half-day for nine months.
We made sure everyone still got a certain percentage of salary. Leadership took 60-80% pay cut, the rest of the company 20-25% and below a certain threshold, no cut. It was timely we did this effective March because for the next two months, there were no transactions. For the first time, Indian Railways shut down – the lifeline of India, 26 million passengers every day. Trains and flights are the biggest legs of our business, we felt the impact immediately.
Q: Were there any other source of revenues coming in at that point?
Fortunately, we had advertising on our mobile travel properties. (Pre-Covid, Ixigo had 30 million monthly users). We did continue monetising from that, there was still traffic coming in for information.
We did a rally call to our team – let’s build something more relevant for our customers. From that, we launched our Covid Centre, a train and flight app, that told people where to get tested, the nearest facilities they could do this, we tied up with pharmaceutical and testing centres. The content was more suited for health as well as what to do during lockdown, such as entertainment content. We developed that in two weeks and we managed to retain half the traffic for April and May.
We also developed Ixigo Assured. We know that when people can travel again, they will still be apprehensive. With our product, they can be insured for up to Rp5,000 for Rp399, which is 40% lower than the next product. This allows customers to buy with confidence, they can cancel 24 hours before the flight without losing money.
Q: A lot of OTAs struggled with the flood of cancellations and refunds requests. How did you manage?
At the height of the crisis, we were getting eight to 10 times the usual volume of requests for cancellations and refunds, so we got all hands on deck to solve the problem. We trained Tara, our AI-based chat assistant, and developed a new version early March. Tara saved us a lot of customer support anxiety by addressing 70% of our queries. For three weeks, all our staff worked in customer service.
Q: Let’s talk about the Travenues deal with SpiceJet. The press release states that it was an acqui-hire and that the move “would help SpiceJet in strengthening its e-commerce platforms”. “With the deal, SpiceJet will inherit Travenues’ airline technology and commerce platform that specialises with its deep tech advancements in mobile apps, cross-selling, payments, ancillaries, among others.”
We realised that given the new realities, we’d be better off focusing on our core B2C business. Travenues was a great idea, we wanted to build the Shopify platform for airlines, using SpiceJet as a customer, and the product was live on their app. But we realized given the circumstances, we are better off focusing on our core business. SpiceJet gets the tech and IP and they will build on it. They have their plan to become an airline tech provider and so, there was a meeting of minds.
Q: Can you share more about the deal?
The transaction was part IP, part tech team.
Q: Which SpiceJet got – what did you get?
There was some payment involved but we are not disclosing that.
Q: Where is the travel market now in India? It looks pretty bad from reading the news.
Travel opened up third week of May and we saw three to four weeks of pent-up demand, with spikes of 30-40% on Sundays. Now we have settled to 25% of pre-Covid levels. It will take a very long time for confidence to return.
We have 250 trains running now, which is a small number for India. In terms of reserved seat trains, there are 2,000 such trains alone in India. On flights, 30-35% are back in the air but demand is about 17-18% of pre-Covid levels.
What has come back is essential travel, non-discretionary demand from reasons you cannot control, family reasons. Marriages have started again.
There is a small trickle of leisure travel that we are seeing in our tracking of return trips and multi-passenger trips. It’s a single digit percentage, nothing to write home about. If we do a deep dive into those bookings, it’s Generation Z and Millennials who are fine with venturing out to the hills.
I wouldn’t pin my hopes on it though.
Q: How has Ixigo weathered the storm?
We have bounced back stronger than the overall market, gained some share. Some offline and B2B agencies have not come back. My prophecy is there will be a longterm net gain for OTAs and airline direct. Consumer behaviour has shifted online.
We made the decision to bring salaries back from July. The revenues we make now can cover salary spend. We re-negotiated with landlords and service providers to reduce fixed costs. Our variable costs are down to nothing. We have spent nothing on Google for five months.
Q: You don’t think it’s too early to make that decision to reinstate salaries? After all, most people are saying this crisis is far from over.
Our transactions have bounced back around 25-25% in flights and trains, we have advertising revenues, we are at 30% of pre-Covid level of revenues, it’s enough to cover salaries. We turned profitable end of December and early January – we have enough margins and strong unit economics. In 2019, we consciously strengthened unit economics and on turning profitable, that has kept us in good shape. It turned out to be the best decision we made.
We are now 150-strong in the team. It’s lean. Our fixed costs are not very high. Our marketing spend is not heavy – we have always relied on content, videos, guerrilla marketing and growth hacking. When things bounce back, no one will have any marketing spend.
Q: This has been a good time for travel brands to wean off their addiction to Google, hasn’t it?
Yes, we are bouncing back well which does raise questions on marketing spend. We are back at 60% of pre-Covid traffic. It proves demand is a little more direct. People know which brands they trust and it also tests who your most loyal customers are.
Q: Your Super Mario video certainly caught my eye, so let’s talk about how you built up your video content strategy.
Yes, the Super Mario video was one of 10 we produced in 2.5 months. Another one that did really well was “Sounds We Miss” (video below) and it was just a collection of sounds of travel to remind people of what they were missing during lockdown.
We built a video team five years ago. Aashish Chopra, who heads our content marketing, has written a book about it – “Fast, Cheap and Viral”. I have daily meetings with our content people and we brainstorm ideas on viral marketing. The thing is, no idea is a bad one, sometimes we just end up making jokes but at times, we come up with brilliant ideas and executing them really fast.
Over time, we have developed an understanding of what works on the different platforms. Some work, some may not. We don’t hire professional actors, we use our staff in various roles. And the most important contribution of team members is everyone shares it. It starts with the first 50 or 100 people sharing.
Q: What percentage of direct traffic do you think your videos contribute?
I think it’d be safe to assume 10% of our traffic comes from our videos.
Q: What about live streaming – has it taken off in India the way it is big in China and is getting big in South-east Asia?
For some reason, that hasn’t taken off in e-commerce yet. I can see it becoming interesting for tours and activities, there could be value in it. We will think about it.
Q: Nowthat you have steadied the ship, what kind of opportunities do you see ahead?
We see opportunities in ground transportation – car rentals and people wanting to move around in their own vehicles – and we are exploring partnerships in that area. We see people in Delhi and Bangalore wanting to do road trips to secluded areas for the weekends, so we will be doubling down on staycations and “drivecations”.
The right kind of flight partnerships and supply is important. We will automate more of our customer service and double down on flight rescheduling and cancellations.
OTAs will have to expand beyond platforms to plan and book to solving anxiety at every moment of the trip – what are the new norms I have to follow, what shops or restaurants are open? In-destination, we have to hold our customers’ hands with information.
Q: That’s always been talked about – the connected journey and in-destination information.
Yes, a lot of stuff that was talked about now has to be done in a matter of weeks and months. This will be the biggest innovation. Thus far, OTAs have structurally been more like offline travel agents if you dissect the way they operate.
The Covid mindset is how to strip away all the costs and use AI and automation in multiple areas and become much more efficient in marketing and customer service, and how we create and curate content.
We have to review our addiction to discounting and cashbacks, and to Google as well.
Q: So what are the other good habits OTAs need to adopt as a result of this time?
Taking care of employees for a change. It comes down to things as fundamental as trusting people. We have done away with attendance, for example. We trust that everyone is sitting at home and doing their job. This is a big mindset change. By default, we will continue working from home.
We have given staff a small fund to buy chairs, tables, good set of headphones to re-create the office environment. We can’t expect people to work from their couch or bed. These are small investments that can go a long way. We have to think of a world where people can work from home forever.
I think the future will be a hybrid model – have an office when necessary – but if you are in a better state of mind working from home, why should you have to commute for two hours every day? This is a huge mindset change for employers. It means we can employ people anywhere.
We will also have to become more empathetic to customers. What matters right now is brand perception. Airlines that have not been responsive to customer queries will lose mindshare. This is a moment of truth for customer service, and it’s still not over.
Q: What other positive has emerged?
It is the realisation that the funding that went into the startup ecosystem is not going to be there forever. There were a lot of hyper-funded companies. It’s reset everything to a more equitable environment, it won’t be easy for any company to raise money, and what matters is execution. There will be a lot of casualties, especially in offline corporate travel. The key is to survive the next 12 months and come out shining the other side.