Q&A: Cleartrip CFO on how the Flipkart deal is fueling growth

In early September, Phocuswright published its India Total Market Report, which provides a comprehensive view of India’s travel market, including detailed market sizing and projections, distribution trends, analysis of major travel segments and key developments. Below, PhocusWire dives deeper into Flipkart’s acquisition of Cleartrip.

When e-commerce giant Flipkart acquired online travel agency Cleartrip, the COVID-19 pandemic was still raging in India. Merging with Flipkart – Amazon’s main rival in India – proved to be a lifeline for the OTA. Cleartrip gained access to the Walmart-owned company’s more than 350 million registered customers just in time for this year’s return of domestic travel.

In a Q&A with PhocusWire, Cleartrip’s CFO and head of corporate development, Aditya Agarwal, discusses the benefits of having Flipkart as a distribution channel as well as how the OTA is reviving its hotels business. 

Agarwal also explains Cleartrip’s ambitions to become a “best-in-class” customer service provider and why its flexibility products are gaining traction. The conversation has been edited for brevity.

Please bring us up to speed on the acquisition. Why was it a good strategic move for Cleartrip?

I think the acquisition came at a very interesting time. It was at the peak of the COVID-19 pandemic’s impact on the industry – especially in India. We pretty much hit the bottom just before the acquisition. You couldn’t have planned it better in terms of timing.

A large part of last year was spent on the integration itself. We have integrated many of the corporate functions, but the businesses operations remain independent.

Month on month, the growth that we’ve seen has been exponential. Obviously, it’s partly because the industry itself has come back. But a large part of it is because we’ve been able to invest in the business, we’ve been able to launch a lot of initiatives and grow our market share. Overall, our top line is about three times versus last year. We’ve almost doubled our market share in this time period to become the clear number-two player among OTAs in India as far as the flights market is concerned.

How is Cleartrip tapping into Flipkart’s customers while maintaining Cleartrip’s customer base?

We are managing the entire travel category, which includes Cleartrip and Flipkart as well. So Flipkart is yet one more distribution channel for us. We have customers coming onto the Cleartrip app, Cleartrip platforms and on the Flipkart app as well.

The way we see it, they are all equally our customers. And we think that there is a lot of merit in having this dual brand strategy.

We can tap into that customer base that we’ve traditionally not had the opportunity to reach and expose the Cleartrip brand and products to them.

Aditya Agarwal - Cleartrip

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Cleartrip has been in the market for 15 years; we were one of the pioneers in the industry. We’ve been known historically for our products, for our UI and UX. We have a very strong affinity with a certain type of customer: the frequent traveler, the more discerning customer. We think that the Cleartrip app will continue to be the natural OTA for those types of customers.

The Flipkart channel allows us to reach a much wider base of users. Almost every single online-transacting customer in India is on Flipkart. Many people may not be travelers yet, or maybe are just starting to travel. So we can tap into that customer base that we’ve traditionally not had the opportunity to reach and expose the Cleartrip brand and products to them.

Which products and services are you investing in, and how can you put Cleartrip products in front of Flipkart customers?

In the years leading up to the acquisition, we were not able to invest in the hotels product. We had dialed down the hotels business to a large extent. We had started taking content from other players. So we had to relaunch the entire hotels business in terms of the supply side, the product itself and obviously the demand engine as well. It was a full relaunch. And this product is starting to gain traction.

We’ve also launched our hotels product on Flipkart. (Ed note: Flipkart and Cleartrip remain separate apps.) On Flipkart, customers can now go and book flights and hotels. We launched flights at the beginning of the year, and we launched hotels in the last month or so.

We have really upgraded our customer service experience. A lot of customers in the travel industry overall have had a hard time because of cancellations and other issues. We think this is an area where we have an edge. We can create a clear differentiator by taking the lead in terms of being the best-in-class in customer service – in terms of response times, in terms of refunds. Now all our refunds are processed within 24 hours.

We’ve also launched and expanded flexibility products on the flights side of our business. We have created proprietary products, including EzCancel and Flexifly, which allow customers to amend or cancel their bookings. Different airlines have different cancellation and amendment policies. Customers want to be able to change between airlines as well, not necessarily with the same airline. So that’s where this product has seen a lot of traction.

Cleartrip recently rebranded, and it announced Bollywood actors Vicky Kaushal and Katrina Kaif as collaborators. How do you hope these initiatives will advance the company’s overall strategy?

We’ve come a long way in the last year and a half since we became part of Flipkart. We’ve been consciously trying to go back out into the market and tell our customers – people who’ve been our customers before, as well as new customers – about Cleartrip, about what we’re doing, the products we’re launching, the offers that we’re coming up with.

We want to be able to go to customers and tell them about all the exciting stuff we are doing. So this is a continuation of that strategy. Vicky and Katrina, the Bollywood stars, are a real-life couple as well, and they are very, very popular. We feel that being associated with them allows us to get our message across to our customers. We’ve launched very interesting campaigns along with these stars, and there are more on the way that you will see in the coming months.

How has the merger affected Cleartrip’s loyalty program?

We are participating in SuperCoins, which is Flipkart’s loyalty currency. It happens to be the largest loyalty program in the country, with hundreds of millions of participants. People can earn SuperCoins on Flipkart and spend them on Cleartrip, or vice versa.

Travel is a very natural category for spending loyalty points. When the integration of SuperCoins happened around this time last year, we immediately saw a very high adoption of people coming on Cleartrip and spending these coins, because there’s a large accumulated base of Flipkart customers who have these loyalty points. So this has given us another hook onto this large customer base. A significant proportion of our transactions are now happening with part of the payment being made with SuperCoins.

Looking ahead to 2023, where do you see the most potential for growth?

This year, we benefited from a recovery in the domestic travel market. Next year, international travel will start coming back in a very big way. It will grow disproportionately compared to domestic travel.

In our hotels business, we feel that a lot of investment that we’ve done in that product will start to deliver greater returns for us next year.

Business travel is an area that we want to really grow. And that’s another area where being part of Flipkart is a big advantage for us because Flipkart does business with a lot of large corporate houses in India. And now, a lot more doors are open for us to try and get a part of that business as well.

We’ve also come up with something which we call the Cleartrip Upgrade, or CT Upgrade, which is in partnership with our airline and hotel partners. It’s a product which allows customers to make any booking on Cleartrip and get something extra. So if you booked a hotel room, you may get an upgrade or you may get some free products at the hotel. Similarly on a flight, you may get a free upgrade or meal. Ancillary is a key area where we see a lot of potential for growth; we will continue to bring in new innovations in this area.

Earlier this year, Cleartrip sold its Middle East business interests to Wego. Why was that decision made?

There is a lot opportunity for growth in India. We want to focus all our energies here.

What trends are you seeing among Indian customers? How have demands changed since the pandemic?

I think the pandemic definitely has led to changes in customer behavior. We see almost one in every three customers opting for our flexibility products. It gives them a lot more peace of mind because they know that plans may change at the last moment.

Second, short-haul and domestic travel has recovered faster as compared to long-haul or international travel. That’s also driven by which countries have opened up their borders and made it easier for people to travel there. So we’ve seen a much faster recovery on the domestic side. India being a very large domestic market helps because we are not dependent on borders opening up for our business to come back.

Consumer travel has recovered faster than business travel. We all feel that business travel is going to take a little bit longer to come back.

How are you investing in mobile? A new Phocuswright report on India shows that OTA bookings on mobile devices will account for nearly 80% of all OTA bookings by 2025, reaching $10.3 billion.

This is another area where Cleartrip is the pioneer. We launched our first iOS mobile app way back in 2012. We saw mobile as the next big channel of acquisition.

Before the pandemic, 70 to 75% of our users were coming on mobile channels, which includes apps as well as mobile web. And that ratio has remained steady for about five years.

Travel is a high-ticket price category. A lot of other online consumer categories have much smaller average transaction values as compared to travel. For that reason, we feel that desktop will remain relevant. People will want to browse around. People will want to take their time in the planning stage itself. They will come, search, go back, come back a day later. So desktop will remain an important category which will continue to represent 20 to 25% of traffic.

Is there anything else new happening?

We are participating in Flipkart’s Big Billion Days sale, which is like Amazon’s Prime Day or Singles’ Day in China. It is a weeklong event (from Sept. 23 to 30). For us, Big Billion Days is another step in disrupting the market. In travel, this will be a never-before-seen event that we are very much looking forward to.