Why MakeMyTrip Isn’t Worried About Flipkart’s Cleartrip deal

India’s largest online travel portal MakeMyTrip is not worried about Flipkart’s full-fledged entry into the segment through its recent acquisition of Cleartrip. The Nasdaq-listed company believes that in large categories such as air travel, horizontal ecommerce platforms cannot make much of a dent, although they might in smaller segments such as bus and rail ticketing. 

“I’m not saying there will not be any impact. Definitely, I think on the ticketing side of the business, we can expect to see that,” said MakeMyTrip founder and executive chairman Deep Kalra during a recent earnings call with analysts. “But are we overly worried or concerned? No, because we’ve seen this play out in the past. Not just in India but even overseas, it hasn’t really worked out as you get into higher value-added travel services.”

Adjusted revenue margin for MakeMyTrip in the hotels segments hovers at 18-22%, and in bus ticketing at 8-8.5%. While its margin in air ticketing is at 7-9%, the segment accounts for close to a majority of its gross sales. 

Background: The travel sector has a digital penetration of more than 45-50%, the highest among major sectors in India’s internet economy. It is also the largest sector in terms of gross sales, after ecommerce. To increase gross sales and show future growth potential, there might not be a better sector.