#StartupsVsCovid19: ixigo Founders On Navigating The Economic Depression In Travel Industry

The biggest impact of the coronavirus pandemic has been on the travel sector, which has had to bear the brunt of flight cancellations, hotels being shut down and movement restrictions across the world. First came the international travel bans and then strict national lockdowns, which eventually led to all travel coming to a grinding halt. 

Aloke Bajpai and Rajnish Kumar, the cofounders of online travel aggregator ixigo, spoke Inc42 cofounder and CEO Vaibhav Vardhan in the latest edition of our ‘Ask Me Anything’ series about the experience of surviving through these tumultuous times. When China reported the first case of coronavirus, no one expected it to turn into a pandemic. None of us thought that it will have such a deep impact on our lives, and the same was the case with Bajpai and Kumar.  

“We’ve been having a very interesting last 12 months at ixigo before March. The company was growing organically, we were not spending a lot on marketing, we were getting closer and closer to breakeven. February and March were a really good month for us. In fact, the first week of March was probably the best we’ve ever in terms of revenue, profit, and growth,” said Bajpai. 

The cofounders never imagined that it would strike India so quickly. “When it actually hit us in the second week of March, we had to think on our toes and actuate a plan B. We had many sleepless nights spent into the plan B discussion,” Bajpai added. 

Interestingly, ixigo was started in 2007 and had to face the 2008-2009 economic crisis very early on. However, Kumar believes the current crisis is different from the 2008-2009 crisis, firstly, because it is a humanitarian crisis. “What happened during 2008-2009 was that the industry saw a dip in demand, and activities were slowed down. But today, the lockdown situation has left the travel sector to completely dry, which means that everything is down to absolute zero. This is something that I don’t think anybody has ever seen before,” he added. 

Protecting The Human Element

At ixigo, the cofounders took a call to take pay cuts instead of laying off employees, in order to survive for the next few months. The company decided to figure out ways in which it didn’t have to let go of people. Even though there were cases where there might be no work for certain people for a few months.

“This crisis is different, this is a humanitarian crisis, this is not a typical capitalist crisis where you take a cold-blooded call and move on,” Bajpai said.  

“So we bit the bullet and said we wanna find a path that gets us there without letting people go, even if it means that six months down the line, if things don’t improve right and travel is even more deeply impacted, we may all go down together but that’s the risk that we are willing to take,” he added.

Battling Uncertainties

The company observed a very rapid drop in its daily active user because obviously there’s no reason for a user to come to the app with the ban on all modes of transport. However, the company has been adding other engagement features.  

“Whether it is gaming, videos, entertainment, book insurance or Covid related information; we had to discover alternate ways of serving the customers on our app,” said Kumar.  These new offerings helped the company to maintain a certain amount of user engagement in current times. Along with opening up some revenue sources, in the form of ads, selling insurance, and other ancillary products.

According to Bajpai, the coronavirus will leave a lasting impact on the travel sector. It will change the way people look at and feel about travel, similar to what happened after 9/11. “At least for international travel, I think there will be mandatory Covid-19 testing. And I think that will become the norm across the world,” he added.

Further, for domestic travel, he expects that India will have to implement China-like solutions, which will help people verify some kind of health data/health status at the point of boarding. All this will happen, because of the consumer’s loss of confidence in safe travel. 

“In the post-corona world, the biggest challenge will be to convince everybody to start travelling again and that requires a different level of trust-building in the procedures of testing and segregation,” Bajpai said. 

People will now cut back on any non-essential travel because they have figured out that conferences, meetings, events can all be coordinated online. Bajpai thinks that is something which is an irreversible change and will result in a lot of dip on the demand side irrespective of whatever happens. 

Future Opportunities In Travel

Bajpai noted that there is an opportunity to come up with contactless solutions in this new world. China has built solutions that allow people to use the lift in a contactless manner. They have a QR code, you can just scan in the lift and press floor number in your app and the lift takes you to that floor. 

“We need to imagine all such contact events today, that can be made contactless and that could be an interesting opportunity for the entire travel hospitality sector. Also, I think the opportunity for the hospitality sector is to figure out, which types of properties can work — anything where the density of rooms is not very high, might still work or maybe solutions like booking alternate rooms will grow,” said Bajpai. 

In addition to this, he noted that the use of technology for providing some kind of clearance for travel, like the Aarogya Setu app or e-passes have a huge potential.

“Any sort of contactless things that people can pay to ensure more safety and confidence of travelers, whether it is hotel sector or the airline industry, it’s going to be in demand in the post-Covid world,” added Kumar.