The year 2020 saw complete paralysis in the travel and tourism sector due to the Covid-19 outbreak and the subsequent lockdowns worldwide. The pandemic blow to the industry is set to cause lingering damage, but experts are hopeful about 2021 for many reasons. To start with, this sector has usually seen a steady rise in revenue over the years. In CY2019, the travel and tourism sector contributed 14 Lakh Cr ($194 Bn), around 6.8% of India’s GDP. According to the World Travel & Tourism Council’s (WTTC) economic impact report in 2019, the industry’s GDP contribution grew by 4.9%, the third-highest after China and the Philippines. At present, India ranks 10th globally when it comes to the travel and tourism sector’s direct contribution to the country’s GDP.
Historically, the growth of India’s travel and tourism industry has been largely driven by the huge variety of tourist destinations, cultural diversity and affordable modes of travelling. Although India is a vast country where off-roading and far-flung tourist locations are increasingly becoming popular, only a minuscule percentage of the country’s population owns a car. The primary mode of travelling is mostly limited to public transport – trains, buses, airlines and rented vehicles.
All these modes of transport are easily available in metro cities, but when it comes to intercity mobility between non-metro destinations, these options quickly fade away. Today, the only affordable options to travel connecting tier-1 to tier-2 cities or even across tier-2 cities are limited to infrequent and heavily crowded trains and buses. This poses quite a challenge as India still caters to more than 50 Mn intercity travellers on a daily basis.
Train capacities have been stagnant for a while which has caused massive waitlists. Even the solution for last-minute bookings like ‘Tatkal’ services force huge waiting lines and result in chaotic bookings which create additional problems for travellers. On average 86% of the trains are overbooked on a regular basis. There is a strong need to improve intercity travel.
However, buses are still the last option when one is going off the Tier-1 routes, and the reasons are many. For instance, there are considerable uncertainties over onboarding and deboarding (passengers often suffer due to the unreliability of bus operators while buses rarely stick to their timetables); cramped sitting space makes long-distance travel quite difficult, while the lack of onboard toilets make such journeys an ordeal.
The recent focus on highway expansions and scaled-back train services makes it amply clear that intercity mobility will mainly depend on bus travel. Noticing the opportunity, a number of players, including Delhi-NCR-based Ixigo, YoloBus, ZingBus and IntrCity have entered the segment. These startups tie-up with existing bus operators to build a fleet of buses with modern facilities that focus on comfort and safety. They also provide online support to make bus travel in India a tech-powered and attractive option.
“Some interesting data turned up during our research. While most trains are overbooked, buses, at best, are operating at 65% capacity. Still, people are not willing to travel by bus. So, we started asking people and saw there was a consensus. A fragmented and unorganized bus market with unreliable service standards makes them less preferred for travelling,” says Manish Rathi, cofounder of IntrCity.
The ‘Smart’ Bus Solution
Traditionally, a bus journey in India is far from comfortable or convenient. Buses are in bad shape; they are almost always overcrowded; their timings are erratic, and, of course, toilets are missing. Now there are private players in this space who have introduced certain luxuries. The seats are more comfortable; there is air conditioning, but toilets are still missing.
Keen to solve this particular pain point and make bus travel a lucrative option, IntrCity came to the fore. Under the IntrCity brand, RailYatri was founded by Rathi and Kapil Raizada in 2013. The startup intended to address the unpredictable ticket availability and the lack of information about train travel through predictive algorithms and data analytics. Catering to a user base of 14 Mn travelers, the platform clocked a revenue run rate of $20M in FY21.
After operating in the train-travel space for years, IntrCity noticed the issues and opportunities in the intercity mobility segment and launched its SmartBus service in early 2019. The startup follows the tech-enabled asset less model, focussing on customer acquisition and the bus travel experience instead of owning the assets while the bus owners/operators take care of on-the-ground operations. The company has already aggregated a 200-strong fleet across 18 hubs and covers 228 cities.
IntrCity claims that 70% of intercity travellers belong to millennials and gen Z and they want to build travel options that solve their challenges. The predominant profile includes mobile-first working professionals who care about a good standard of service at a competitive price.
To build a bus service that follows expectations on punctuality, safety and reliability of operators, IntrCity Bus service includes real-time GPS tracking and CCTV footage. On the convenience side, the company provides private cabin facilities with beds and digital keys, Wi-Fi-enabled lounges at boarding points and most importantly, a ‘driver fatigue alert’ where the system uses artificial intelligence to check a driver’s eye and hand movements to determine his/her alertness.
While the SmartBus service takes care of creature comfort and provides important travel information with the help of several hi-tech functionalities, a crucial question remains – that of hygiene and sanitation. As Covid-19 is far from over, all modes of public transport raise health and safety concerns. Even now, adequate social distancing and stringent sanitisation norms need to be followed when it comes to travelling. In fact, according to the India Bus Travel Survey, more than 80% of the respondents expressed their concern over social distancing.
IntrCity says that sanitisation is a priority for its bus service and the company has in place a five-step cleaning and sanitising protocol. It also follows a mandatory thermal screening and KYC procedure where passengers are requested to share their contact details and hand in a declaration of being Covid-negative. The also ensures contactless check-ins in sync with the social distancing norms. The startup has a separate crew app to help automate the workflows, act as a checklist and allows constant communication between the bus staff and the IntrCity team.
The platform presents the experience of a ‘connected vehicle’. Using big data analytics, its buses are tracked 24×7 and the data is made available to users through a command centre. The same command centre is capable of keeping tabs on the status of the bus in real-time, its speed, arrival time and more. The system monitors a driver’s alertness level and there is a mechanism to measure intoxication level as alcohol intake on the job is not allowed to ensure passenger safety. Using a high-end-fault-tolerant data system, it is able to provide coverage in even the most remote locations in India.
With its efforts, the bus service has tackled several industry challenges that have stopped the growth of Indian bus services for decades. With all its features and offerings, IntrCity Bus Service has sold 100K seats per month in March 2021 with an overall fill rate of 88%.
Challenges and Growth
Top-quality bus services matter a lot for driving growth in the travel and tourism sector. This is all the more important as the industry, possibly the worst hit by the Covid-19 pandemic is slowly recovering. However, this mode of transport has always been ignored and tech upgrades are rarely seen in this segment. The biggest issue: The lack of an integrated approach, right from ticketing to great hardware (read buses with modern amenities) to overall traveller experience. In India, most service providers only focus on the ticketing business.
Buses in London or Singapore thrive on an integrated approach, where systems tell passengers everything they should know, from timings and routes to terminal points and more. But India does not have such a mechanism in place. Private players are not too keen to adopt global standards and protocols, and tech upgrades have remained up in the air.
The much-needed smartification of Indian buses has been a work in progress for years now. As buses are the most cost-effective mode of transport, these are mostly used as the primary mode of travel across short distances. But the scenario changes when it comes to longer trips or long-distance travel because travellers value comfort and convenience. After decades of neglect, the likes of IntrCity and its ilk are now exploring the segment and taking initiatives to leverage the latest technology to turn mundane bus travel into a much-coveted experience, but much remains to be done yet.
Of course, IntrCity SmartBus is a step in the right direction, and the quick growth of the new product confirms it further. Even in the post-Covid times when travelling is still limited, the company says that it has achieved 15-20% better fill rates. The company claims to have grown more than 200% in FY20 compared to FY19, with the entire cost of growth covered by the revenue earned.
The Journey Ahead
The startup’s future road map is ambitious as it plans to grow its fleet of smart buses to 300 by the end of 2021. Plans are on the cards to expand to the south as 40% of its new buses will cover the routes across the southern states. IntrCity intends to boost its fleet to 2,000 buses by 2023.
Speaking on the future of the travel segment, Rathi says, “Nearly 60% of the passengers travel by train and buses run by state road transport corporations. And this capacity of state-owned services has more or less remained the same in the past 10 years or so. So, there is a need for private players who can expand their networks and provide the framework for additional passenger transportation.”