Spending ₹988 cr to earn ₹97 cr—20 years on, Cleartrip still has no flight plan

Last Thursday, the company appointed Manjari Singhal as its new chief growth and business officer, less than a year after her predecessor was appointed. On her shoulders fall the onerous task of turning the company around.

Cleartrip, which was acquired by Flipkart in 2021, is far from where the e-commerce giant expected it to be—despite its aggressive discounts and star-studded campaigns. Industry insiders point to years of misplaced priorities and strategic missteps that have left Cleartrip gasping for revenue.

A burn strategy can work initially to aggressively capture market share through heavy discounting and customer acquisition. But when expenditure vastly outpaces revenue, it threatens long-term financial stability and requires a shift toward a more balanced cost structure, said Mit Desai, practice member, travel and tourism, at Praxis Global Alliance.

While offering discounts is a straightforward practice in the travel industry, an industry expert points out that you can use this strategy at the early growth stage, not at a stage where you need to consolidate your margins and look at your profitability.

Over-reliance on discounts can create short-term traction but doesn’t necessarily build loyalty or long-term value, said Harish Khatri, founder and MD at India Assist, a travel assistance company. “The strategy may have been adopted to stay visible in a crowded market, but eventually, the fundamentals have to make sense.”

Today, the Flipkart-owned travel platform finds itself at a crossroads, raising questions about its strategy, sustainability, and market fit.

The brand

Founded in 2006 as a hotel and air aggregator by Stuart Crighton, Hrush Bhatt, and Matthew Spacie, Cleartrip was quick to gain traction.

With many travel startups being built, that era saw a major shift from offline travel agents to online travel agencies. MakeMyTrip (2000), Yatra (2006) and Ixigo (2007) are the biggest companies in the space.

Over the last two decades, Cleartrip has built a brand for itself in the travel industry. It’s a company known for its excellent user interface and user experience (UI/UX).

Despite all the focus on building a great product, after a few years, the wheels started to come off. “When you get these awesome reviews on UX UI and get carried away, you will start focusing on UX UI rather than on transactions,” a former senior executive of the company told Mint. “A lot of times, If I would talk about moving this button here, or trying to say this kind of flow will give us higher transactions, it was shot down saying, we can’t compromise on UI UX.”

The big miss

In the early years, the biggest companies in the space had a majority of their business coming from air travel. Investments were drying up and around 2010-11, all of them started to focus on building the hotels business—a more lucrative vertical with about 18-20% margins, compared to the 0.6-0.7% margin in air ticketing, according to industry estimates. It is a common understanding that while air travel drives the top line, hotels are what bring in money.

Cleartrip, according to industry executives and former employees, continued to focus on flights. Around 2014-15, after a boom of 6-7 years, OTAs had more or less settled down into their revenue models. Everybody in the ecosystem understood that flights were a commodity business—whoever sold cheapest would succeed—according to a former senior executive.

Cleartrip did not respond to multiple requests for an interaction or a detailed questionnaire sent over email.

“MakeMyTrip understood it fairly early, and they built a brand you just can’t compete with. However, Cleartrip had an overdependence on flights, where 85-90% of the revenue was coming from flights. But they just couldn’t take the risk involved in diluting focus from flights and pushing on building hotels and non-flight businesses. Their risk appetite was very, very limited,” he said.

Cleartrip started with direct contracts with hotels, but the number of hotels kept shrinking. Eventually, it started sourcing hotels from other platforms such as MakeMyTrip and Yatra. “They switched off and closed down their own supply team around 2018,” a former executive recalled. The hotel business was revived only in 2023.

Air travel is a standard product where a customer is just looking for a seat to travel from one place to another at a certain price and at a certain time. The customer knows what he/she will get, except for delays, but otherwise, the in-flight experience is standard, with only a few choices with regard to airlines. Hotels, however, is a business that requires a very complex decision-making process.

“You need a very small team to manage the supply side of the air business. When it comes to the hotel business, the supply is highly disintegrated. Pan India, you have a large number of accommodations. There are five-star, four-star, three-star, two-star, and unrated hotels. Many of them adopt technologies, and many don’t. So, even the supply curation and ensuring you’ve got the right inventory, product pricing, content—you need a big team,” an industry executive explained.

“To give you an example, a while back, when there were 5-6 people to manage the air supply at Cleartrip, there were almost 150-200 people to manage the supply of hotels,” a former executive noted.

Big daddy

Cleartrip is not a leader in any category. According to data from research agency VIDEC consultants, It does not have any market share in the rail and bus segments based on gross booking value. It is a distant second in the air category after MakeMyTrip, with about 14% market share, and third in hotels with about 2% market share.

Clearly, Cleartrip is still trying to find its footing when it comes to defining its true area of expertise. Market experts say Ixigo gets huge traffic because of train tickets and that traffic can then be utilized for air or hotel and other products. Yatra has become a specialist in corporate business. The biggest of them all is MakeMyTrip, which has a finger in every pie.

About eight years ago, MakeMyTrip acquired Goibibo, in a significant consolidation move. It was a big turning point, according to industry watchers and former employees.

“Goibibo came in with huge discounting and huge money power. They went ahead with very aggressive discounting in the online domain, which none of the other guys were able to keep up with,” said a former senior executive.

Goibibo was launched in India in 2009 by the ibibo Group, which was backed by South African tech giant Naspers. While it started as a social networking and gaming platform, it pivoted to online travel bookings, focusing on flights, hotels, and bus bookings around 2012. Four years later, MakeMyTrip acquired the company.

“MakeMyTrip launched holidays in 2007 and the first two years were brutal but Deep Kalra (founder) said this is one space we want to be in because it gives me double-digit margins and the engagement that you do with clients is far better than your engagement when you do flights,” said an industry executive.

The company continued to invest in that business for 6-7 years and kept losing money. Later, it figured out how to run the holiday business in a lean and mean way. Cleartrip, on the other hand, say industry watchers, was lacking in both clarity, speedy execution, patience and capital.

Acquisition by Flipkart

On paper, what Flipkart perhaps found appealing about Cleartrip is that it would be able to get high gross margin value (GMV) transactions without any complexity of actual logistics and operations, as everything is e-delivered, an industry executive said.

But the travel business did not deliver the kind of hockey stick growth that Flipkart anticipated. “It is a lifestyle business and not everybody can afford a flight ticket or a hotel in India. Typically, you are at the tip of the pyramid in terms of the total customer set,” the former executive cited above explained. “But if you’re selling a mobile phone, which is one of the highest selling categories in e-commerce, they’re at the bottom of the pyramid, with everybody buying a phone today.”

Moreover, the integration with the parent took longer than expected. When Flipkart acquired the company in 2021, travel had started to rebound but both the companies were still locked in the integration.

The e-commerce platform tried to operate Cleartrip the e-commerce way, with a lot of talent from its marketplace model being moved to the travel company. Almost 90% of the workforce, including the management and the second line, were from the marketplace team, with only 5-10% having a travel background, a former executive claimed. That did not pan out well.

When Flipkart acquired Cleartrip in 2021, travel had started to rebound but the two companies were still locked in the integration.

“When they acquired Cleartrip, they got carried away by the glitz of the travel business, airlines, hotels and moved some of their Flipkart, Myntra, senior management into Cleartrip. They did it like a fashion or e-commerce brand and the whole treatment backfired,” one former senior executive noted. “I’m not saying only travel guys can build travel businesses, but you need to have the right balance of industry folks and e-commerce folks,” another executive said.

The thing that Cleartrip needs the most is vision and leadership, according to industry executives. The company has seen a significant churn at the top with former Cleartrip CEO Ayyappan R. stepping down after an 11-year tenure with the Flipkart Group, and CFO Aditya Agarwal resigning soon after.

Singhal is now replacing Anuj Rathi, who the company says is moving on to pursue new opportunities. Singhal led the Beauty, FMCG, and General Merchandise business at Flipkart.

Rathi is leaving the company less than a year after he joined Cleartrip. Notably, he, too, came with an e-commerce background, with a career spanning two decades in tech and e-commerce, including roles at Swiggy and Jupiter Money.

Renewed focus

Hotels is the only category where Cleartrip could make a comeback. It remains a big opportunity as 70-75% of the business is still offline, meaning it can be converted to online.

In recent years, the hotel segment has indeed become the top priority for Cleartrip. The company is also working on building its corporate as well as cab and bus segments. In 2023, Ayyapan R., the then CEO of the company, said the new categories—hotels, bus and cabs—would contribute to over 50% of the business.

Akash Nigam, co-founder of travel agency Mansa Travels says that the online travel market is at a strategic inflexion point where customer acquisition costs must align with lifetime value metrics.

“Cleartrip’s opportunity moving forward lies in strategically expanding into under-served segments like series and fixed departure flights, which could drive consistent traffic from business and group travellers seeking specialized inventory,” Nigam added.

“To gain momentum, a company must pivot toward a sustainable model by focusing on high-margin segments (for example, business travel and premium packages), leveraging digital tools and AI for targeted customer engagement, and aggressively rationalizing costs to drive long-term profitability,” said Praxis Global Alliance’s Desai.

For Cleartrip, that is the challenge. The company appears to have woken up belatedly to hard business realities. But it still needs to make the right calls to fly out of the turbulence of recent years and get into cruise mode.