It is typical for airfares to go up during long holiday weekends, but this does not highlight the broader trend of the market, according to Thomas Cook India MD and CEO Mahesh Iyer. In a telephonic interview with Swaraj Baggonkar, Iyer said that over a longer period, there has been softening of airfares as well as a drop in the average spend by holidaymakers. Excerpts:

What do the booking trends show for the Independence Day long weekend?

Independence Day is a short getaway. Our bookings are reflecting a strong trend on the domestic side, they are up by 25-30% (on week-on-week basis) for locations like Goa, Bhutan and parts of the North-East.

How early were these bookings done?

Long-haul people plan in advance because there are challenges on the visa front, but short-haul ones, like domestic for routes, people typically book 1-2 weeks in advance. Visa-on-arrival destinations are in top demand.

What about forward bookings for Diwali and beyond?

Forward bookings are looking reasonably strong at the moment.

How is Thomas Cook benefiting from this robust demand?

Our income grew by 11% in Q1 and within that our travel segment grew by 15% and profitability grew by 17%. We saw some headwinds in geographies like West Asia, but other markets grew. We have cash reserves of Rs 1,800 crore, of which net cash is Rs 350 crore.

Airfares are up and this must have led to a rise in the average spend per customer.

Our data suggest that there has been softening of rates on the domestic side. During long weekends, it is natural for airfares to go up but in comparison with the previous year, fares have remained the same, or in some cases, even marked a drop. Our 6-7-month average ticket price used to be Rs 7,000, we are now seeing this at Rs 6,800.

What about the hotels rates?

Hotel rates have remained at the 2023 levels. The value per package has gone up but in terms of number of passengers, there is still room for catch up with 2019 levels.

How do you see H1 and the rest of the year?

We are looking at double-digit growth in forward bookings. We see an extended holiday season, especially for the long-haul segment because there was an impact in Q1 following elections and warmer conditions in Europe. We are actually seeing a little bit of bump-up for Europe for the winter season compared with last year.

But Western destinations are not traditionally known for being winter favourites.

While Europe has been traditionally avoided during winters, travel is now a year-long thing. While there are peaks during the year, people now are taking advantage of the changed visa rules of Schengen, where visas are given for a period of two years. US is issuing on a 10-year visas. This means people can now travel more freely than before.

How are your business segments performing?

Each of our businesses grow at different levels. Foreign exchange business revenue grows at 10-12% and profitability will grow in the 12-15% range. We have guided the travel market to grow 12-15% in income and profitability. Expansion of margins from the current 3.8% to 4.5-5% will come from some of our overseas business, which were loss-making and will start generating profits by the end of this year.

Holidays on EMIs – how is the trend catching up?

The level of penetration of ‘holidays on EMIs’ was 6% till late last year, but now it is at 8% and this will continue to grow. Discretionary spending has gone up. People are also using the book now pay later (BNPL) schemes to upgrade their holidays.

Any new strategic plans of the company or any new expansion plans?

We are expanding our digital footprint, while physical distribution is important. We have introduced a digital way of transacting with customers where the penetration level has reached 22%. In the holiday business, we are at 11-14% in terms of digital adoption.