E-commerce major Amazon is now eyeing a stake in India’s travel industry beginning with flight bookings. Amazon has started offering flight tickets booking on its platform loaded with cashbacks for both — Prime and non-Prime customers. Amazon has partnered with online travel aggregator Cleartrip for the service that would be offered through its payment arm, Amazon Pay.
Building on Travel
There is no mention about the new service on Amazon’s home page, neither it is listed under categories. The service is accessible via Amazon Pay header or by searching “Flights” in the search bar.
Amazon has, as of now, launched the service for domestic bookings, as per its FAQs, and will offer cashbacks starting between Rs 800-2,000 for Prime customers and Rs 400-1,600 for non-Prime customers. However, cashbacks are available till May end that would be credited in three working days as Amazon Pay’s balance.
“Since online retail growth has slowed down in India, such companies are figuring out other avenues to grow. Travel is a large part of the e-commerce market and these companies are not capturing it then they are losing out on the e-commerce growth,” two industry sources told Financial Express Online.
Morgan Stanley has last year revised estimate for the e-commerce market in India to clock $200 billion by 2027 from its preliminary forecast of 2026.
Amazon shows leading carriers including SpiceJet, Air India, GoAir, Indigo, Air Asia, and Vistara in the search results.
“Travel industry will be buzzing about this for the foreseeable future. Airlines, online & traditional travel agencies, plus all those 100+ million Prime subscribers should take notice…,” tweeted Robert Cole, Founder, RockCheetah — a hotel marketing strategy and travel technology consulting firm.
Amazon will compete with existing online travel agencies (OTA) in the category including MakeMyTrip, Yatra, Booking.com, Via.com etc. Google too, offer flight booking services, however, it is a flight search engine and redirects customers to respective OTA for completing the transaction. In terms of the travel marketplace model, Ixigo leads the category.
Turning Super App
For companies like Amazon, which has a large number of users, it is logical to become a super app that houses multiple services irrespective of its core business.
However, this isn’t the only experiment that Amazon is doing in the travel market. In late 2014, it had dabbled with hotel booking service called Amazon Destinations that was, nonetheless, shut down within months in 2015 without Amazon stating the reason behind it.
Customers use Amazon for more than just shopping such as payments, entertainment, mobile recharges, utility payments, money transfers etc., as they “love the convenience we offer of shopping and paying – all in one single app,” said Shariq Plasticwala, Director, Amazon Pay. Hence, adding flight bookings, enables them to do “more with their Amazon app and for Prime members to get more value from their membership,” he added.
Amazon has around 150 million registered users, The New York Times reported in September last year.
Much like China’s WeChat, which apart from messaging service, is also a publishing platform, payments, gaming etc, India’s top startups are also turning super apps such as Flipkart, Ola, and Paytm.
“For Amazon too, it is a logical step as at that high scale, companies look to add different services or verticals gradually. While Amazon has tied up with Cleartrip but such partnerships are done by businesses to test their new categories without having to invest much in it and build from scratch,” said another industry source. Moreover, Cleartrip is getting branding to power such service for Amazon and this is significant.
Cleartrip echoed it too. “Partnering with a trusted consumer brand like Amazon is an exciting development for us,” said Stuart Crighton, CEO, Cleartrip.
Launching flight ticket vertical also makes sense for increasing the gross merchandise value (GMV) and high-value transactions. “There are already around 4 lakh daily domestic flight tickets booked out of which around 2 lakh bookings are done online. Also, it is a large market in terms of $11 billion domestic GMV. So, depending on the scale, Amazon might be able to show further top-line growth,” the source added.
India’ online travel market is expected to grow to $13.6 billion by 2021 led by flight and hotel aggregators while domestic and international flight bookings are likely to expand to $6 billion and $2 billion in size respectively by 2021. Hotels would account for $5.6 billion, said a 2018 report by management consulting firm Praxis Global.
Amazon, later on, Saturday announced the launch of flight ticket bookings.