iXiGO.com has the rare combination of a passionate team with an idea that is not only innovative but also timely. The travel search engine was launched in a market where Indian online travel agents had received more than 100 million US dollars in venture funding.
However, both the portal’s founders and investors felt that no amount of money could stave off the right business model. As proof, iXiGO has steadily grown its customer base month-on-month with minimal marketing. Indian travel providers are actively signing up, realising how much iXiGO’s model reduces their distribution costs; and travellers, eager to find the best deal, have made iXiGO the biggest travel search engine in India in under two years.
The iXiGO model
iXiGO.com searches across travel and supplier websites in India for consumers looking for the best deals in terms of flights, hotels, bus and train journeys. Unlike online travel agents who do the bookings themselves, an iXiGO booking happens directly on the supplier website through a redirection link.
“We use advanced search algorithms to find really cheap air fares and hotel room rates, and most of the time we can cross-combine flights on complex routes much better than our counterparts,” CEO and co-founder Aloke Bajpai (MBA ‘05J) told INSEAD Knowledge.
The company’s business model is two-pronged. “We get paid for sending qualified leads to our travel partners’ site and we are paid well by ensuring a good quality of such leads. Secondly, we generate qualified eyeballs for our advertisers from this quality traffic. In a way, we are increasing the efficiency of the travel eco-system by building a strong product to attract qualified buyers and providing a neutral, unbiased platform for sellers to showcase their inventory.”
According to Bajpai, what sets iXiGO apart from its competitors is being more consumer-friendly by providing comprehensive, unbiased fares with no added commissions and being supplier-friendly through offering a transparent platform driving travellers directly to travel provider websites at very low cost.
Bajpai says iXiGO is the only travel search engine that works with airlines directly and not through third-parties. “We chose to strategically align our interests with the airlines and we kept intermediaries out of organic results to achieve that. So we are unique with our airline-direct approach.”
On the hotels side, their uniqueness lies in their comprehensiveness. “We have the largest inventory of hotels globally, in comparison to any other hotel search site – there are over 220,000 hotels in our database.”
iXiGO establishes direct channels with the host, bypassing the more expensive GDS (Global Distribution System) channels, some of which were set up by the major airlines themselves.
“That takes out a significant chunk of the distribution cost which is especially high in proportion to the cheaper fares offered in the lower bucket (shops),” says Raj Sivakumar, vice president of revenue management at Jet Airways.
Assuming the cost from this channel is relatively low, the only downside is potential cannibalisation of revenue from customers who would have booked through the Jet Airways website anyway. “We will then be capturing the same customer with a higher fee,” he says.
Sivakumar says the distribution marketplace is quite crowded and there is no clear leader at this point in time. “So we will continue to support lower-cost channels that will display our content in an unbiased manner.”
iXiGO, which stands for ‘I eXplore I GO’, came into being in 2006 when four friends who worked at the GDS Amadeus, set out to create the search engine with the most comprehensive inventory options searchable on site.
“We had understood how travel technology and booking systems work, and saw that the future of travel bookings would not happen in the company we worked for. We wanted to create a new product that focused on usability and speed, with optimisation on the front end and the back end,” says Bajpai. “iXiGO came into being with complete transparency for the customer with no commercial considerations in how we display the search results.”
Their dream is to be the most popular travel site in India and among the biggest travel sites in the world in terms of transaction volume. The only debate is whether to grow organically through word-of-mouth only or by mass-marketing in traditional media as other Indian travel sites have done.
“We are growing at nearly 15 per cent month-on-month for the year. We should be profitable by the end of this financial year,” says Bajpai.
Getting it right. Or not
Says iXiGO investor and advisor William Klippgen (MBA ‘03D): “iXiGO has a team that both understands the fine details of the travel industry and the emerging online space. And, they understand how online interaction with consumers requires 100 per cent focus on usability. They know that minute details matter: the size of a button; the colour of certain elements on screen.”
iXiGO's weakness is possibly its size and ability to influence policy, compared to the larger, well-connected players. The company instead has to be sufficiently persuasive through its own power of innovation and future potential, Klippgen argues, when dealing with the large travel providers.
Klippgen knows what he is talking about; he co-founded Kelkoo, the comparison site for online shopping in Europe, more than 10 years ago. “We grew from a couple of people to become Europe's largest e-commerce comparison portal in seven years. Luckily, the world has not changed too much, and some of the old tricks still apply and I try my best to be helpful in sharing this experience. Having said that, I learn even more from following the team and this symbiotic relationship is really what makes me tick as a seed investor.”
The impact of the economic crisis
Since the economic downturn, iXiGO has become a lot more prudent on the costs side and has worked on innovative ways of growing revenues, including doing barter deals, affiliate sign-ups and deeper partnerships with eco-system players.
On the demand side, the crisis has adversely affected the market, but the airlines also appreciate the new wave of fiscal prudence that every business showed, Bajpai says. Also, smart partners such as TravelGuru, Hindustan Times and NDTV have adopted iXiGO’s meta-search platform and discovered that this channel is likely to become a dominant platform for accessing airfares and comparing them.