India’s bus travel segment is experiencing a period of rapid expansion, driven by various factors such as improved road infrastructure and changing travel preferences. Industry players and analysts are optimistic about the sector’s growth potential in the near future, with projections indicating that the Indian inter-city bus market could reach ₹688 billion ($8.6B) by FY26, according to travel analytical firm VIDEC.

Virendra Jain, co-founder and CEO at VIDEC, highlighted the significant investments India is making in physical and digital infrastructure, including the development of national and State highways, as well as last-mile connectivity. With an estimated value of ₹539 billion ($6.7 billion) in FY23 and 19 per cent online penetration, the inter-city bus market in India is highly fragmented, with over 4,500 private bus operators and more than 25 State road transport corporations offering nearly 100,000 daily services and routes.

Singh, an industry expert, explained the dominance of online travel agencies (OTAs) in the fragmented inter-city bus market. With their expertise in content aggregation, digitisation, productisation, and providing superior booking experiences, OTAs hold an 82 per cent share of the indirect distribution in the online inter-city bus market at present. This channel is expected to continue contributing to the growth and adoption of online bus bookings.

Several factors have contributed to the surge in bus travel demand in India. First, airlines are operating at nearly 90 per cent capacity, resulting in high airfares, especially for last-minute bookings. This has driven many travellers to choose bus travel as a more affordable and accessible alternative, particularly for spontaneous trips. Furthermore, train travel has been plagued by waitlisting issues, with over 2.7 crore passengers being denied train travel due to waiting lists in FY23.

Rohit Sharma, COO of AbhiBus, explains that State government-run operators are significantly expanding their fleet to meet the growing demand. Additionally, infrastructure quality has improved by an impressive 59 per cent in the last nine years. Alongside these developments, Internet penetration in Tier 2 and tier 3 cities has been increasing at a rate of 20 per cent year-on-year. To cater to this expanding market, 100,000 new bus routes have been added in these cities, enabling easier access to bus travel options. The combination of improved infrastructure, increased internet access, and the convenience of bus travel has resulted in a notable increase in bus bookings from Tier 2 and tier 3 cities.

Ac buses

Recent data from Cleartrip indicates that a substantial number of Indian travelers now prefer air-conditioned buses, accounting for 60-70 per cent of bookings. Moreover, the popularity of sleeper buses has also increased, with 70-80 per cent of travellers opting for overnight journeys.