Bus service start-up Cityflo to expand into Delhi

Cityflo will be expanding its services into Delhi by the end of February. The app-based bus service start-up plans to have a fleet of around 250-300 buses in the city over the next 18 months.

Cityflo’s fleet of premium buses will initially start operation on the Faridabad-Gurgaon route, and later expand to other areas across South Delhi, Rohini, Paschim Vihar, and Dwarka over the next three months.

Jerin Venad, Co-founder, Cityflo told BusinessLine, “In the first phase of the launch, Cityflo will start with three routes, each route requires 10-12 buses. We will be adding one route every two-three weeks. By the next 12 months, we should be able to add 15-20 routes, with around 200-250 buses. We are estimating to have around 250-300 buses in Delhi over the next 18 months.”

He added that, together with the bus owner partners, Cityflo plans to invest over ₹120 crore for Delhi-NCR operations over the next 18 months.

This marks the first expansion of the Mumbai-based bus service into another city since its launch in 2015. Currently, it runs 140 buses across Mumbai with around 6,000 daily passengers across 13-14 routes. The average ticket price per customer is about ₹180.

Venad expects the Mumbai business to grow 4X over the next year-and-a-half, aiming for 500-600 buses. Their Mumbai service has seen an uptick in new customers with more people returning to the work from office system.

The start-up partners with bus owners through contracts, wherein the buses have to be of a certain quality. Cityflo then trains and grooms the bus staff and drivers in personality development and engaging with the customers. They also have centralised cleaning system for the buses.

Frugal spending

Over the last two years, the bus service segment has been seeing consolidation with peers like Shuttl getting acquired by Chalo, but Cityflo has managed to survive and grow. The company had last raised $8 million in a Series A funding round from Lightbox Ventures and India Quotient in November 2020.

Venad said, “That funding was well-timed for us. The company is into daily commute and the last two years were difficult, so that additional funding helped. We have been very frugal in the way we spend as a company, we have been very traditional. We know we will grow because the service is required. Financially, Cityflo is very strong and we turned profitable at a gross level this year. We make a margin of around 15 per cent on our fleet. All the money we need is for the head office expenses.”

He added, “Because it is commuting and most of the growth we achieve is organic, we are able to do it without spending much on marketing. We have also started seeing more investor interest now that the worst is over and business is proven. Our existing investors India Quotient and Lightbox have said that they will be participate whenever we raise subsequent rounds.”

The start-up has a team of 75 employees including, five new members hired for the Delhi service.

Eventually, Cityflo will be looking at Hyderabad, Pune, Kolkata, Bangalore and Chennai when they plan further expansion.

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