OTAs seek change in GST rule, eye higher growth in bus ticketing segment

Online travel agencies (OTAs) are seeking a level playing field as they continue to eye higher growth in bus ticketing segment.

Bus ticketing is the fastest growing segment for OTAs with a daily seat inventory of around two million seats. The bus transport industry has also seen a rebound post Covid-19 pandemic and is slated to reach a valuation of around ₹1.04 trillion by 2026. However the OTAs feel that their growth is being curbed due to a 2021 policy of levying 5 per cent Goods and Services Tax (GST) on the sale of non-AC bus tickets on e-commerce portals. Tax is not leviable if a non-AC bus ticket is purchased offline or a website of state transport corporation

“Essentially consumers are being penalised for convenience. When the rule was introduced, we used to get around 46 per cent of our bookings from non-AC segment. In the latest quarter, booking from non-AC segment has reduced to 34 per cent,” said Prakash Sangam, CEO, redBUS. “The only ones who are bearing the brunt are the OTAs. In a way it is against spirit of Digital India,” complained Aloke Bajpai, chairman and managing director of ixigo.

Significant gains

Yet despite the challenges, OTAs are seeing significant gains in the segment. A tie up with OTAs is also helping bus operators scale up their sales and improve customer experience. “We are seeing very strong double digit growth in bus ticketing segment,” Bajpai said. 

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“Overall growth is picking up quite well. Post Covid-19 pandemic, the overall bus market has been growing at 10-15 per cent. Our growth is in mid-20 per cent and that is higher than the industry,” Sangam added.

Karnataka, Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, and Uttar Pradesh are the principal markets in State transport undertakings, constituting nearly 70 per cent of the market share. The top five States in total addressable market for private buses are Uttar Pradesh, Maharashtra, Rajasthan, Punjab, and Haryana, which are expected to account for around 45 per cent share by 2026, as per a report by Internet and Mobile Association of India and Grant Thornton Bharat.

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