No Muss, No Fuss – Just Take The Bus

The bus service industry in India alone is worth USD3.5 billion and growing. Since 2010, the number of bus seats sold has double, as Indians with varying pocket depths are opting to travel by bus rather than planes, trains or cars.

Online travel sales, in a country where Internet penetration is less than 13% with lots of room to grow, totaled USD5.75 billion in 2012. Bus ticket sales currently contributes to only 2% of that number as its market largely comes from Tier A cities where bus operators are more aware of using the Internet as a sales channel. With new online bus booking portals, like Red Bus, the industry is set to grow at an exponential rate. The potential for the bus travel industry in India, the second most populated country in the world where low income per capita necessitates an affordable mode of transportation, is colossal. Intercity travel by bus costs a fraction of the airfare. For instance, a bus ticket from Bangalore to Goa costs only 30% of a plane ticket for a similar journey.

Red Bus, of Bangalore, offers 12 000 routes and travelers can choose from a spectrum of price and comfort level. For those who can afford it, they can choose a recliner or flatbed seat and even an air-conditioned Volvo coach. For those with shallower pockets, there are still straightback seats on domestic vehicles. In short, there is something for everyone. Passengers can post reviews of their experience which help other would-be customers make their choice while keeping the bus operators in check and on their toes.

Red Bus started as a non-profit service in 2005 because, one day, one of its founders needed a last minute bus ticket to return to his hometown for the Diwali festival. He couldn’t find one, even after spending the day crisscrossing the town, from travel agent to travel agent, in notorious Bangalore traffic. During this frustrating incident, the idea came to him for an online platform for travelers to book tickets with ease. Today, the company issues 12 million bus tickets annually with a gross merchandise value of IDR600 crore. It has a network of 1200 bus operators from 24 states. Recently, ibiboGroup, the Indian subsidiary of South African media giant Naspers, acquired Red Bus for USD120 million.

The bus travel industry is advancing faster than we think

With Diwali once again just around the corner, the Chennai state government recently announced that it would bring in more than 8000 special buses across the state and 200 buses within the city to support the heavy passenger traffic, and that is in just 1 out of 28 states.

Considering the decline in personal vehicles sales and the weakening Rupee, the mass transport industry is the next rising star. Even the government is urging the public to take the bus once a week, specifically Tuesday for unspecified reasons, as part of an energy reduction campaign which aims to reduce the country’s energy bill by USD5 billion. The country imports over 75% of its crude oil and, because of the weak Rupee, the cost has skyrocketed in recent months.

Last month, Petroleum Minister, Veerappa Moily, told news media that, “We need to do more to conserve fuel or face tougher choices such as steep price increases or even quantitative restrictions…We want people to take the bus and other forms of public transport.”

Moily is encouraging members of the government to practise what is being preached. A circular was issued from his office, requesting the officers in his ministry and 14 public sector firms under its jurisdiction to take the bus on Wednesdays. He further urged other ministers, major PSU heads and heads of different central ministries to declare a ‘bus day’, going as far as to point out that these people often use vehicles that are fuel guzzlers.

With all this focus being channeled towards buses, we can imagine bus manufacturers rubbing their hands in glee.

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