A recent industry survey done by PGA labs shows that India’s current outstation travel market is valued at approximately USD 66 billion, which includes both private and public outstation bus services, trains, flights and 4-wheeler Taxis including aggregator cabs (Ola/Uber), private cabs and maxi cabs. Out of this, 46 per cent of the majority market share is earned by the outstation bus businesses. While flights are fast and train travel will eventually grow as well, the survey shows that bus travel of less than 1,000 km is the most convenient for outstation travel as they are cheaper, time-efficient and enable superior reach. Cabs in comparison have higher fares and have limited outstation range. And customers prefer the subsidised bus ticket prices compared to cabs.

1 Credit: PGA Labs

Credit: PGA Labs

Hence, the total outstation bus market in India is valued at USD 30.3 billion, out of which USD 24.4 billion is private contract carriage such as Zingbus, which participates in the USD 9.6 billion pre-bookable private contract carriage segment. The survey also indicates that 18 per cent of total bookings made in the USD 66 billion outstation market are booked online through travel portals and aggregators. Only 5 per cent of outstation bus rides are booked via online methods in FY20, valued at USD 1.2 billion.

2 Credit: PGA Labs

Credit: PGA Labs

But there is good news, the outstation bus market is expected to grow at 9.8 per cent CAGR between FY20-25 to USD 48 billion. Out of this, the private outstation bus online booking market is projected to grow at 31 per cent CAGR by FY25. This will propel its revenue value to USD 4.6 billion. The rationale behind this is the ease of booking through online modes that also provide a better customer experience when opting for pre-bookable private contractors. An increase in fuel costs is passed on to customers as well. In comparison, the public bus sector suffers from bad customer experience and a lack of government funds to replace existing buses.

3 Credit: PGA Labs

Credit: PGA Labs

Changes in customer behaviour, penetration of smartphones and the internet are essential behind growth:
While the online bus market is expected to see an overall growth from 5 per cent in FY20 to 9.5 per cent in FY 25, it will be the change in customer behaviour that has the potential of unlocking its potential of up to 25 per cent penetration. This would also help overhaul bus operations and its business practices in the country.

4 Credit: PGA Labs

Credit: PGA Labs

Customer behaviour change has been categorised into 3 key categories, Pre-booking, Smartphone adoption and Better service expectation (based on reviews and ratings). Meanwhile, bus operators’ overhaul has been categorised under, Increase in online listing and Change in business operations.
Under the survey, outstation bus operators have been classified into two categories. Unorganised and Organised. Currently, the private bus operators’ market has over 26,000 operators and is largely fragmented. Out of this, Organised bus operators (private and large) operate only 10,000 buses and hold 5 per cent of the market share. While the unorganised bus operators hold the majority of 60-65 per cent market share with over 195,000 buses. The organised segment hopes to gain ground with the help of OTA, established brand names and better customer experience. But the unorganised operators are also expected to hold ground as they offer reliable offline booking, the ability to cater to last-minute travellers, lower prices and rural reach points.

5 Credit: PGA Labs

Credit: PGA Labs

‘One nation, one permit’ could be the key behind USD 48 billion revenue value by 2025:
The government’s ‘One nation, one permit’ (ONOP) scheme could lead the industry to 9.8 per cent CAGR growth with easier and faster processing of permits for operators, boosting inter-state travel. While pre-ONOP operators were often constrained due to the requirement of multiple state permits across regions to operate and other contingencies. However, with the implementation of ONOP, a single permit will streamline operations and also introduce a web-based application, payment and grant system. This will broadly reduce the time taken to acquire permits, reduce costs, open access to more routes and increase the number of bus availability.

6 Credit: PGA Labs

Credit: PGA Labs

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