’s biggest source of revenue is also its biggest risk
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Business4 min read’s biggest source of revenue is also its biggest risk     Canva/BI India
  • Yatra is looking to go public in India to raise ₹750 crore.
  • The company mentioned that its heavy reliance on airlines may be a risk factor.
  • It currently earns close to 70% of its revenue just by selling air tickets.
There is no denying that the last couple of years have been extremely tough on the global travel and tourism industry. Whenever the segment started to make a little recovery, they would once again be hit by a new COVID-19 variant and another deadly wave. While everyone hopes that the worst of the pandemic is behind us, may have a little more to worry about.

Yatra, which is now looking to go public in India to raise ₹750 crore, has revealed that its heavy dependence on air ticketing business and airline supplier relationship is one of the risk factors to its business. The reason simply being the financial conditions of the Indian aviation industry.

The airlines and airports in India incurred an estimated loss of ₹19,564 crore and ₹5,116 crore in 2022-2021 due to several disruptions caused by the global pandemic, the government of India revealed in December 2021. Another report by Investment Information and Credit Rating Agency of India (ICRA) revealed that the domestic aviation industry will require an additional funding worth ₹32,500 crore to ₹35,000 crore during fiscal year 2021-23 to overcome the impact of the pandemic.

The report added that airlines were losing ₹75-90 crore on a daily basis during the COVID-19 lockdown. The industry level debt was also expected to increase to ₹46,500 crore over FY2021-22, the report noted.
AirlinesNet DebtYear
SpiceJet₹10,400 croreFY2021
Air India₹61,562 croreAugust 2021
IndiGo₹29,859 croreFY2021
GoAir₹7,346 crore December 2021
Source: Statista, Air India, IndiGo, GoAir

The situation of Indian airlines could impact Yatra

A report by ResearchGate mentioned that the Indian aviation sector has shown significant growth prospects in the last few years, but the financial performance of most of the air carriers individually is not at all “impressive”. “Every five years one airline in India is being grounded…,” the report added. Jet Airways was grounded in 2019 and will now be making a re-entry three years later next month.

Yatra Online Limited, in its draft red herring prospectus (DRHP) revealed, “We are exposed to risks associated with these Indian businesses which risks have recently been heightened by the COVID-19 pandemic, including bankruptcies, restructurings, consolidations and alliances of its partners, the credit worthiness of these partners, and the possible obligation to make payments to our partners. For example, the Indian airline industry has experienced significant losses and has undergone bankruptcies, restructurings, consolidations and other similar events.”

The company also cited the example of Jet Airways whose bankruptcy and cessation of operations negatively impacted Yatra’s revenue. The Jet Airways bankruptcy — or any future bankruptcies or increased consolidation in the airline industry — could create challenges for the company and reduce the profitability of its airline ticketing business, the company said.

But it gets worse

Yatra Online Limited generated over 70% of its business from air ticketing in the fiscal year 2021 and nearly 66% in the first half of fiscal year 2022. Any reduction in the profit margins in air ticketing could have a larger impact on Yatra’s revenue and profitability.’s biggest source of revenue is also its biggest risk
BI India

To make matters worse, a substantial portion of Yatra Online Limited’s revenue comes from only four domestic airlines. Even though it provides access to 407 airlines, seven domestic and 400 international airlines. These include domestic flights like Air Asia, Air India, Air India Express, Go First, IndiGo, SpiceJet, Vistara, and international airlines such as Air France-KLM, British Airways, Emirates, Etihad Airways, Lufthansa, and others.

“Because the majority of the domestic Indian air travel industry is concentrated among these four domestic airlines, any adverse market developments across the Indian commercial aviation landscape, particularly among the most dominant domestic airlines are more likely to impact our business,” the company said in its DRHP.