L O A D I N G
blog banner

Save on international flight travel costs to/from India using arbitrage opportunities

Some of the Indian travel websites like cleartrip.com, makemytrip.com and yatra.com now offer search for India-RestoftheWorld-India travel – the prices, depending on the deals these sites have made, are aggressive for certain airlines, routes and dates.

Similarly, you have global websites that allow for international travel search like travelocity.com, expedia.com and orbitz.com.

A quick search on return flight routes from most countries outside India will show you that tickets for RoW-India-RoW cost more than tickets for India-RoW-India.

Now, since most popular websites in a country are “world-famous” within that country, chances are that the world hasn’t yet heard of Indian travel websites. Hence, it is very likely that most individuals/organizations who are based outside India end up going to a travelocity or expedia or orbitz, search for the best rates, and book their tickets there.

However, if we know that the individual in question needs to travel to India at least twice in the near future, and if we can plan travel dates for at least 2 round trips (or more) in advance, then there is an opportunity for pricing arbitrage.

It works like this –

Person A lives and works in country X

He/She needs to travel to India for a week, twice in the next 3 months.

Say, the dates are,
1st Feb to 7th Feb, and
1st Mar to 7th Mar

Now, if tickets are to be booked looking at the travel from country X, one would usually go for

Round trip #1
Leave X for India – 1st Feb
Leave India for X – 7th Feb

Round trip #2
Leave X for India – 1st Mar
Leave India for X – 7th Mar

Normal booking practice

Legend

However, you will see that another way to look at this could be –

One-way #1
Leave X for India – 1st Feb

Round trip #1
Leave India for X – 7th Feb
Leave X for India – 1st Mar

One-way #2
Leave India for X – 7th Mar

Proposed booking practice

Assuming that the international websites do not offer massive discounts on return trips vis-a-vis one-way trips, the chances of the second approach costing less than the first approach are high.

I base those chances on the fact that usually, the price difference, between

Cost of (India-to-X plus X-to-India) as a round trip booking on an Indian Travel site
is a good 40% lower than
Cost of (X-to-India plus India-to-X) as a round trip booking on an International Travel site

My research has been limited to a few price checks I did a few weeks ago on travelling from Delhi-Bangkok-Delhi on Indian travel sites like Cleartrip and MakeMyTrip and on AirAsia. The Indian sites offered rates in the range of Rs.15000 (approx 300 USD) for the round trip versus rates of Rs.25000 (approx 500 USD) on AirAsia.com

The math, if you want to see in terms of savings would look like this –

Assumptions:

  • One-way travel costs 50% of round trip travel costs on international travel sites
  • A roundtrip between cities (India-RoW-India) using an Indian travel site is 40% cheaper than a roundtrip between cities (RoW-India-RoW) using an international travel site (as highlighted above)

How the math breaks down

Hence, the savings using the proposed method are –

Overall savings of 20% (200% vs 160%) on 2 round trips (RoW-India-RoW, RoW-India-RoW)

Overall savings of 27% (300% vs 220%) on 3 round trips (RoW-India-RoW, RoW-India-RoW, RoW-India-RoW)

Overall savings of 30% (400% vs 280%) on 4 round trips (RoW-India-RoW, RoW-India-RoW, RoW-India-RoW, RoW-India-RoW)

As the number of round trips tends to infinity, the savings will tend towards 40%.

n Round Trip savings tend to...

However, the bulk of the savings, will be reached soon enough –

  • 30% savings at 4 trips
  • 35% savings at 8 trips
  • 36% savings at 10 trips
  • 38% savings at 20 trips

 

NOTE: The above arbitrage is however, only useful for –

People based outside India who travel to India often
People based out of India travelling abroad would anyway be using Indian travel sites – and hence, would already be availing of the better prices

People who use International travel sites for their bookings
In case of organizations or travel agencies, one will need to be careful to –

  • Ensure bookings that are done for the same particular individual
  • Care has to be taken while booking for multiple travellers since each traveller will need his one-way going trip, n number of round trips, one-way coming trip to be tracked diligently
  • Book on India-based airlines that fly to international destinations as Indian travel sites do not have tie-ups with most of the global international airlines

Leave a Reply

Your email address will not be published. Required fields are marked *