Travel industry’s back-office boys

QuadLabs Stands Out In A Crowded Market With Its Service Model

AIR travel has become much more popular in the country in the past four years. With rising incomes, many middle-class passengers who were taking the train earlier have started flying. And the expansion of civil aviation, experts say, has only begun in India. Little wonder, then, that business opportunities are cropping up by the dozen in this sector. QuadLabs, started by an entrepreneur in his mid-20s, is one such entrant catering to the software side of air travel management business.

Think of ticketing software and there are several companies selling branded products in the market. Both airlines and travel agents use them. But Quad-Labs has taken a different path, which it believes would be more profitable and sustainable in the long run. The company offers ticketing software as a service and takes a cut for every ticket sold.

The process of booking a ticket and transferring the payment is a complex and cumbersome one. Travel agents and online ticket vendors such as Yatra and TravelMasti would rather outsource this process than take it on themselves. Investing in a ticketing product may prove expensive and the seasonal nature of tourism makes that upfront investment unattractive.

Engineer Gaurav Chiripal, 27, figured that these companies would willingly adopt some sort of a payper-use model, coupled with a much lower upfront fee. A minimum business commitment would even make it a sustainable business model for an entrepreneur.

When the company started operations in October 2006, its offering was to set up the infrastructure required to take a travel business online. The initial cost of setting up the technology for a travel portal would start at a minimum of Rs 70 lakh if it were to buy a product licence and the required hardware, says Faraz Khalid, QuadLabs’ cofounder and head of products. Not many travel agents can make such investments. So, the company expanded its offering to give a complete ticketing solution in the services mode, leaving travel companies to focus on selling.

It was the lure of the travel business that made the founders come up with this offering. Back in the fall of 1997, Mr Chiripal worked in his father’s company, NC Tours & Travels, in the old residential neighbourhood of Patel Nagar in Delhi. He was just 17 years and was trying to explain to his 46-year-old father the advantage of taking their business online. Dad was listening patiently but the young Chiripal knew he wasn’t going to apply it.

“He wasn’t ready to believe in the idea. My Dad was a pure travel agent. He bought tickets in bulk from airlines and consolidators and would resell them. He did not see how technology could help and was sure that his team was all that was needed for such a business.” The young Chiripal decided he would have to take things in his own hands.

Soon, opportunity came flying in his way in the form of Turkmenistan
Airlines. A friend, who worked for the airline in Delhi, told Mr Chiripal about the difficulty the airline was having in managing passenger and luggage load. Mr Chiripal wrote a small programme to enable the airline to use in four cities that it would touch — Ashgabat in Turkmenistan, New Delhi, Kathmandu and London. The software kept tabs on the people and luggage that got on and off
the planes at these points.

During the big bad internet boom, Mr Chiripal attempted to launch a travel portal at IndianPassenger.com. When the bubble went pop, they, like many entrepreneurs realised there weren’t enough people with credit cards to allow such a business to survive in India. And so, this company sold the software it had developed for own use to other travel companies in Europe.

One of its bigger clients was eBooker, says Mr Chiripal. In the second half of 2006, Gaurav Chiripal, Manav Lohia, and Faraz Khalid came together to form QuadLabs. Before this, Mr Chiripal was part of Final Quadrant, a company that is now its competitor. He parted ways with the co-promoter of Final Quadrant after a clash of vision. Now, though they work apart, the two companies share some intellectual property.

It has been a year and three months since the company QuadLabs gained its own identity. The initial funding of Rs 2.5 crore came from the founders’ savings and an angel investor in London. The investor had put in money in Final Quadrant as well. QuadLabs claims to have been profitable since day one. The upfront fee it charges clients takes care of the infrastructure cost and the usage charges bring steady revenue and profit. During its shift from product to services, the founders had to plough their profits back into their business to set up the hosting facilities for their business.

Gaurav Chiripal (L) with Manav Lohia and Faraz Khalid

Article Resource:
Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".