She told WIT, “Part of our deal with Expedia is we will cut off online distribution since we have a 50% stake in this joint venture. The numbers from India’s OTAs are insignificant as their buying is still traditional like the traditional agents. 

“They are more keen to sell selective routes and, similar to traditional agents, are only after cheap fares and want a flat price which is not exactly our dynamic pricing.

“We own 50% of Expedia India. They may be new but we are investing there and the market size is big enough for all. The only difference for Expedia is they have 400 airlines to sell and can tap on its global network and serve different niche segments. A lot of Indians travel to US now and this could be Expedia’s edge.”

In India, Hrush Bhatt, founder and director, product strategy of Cleartrip, confirming that AirAsia has withdrawn API access to content through all B2C and B2B channels in India, said, “This cuts them off from distribution through OTAs and offline travel agents across India.”

He added, “With internet penetration at less than 10% of the population, AirAsia is going to face a challenge on distribution in India. Expedia India is still a small player with just a fraction of the online travel’s traffic.

“We expect that Air Asia’s competitors will be more than happy to embrace the distribution channels where AirAsia has specifically chosen to be absent.”

Bhatt said that customers would choose to shop in environments in which aggregated content exists.

“Cleartrip continues to focus on comprehensiveness of content and today arguably has the most compelling International flights product that offers full service and low cost content through the same interface.”

Asked if he saw this AirAsia exclusivity benefitting Expedia India, Bhatt said, “We don’t see a big benefit for Expedia India from this at all. In fact, it may deter competing airlines from wanting to work with Expedia. As far as industry alliances go, this is certainly a first-of-its-kind partnership, but the rationale for the partnership is a bit foggy.

“Expedia isn’t a company that has ever cared very much about selling low cost airline seats, they care about package and hotel revenue. We’re not sure why you’d partner with a company which regards your product as a commodity they couldn’t care less about.

“If AirAsia believes that the partnership will allow them to accelerate their own package and hotel sales, then we wish them luck.”

On AirAsia’s side, Tan said the upside is the entire Expedia network (not just Asia’s JV) will have AirAsia inventory.

“I have faith in our JV and just three months in operation, they are showing better results than expected. We have a young and dynamic team in Expedia India and I have faith they can do a good if not better job than the rest of OTAs who have been around a long time.

“China is a good example where we didn’t depend on OTAs nor traditional agents but focus on building the brand, offer low fares and we are building a strong FIT market where critics told me we will not succeed.”