For a period of two to three weeks in April, Jet Airways and InDiGo withdrew inventory from a handful of OTAs, saying the “opaque fares scheme” which allowed users to buy air tickets at basket sale price was unfair to airlines.

Airlines had inferred the scheme was used to hide the distressed inventory being offered by the troubled Kingfisher Airlines while MakeMyTrip had said in a statement it was “an internationally accepted practice used by airlines and hotels to sell their unsold inventory at a discounted price. This generally helps prevent sales of unsold inventory from adversely affecting full-price retail sales. The pricing and inventory is entirely controlled by the airlines and sold through their sales channels like OTAs.”

DhruvShringi, founder of Yatra, whoseYatra Supersaver was withdrawn from the site, said in an article in TechCircle.In, “The scheme benefits all. Be it the OTAs, the airlines and consumers. Opaque fare is a very consumer friendly scheme which is of great benefit for the flexible consumers. Though in India it covered a small percentage of sale of tickets, many global OTAs have followed this scheme and have grown considerably benefitting all.”

A compromise has since been reached with the OTAs agreeing to pull out the scheme.

Airlines and OTAs have long had a fractious relationship in India but observers remark this time carriers seem to have won the round.

Given the huge volume of business done at a site like MakeMyTrip which in FY12 reported a 65.5% YOY growth in revenues to $196.6 million (see full results below), it is estimated the scuffle probably cost it and the airlines several million dollars in sales.

The quarrel is symptomatic of a problem that’s looming in Indian aviation – the lack of capacity, with Kingfisher Airlines in trouble, and, as a result, higher air fares. Airlines are also having to cope with rising fuel costs.

MakeMyTrip’s Singapore-based chief business office-international markets, Amit Saberwal (above), declined to comment specifically on the recent incident but said that air demand could see a slight drop due to higher fares.

Despite that, he said the Indian story is still strong. “We may have glitches here and there, political issues, bad press, etc but the fundamentals of the Indian story remain strong. People want to travel and the mobile story – where only 150 million people have broadband connections but there are an estimated 700 million mobile connections – will make it even stronger.

“We are also seeing excellent growth in our hotels and packages business that shows leisure demand is intact and growing well.”

As such, he said MMT would continue to expand its business across Asia by following its Indian customer base. Its experiment with an English-language website in UAE is working well and the company will soon roll out other sites in the GCC region. It will also launch an Arabic website.

For now, the English-language is working well. “There are many expatriates working in the region,” said Saberwal.

He said MMT’s philosophy was always to test proof of concept first and once something worked, then it would put weight behind it and scale. “We don’t believe in putting the cart before the horse. We want to get one thing right first and then roll it out.”

The company will ramp up its drive for regional hotel content. It now has its own hotel contracting teams in Singapore, Malaysia, Thailand, Hong Kong and UAE and Sri Lanka. Recently it signed a partnership with Site Minder to give it last minute availability to inventory of regional chains and hotels outside India.

While he believes Indonesia is an exciting market, it was not a priority for MMT as yet as it’s not a top destination for its customers. “The payment system is also less developed there. Players will crack it with bank transfers but we prefer to be in markets with fully automated payment systems,” said Saberwal.

Its HTML5 mobile website is also seeing tremendous traction, more than the Blackberry app launched earlier. “The problem with a single platform is that you are restricted to the growth of that platform,” said Saberwal.

Offering flights only at the moment, he said mobile content would be expanded to hotels, with a focus on last minute prices and deals. He noted a trend towards last minute bookings even though prices tended to be higher.

“It shows people don’t mind paying more for the convenience of booking last minute. We want to follow our customer behaviour and make options available to them.”

He said travellers in emerging markets like India and China tended to be more last minute. “We know Indians are not as organized as say, the Singaporeans. And there’s so much uncertainty these days it’s hard to plan any trips that far ahead.”

MakeMyTrip’s Financial Highlights for Fiscal 2012 Fourth Quarter and Full Year

 Revenue rose 66.8% year over year (yoy) to $47.0 million in 4Q12 and grew 65.5% yoy to $196.6 million for FY12.
 Revenue less service costs(2) increased 44.0% yoy to $22.1 million in 4Q12 and increased 51.7% yoy to $88.2 million for FY12.
 Net revenue margin(3) for Air ticketing and Hotels and packages combined increased to 8.5% in 4Q12 versus 8.2% in 4Q11. For FY12 net revenue margin was 8.5% versus 7.9% in FY11.
 Adjusted operating profit(4) for 4Q12 improved to $2.7 million yoy versus a profit of $1.1 million in 4Q11. FY12 adjusted operating profits grew to $10.9 million, up from $4.6 million in FY11.
 Adjusted net income(5) for 4Q12 was $3.0 million yoy versus a profit of $1.1 million in 4Q11. FY12 adjusted net income(5) grew to $9.0 million, up from $5.1 million in FY11.
 Adjusted Diluted earnings per share(5) for 4Q12 was $0.08 versus $0.03 in Q411. Adjusted Diluted earnings per share(5) for FY12 was $0.24 versus $0.15 in FY11.
(YoY Growth % are on constant currency basis)