Ixigo Invests in AI and Hotels Amid Q1 FY27 Earnings
Online travel company ixigo is prioritizing significant investments in AI capabilities and hotel business expansion, impacting short-term profitability. The bus segment continues to show strong growth.
Indian online travel aggregator ixigo announced in its Q1 FY27 earnings that it is prioritizing significant investments in artificial intelligence capabilities and the expansion of its hotel business. The company has deliberately chosen to reinvest operating leverage into these areas rather than maximizing short-term profitability.
The company stated that its AI investments encompass engineering talent, infrastructure, and the training of its own small language models. Its AI agent, TARA, reportedly resolved over 81% of voice queries and more than 92% of text queries end-to-end without human intervention, handling over 57,000 customer interactions daily. Ixigo anticipates that these technology costs will normalize within the next few quarters.
Ixigo's bus business, AbhiBus, has become the company's largest vertical by contribution margin. Growth is attributed to structural tailwinds, including infrastructure development and higher airfares pushing travelers to road transport. The company has introduced new services such as an AI-first operating system for bus operators and a membership program for students.
In contrast, the train business is focused on preserving margins and consolidating market share amidst evolving industry policies. The flight business faces near-term challenges from elevated airfares, which may deter new flyers, particularly those from Tier 2 and Tier 3 cities.
The company also confirmed that its contracts with PhonePe for flights and buses were not renewed, although the partnership for train bookings continues. Third-party distribution partnerships collectively represent a small percentage of ixigo's overall gross transaction value.