Queuing for a seat on a premium express bus service to the south of the island during demand peak – like a Friday evening – is an unnerving experience. At the Maharagama hub for the 128 air-conditioned buses plying the expressway to the south, queues span the length of the bus stop five times over.

Air-conditioned expresses bus services price seats two to three times higher than the normal service. Normally, customers fork out for premium services for convenience, dependability, speed and comfort. Expresses buses are faster and more comfortable; however, early seat reservations aren’t possible and the service is unreliable.

“This is not the way to operate a luxury bus service,” exclaims Dinusha Kornkaduwa, co-founder and chief operating officer of a company that launched a central reservation system for seats on long distance luxury buses. It’s similar to echanneling’s business model of an internet-connected central reservation system for consulting doctors. Consultation appointments of patients visiting a hospital, dialing a hotline and online booking are all recorded in an internet-linked central database.

Busbooking.lk’s business model – linking travellers with available bus seats – is similar. It combines available seats in a central reservation system. Travellers access this data on its website or mobile apps, pick a convenient bus, select a seat (on a seat map like in airline reservations) and pay online. Instead of standing in a queue, passengers can arrive at departure time to claim their seat.

For short distances, a private vehicle, taxi or city bus is unlikely to be displaced soon. However, the most-travelled long distance routes fall into a category of being too leisurely and long to drive. Rail connects are few on these routes, and the expense of air travel is difficult to justify. Express buses dominate long distance intercity travel. Demand is growing. Express buses are categorised into four. Normal buses are ones not offering air-conditioning, semi-luxury buses have high back seats and fans, luxury buses  must have air conditioning, and super luxury ones must have a lower deck as luggage space in addition to AC. Fares are regulated. Luxury buses charge twice and super luxury three times the normal fare. Sri Lanka’s National Transport Commission (NTC), which in turn is overseen by the Sri Lanka Transport Board, is the regulator. It issues route permits and categorises buses.

Busbooking.lk is targeting to organise the 1,200 luxury and super luxury category buses. Since proving the technology and the business model, it’s aiming to add more than 500 buses to their network of 86 in the next year.

Busbooking.lk is making revolutionary changes in the industry. In retrospect, however, they seem obvious – like online reservations and payments, seat maps, and soon even curb-side pickups. Once they have scale and resulting data, the information can help optimise the bus network, scheduling and pricing, and offer third-parties access to this data to improve services. One of its biggest challenges is the industry’s fragmented nature. Most operators own one or two buses. To add 500 buses to their network, Busbooking. lk will require as many agreements. The absence of fleet operators – except for the state-owned SLTB – is an entry barrier to competitors.

To succeed, a network operator must be willing to roam the central bus terminals, ensuring service quality and signing up new operators, which is now Kornkaduwa’s critical responsibility. He makes sure the seats are comfortable, interiors clean, buses run on time and honour reservations. Bus crews are issued a mobile device that shows the number of reserved seats, and they fill any vacant ones with passengers turning up at the bus station. The vexing and risky part of the business is the commercial relationship with bus owners and their crews. “Bus owners have an issue with crews, who sometimes skim revenue,” he points out. Bus owners have been smartening up, installing live view cameras, to keep an eye on the number of passengers and other details.

Buses haven’t offered numbered seats in the past, and a passenger expecting a selected seat may be disappointed if the crew has allowed someone else its use.

If a bus is mostly or fully booked in advance, bus owners can be assured of receiving total earnings. On average, Busbooking.lk generates around 10 reservations for each journey and a 13% average margin on tickets for buses on its network. They are forecasting net revenue will rise to Rs90 million if they can – as planned – enlist 500 buses on the network and pre-sell an average 10 seats for each journey they make. They would have to sell 5,000 tickets daily to achieve this, up from the 300 or so they now sell.

Kornkaduwa and co-founders Udantha Pathirana and Madhura Jayantha – all Moratuwa University IT graduates – employ six others and funded the business with Rs3 million from their savings. It’s now generating Rs600,000 net revenue monthly from the Rs60 per seat reserved income. They are negotiating their first round of funding to raise Rs15 million. Kornkaduwa is now impatient for scale. Their main competitor busseat.lk, a similar reservation service, recently partneredtelco Dialog to source customers. Busbooking.lk is negotiating an arrangement with Mobitel. Kornkaduwa admits that getting a bus onboard takes around a month. Dealing with all private owners and crews is time-consuming. Several things can be achieved with scale and some flexibility from the regulator.

First, central reservations allow buses to be filled in advance, requiring them to arrive at the pickup point just before departure. Currently, buses operate under one of two systems: a timetable or a rotational system. On timetables, buses may run with some empty seats, and on a rotational system, crews and passengers must wait until the bus that has its turn next is filled.

Second, dynamic bus ticket pricing could be introduced, allowing discounts for early booking and higher rates for peak hour demand. Bus fares are regulated, so dynamic pricing will require adjustments to regulation.

Third, buses may be able to operate outside the schedules altogether, making it possible to commence and end journeys at non-conventional points, and curb-side pickups possible. Technically, Busbooking. lk’s platform-registered long distance bus owners can set their own timetables, as long as they have a permit to offer services on a route. Kornkaduwa and his team are working on educating operators and bus crews on a set of skills to make Sri Lanka’s transport system efficient.