Price war cuts Ctrip.com's income by 39%

Smaller agencies had to join the price war to keep their market position and increase market share. Agencies say the war will continue this year.

Ctrip.com will offer air ticket rebates to customers after Spring Festival, as a coupon promotion it launched mainly applied to its hotel reservation business in 2012, said Sun Jie, its chief operations officer.

Cui Guangfu, CEO of eLong Inc, an online travel service provider, said the price war will not stop until the market achieves new balance.

Wang Tingting, an analyst from iResearch Consulting Group, an organization focusing on research in China's Internet industry, said: "According to the agencies' cash flow, the price war is still under control."

Wang said agencies are also trying to increase market share through investing in coupons and rebates, as the online travel market in China is still very robust.

The market is seeing annual growth of 30 percent on average, according to iResearch.

Ctrip.com is also concentrating its resources on its online business, laying off some employees in its off-line sales department since the end of 2012.

"Ctrip.com was optimizing the off-line sales channels and made proper arrangements for the employees involved," the company said in a statement on the redundancies.

It did not say how many employees were laid off, but reports said 500 employees were involved.

Wang added: "Online sales are obviously much more efficient than those off-line, as human resource costs are rising."

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