Travel search engines, which allow you to book directly with suppliers, have the potential to completely disrupt the status-quo. Here's a look at two new highly disruptive services that offer great advice for travelers.
According to Wikipedia (with a small edit by me), "a market is transparent if much is known by many about: 1) what products and services are available, 2) the price of those products and services, and 3) where those products and services are available. A high degree of transparency can result in disintermediation due to the buyer's increased knowledge of supply pricing." As an economics student in college in the mid-late 90s, the theory of transparency was extremely exciting to me because the internet promised to open everything up, empowering the consumer to make informed decisions.
I'd argue that this vision for the consumer facing internet didn't exactly pan out as planned. And while the travel industry is a lot less opaque than it once was, we're no where near transparency. This is exactly why I'm so bullish on new ideas in online travel booking. At this point, high booking fees are already a thing of the past for many consumers who use the travel search engines (SideStep, Kayak, Mobissimo, FareChase, etc).
Just as meteorologists try to predict the weather, several PhDs at Farecast are attempting to predict airline prices. Farecast looks at pricing, scheduling, and availability (ok it's actually 115 indicators, but who's counting) to give travelers an idea of when to book to get the best price. For each flight search, Farecast displays whether it believes prices will rise or fall over the next 7 days, how much of a rise or fall in prices is expected, and a confidence level associated with the prediction. Helping to answer the question, should I buy now or wait? Next to this indicator is a fare history chart so consumers can see fluctuations in the lowest price for their search over the last 45-90 days and the average lowest price of a ticket over that period. Farecast has made over 90 billion airfare observations to build relevant (based on real pricing and availability) fare predictions and fare histories. [While this 90 billion number might be hard to get your mind around, the point is that the more data Farecast looks at, the better the company will be at predicting prices.”
Farecast has developed the latest travel search engine (similar to Kayak, Mobissimo, Sidestep and Farechase). With each search, all flight options are displayed on the search results page with links to book direct at airline websites as well as Orbitz. [This direct booking option is one point that sets travel search engines apart from online travel agents.” The display and filtering technology is exactly what you'd expect to see from a 'new' travel search engine as the company employs AJAX and Flash for a Web 2.0-esque experience. Farecast has also created a 'grid display' which shows pricing by time of flight.
Another great feature is the 'Flexible Search' path (it's an alternative choice to 'Quick Search' on the homepage) which is perfect for travelers with more flexible schedules as it allows the user to compare the lowest prices for flights over a 30 day period. You can choose a particular destination or leave it up to Farecast (this is very similar to Kayak's Buzz feature) and just refine by trip length and time of departure/return. Additionally, in the 'graph view', you can quickly compare prices for up to 5 destinations. Finally, there's a 'heat grid' which lets travelers view yesterday's lowest prices by departure date and length of travel, providing further information to figure out the best price and dates for a trip.
Farecast launches today in limited beta, serving only search results departing from Boston and Seattle to all major destinations. Farecast will offer predictions for additional markets throughout the year and plans to have nationwide coverage by year end.
As opposed to the normal schedule driven approach, FareCompare is all about analyzing travel from a price driven perspective, allowing the flexible leisure traveler to get a better sense of when to book. FareCompare is not trying to predict prices like Farecast, but rather empowering the consumer to make a more informed buying decision. As the company's white paper on the topic explains, "Most consumers would not go shopping for a car without pulling up Kelley, Edmunds or a few newspapers to get an idea of what price point to expect. The average travel consumer has a sense for what they can afford based on their budget, but most don't have enough experience to have a good "feel" for what is a "good" price for travel between 2 cities."
While not as polished looking as Farecast, FareCompare provides a ton of flight pricing data which made me feel smarter. As international travel prices are based on seasonality, it's especially welcoming to be shown which month and even which week within a month would have the best pricing for a trip to Manila, for instance. FareCompare is making the move to a more consumer friendly model. It's important to note that at this point pricing on the site will not necessarily be available when you click through to book as the site is not looking at seat availability, just recently published pricing data.
FareCompare currently has partnerships with MileMaven and Yaeger Airport (Charleston, WV) to display its flight pricing information. The site has also developed a number of widgets (Google Desktop Plug-in, Yahoo Widgets, FireFox Extensions, and Apple Widgets) resulting in over 200,000 downloads. Expect many more announcements out of FareCompare as the company makes a big push towards the consumer market.
I really enjoyed talking to both Farecast and FareCompare because they have big ideas about how online travel search should be conducted. The reality, though, is that with Farecast only providing data for Boston and Seattle to select cities, FareCompare not looking at seat availability, and neither company looking at prices for Southwest or Jetblue, both companies miss out on Wikipedia's first requirement of transparency.
So why should you care? Consumers search Expedia then go directly to American Airlines to book. They passionately proselytize the benefits of Mobissimo, but still look at Southwest.com just to make sure they can't get a better deal. They love the Web 2.0 style of Kayak or the SideStep sidebar comparison tool, but still don't really understand the difference between the travel search engines and OTAs. At the same time, they hear wacky stories about an airline in Europe promising to make flights free by charging for ancillary services like in-flight gambling.
It's a clichC), but this chaos in the travel industry creates an amazing opportunity. As Hugh Crean, CEO of Farecast explained, "there's innovation around the theme of demystifying complex transactions. The closer you can get to the best data, the better off you are making a decision." If Farecast brings us a couple steps closer to clairvoyance in the complex travel market, the company could force airlines to adopt simpler pricing models (although that might essentially put Farecast out of business).
The difficulty is going to be in rising above the noise. Orbitz is on every radio station talking about their TLC campaign, Travelocity has filled our dreams (nightmares?) with traveling gnomes, and Kayak is scheduled to launch a TV advertising campaign run by the former branding guru of Vonage. At the same time, SideStep and the rest of the travel search engines are barely a thorn in the side of Expedia.
Predictive technology sounds like a great user benefit and big words like transparency and empowerment are potentially potent themes, but for a start up like Farecast, it still comes down to PR, partnerships, and marketing. I'm sure there are plenty of agency sales representatives reading this article who have already picked up their phones.
NOTE: Article links often change. In case of a bad link, use the publication's search facility, which most have, and search for the headline.
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