Start-ups to predict fare trends

Two travel search start-ups have aimed their algorithms at an elusive target, air fare trends, betting they can engender loyalty by informing customers about the ups and downs of airline ticket pricing.

Seattle-based Farecast this month launched a beta travel search site that predicts how much, on average, the lowest air fares on selected city pairs will rise or fall over the following week. The beta starts with Seattle and Boston as origination cities on 120 routes, with the rest of the country being rolled out in stages, said president and chief executive Hugh Crean.

A flight search from Boston to Chicago (Midway), departing June 9 and returning June 15, retrieved fares from AirTran, Northwest, United and Orbitz (for multiple carriers), among others, and predicted with 80% confidence that the lowest fares will rise $50 or more on average in the next seven days.

Changing the dates to July 21 and July 28 produced a Farecast prediction that the lowest fares would drop $20 on average over the next week. And for each search, Farecast presents a fare history, showing a graph of available fares over the previous month or two.

Based on its prediction of whether fares will rise, fall or remain steady over the next seven days, Farecast advises consumers whether they should purchase the ticket now or wait.

Farecast said it uses data-mining techniques and predictive technology for the basis of the forecasts and that it stores “more than 50 billion historical air fare observations”.

Crean said Farecast would make its money through advertising revenue, with ads surrounding the unbiased fare displays, and through referral revenue from airlines when consumers click to the airlines’ websites.

American Airlines spokesman Billy Sanez said the airline is headed toward an agreement with Farecast, arguing that tools that empower consumers is a good thing for the carrier.

Meanwhile, another travel search company, FareCompare, based in Dallas, introduced a suite of tools called FareTrend, enabling consumers to compare prices for various travel dates over the next year.

FareCompare doesn’t predict how pricing will change over the next week or month, but presents historical pricing on given city pairs and shows how ticket prices vary based on travel dates over the next year.

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