Yapping About Airline Tickets

Every once in a while, FMV comes across an idea that really makies us consider what it may do to an industry. While reading The Next Net – we may have found such a site. Yapta (still in beta) will actually track your PURCHASED ticket, and let you know if the price went down.

Why do would you care?

There is a little-known rule in the airline industry called the "guaranteed airfare rule." If you buy a ticket directly from an airline and the price of that ticket later drops, you are eligible for a refund [(minus $100)] or a credit voucher [for the full difference].

Think about that. Yes, you would rather buy at the cheapest price possible, but we can’t always time that very well. But this service could be the next best thing – you just get the money back after-the-fact. Granted, it’s in credit rather than cash (we believe that 95% of people would rather accept a credit for the full amount rather than a refund minus $100), but for anyone that travels fairly frequently, that’s still money in the bank.

Implications and reactions? FMV can think of a few:

1) There will be an interesting psychological battle to be played out with FareCast – because these two companies will be on opposite ends of the spectrum. Farecast tries to tell you if you are getting a good deal, and will protect you if you buy their Fare Guard product in case fares rise later. Yapta will track your ticket prices and get that money back for you (for a fee?) if it goes down. Which would a buyer prefer?

2) The obvious skeptics reaction is “airlines will just change their policy and not allow this”. Really? FMV doubts it. We think some carriers will embrace it, use it as great PR, and potentially even attempt their own automation to save call center expenses. Others may be unhappy, cry a bit, but will simply deal with it in the end. To wholly change their policy seems unlikely, though a restriction tweak or two won't surprise (e.g. voucher restrictions).

3) As a side note, FMV wonders what the breakage is for these types of credits. If general retail stores experience a default rate of almost 20% - we bet the numbers are higher for these credits.

4) Others will also say “people will just do this themselves and won’t pay for a service like Yapta to do it for them”. That’s probably true to a large degree. But FMV also can’t figure out why people would pay an additional $5-$6 to buy their air ticket through a online travel agent rather than directly through an airline website...

5) Yapta will be in a unique advertising position because they will know where you are going and the exact dates you will be there! That has amazing potential. Hotels are cars could check out their inventory with specificity and offer better deals and sales. Same for other attractions, events and restaurants.

"We recognize we are throwing a hand grenade into a big industry."

Tom Romary, the CEO, has got that right. First, people will freak out and scoff at this idea. Second, copycats will emerge to provide the same service (think gnome and Galileo-ports). After THAT, it will all come down to execution, marketing, and partnerships.

Regardless of which provider wins the endgame, money back for traveling is a great thing.