Apparently Fares Fluctuate 400%

Seems that Yapta is actively trying to promote their pre-buy shopping tools over post-buy change alerts:

"The average airline ticket price fluctuates 400%. All those tricky price changes mean people like to shop around before they purchase airfare. That’s why the latest version of Yapta includes a comparison shopping notepad, right in a sidebar window of your Internet browser. "

Seems like a good call, given trends toward less generous carrier reprice policies. And the Yapta tool in your browser seems kind of neat. However, we question whether a downloaded app model will ever prevail over pure web services such as Kayak. Are consumers comfortable with another monitor on their PC in this era of pop-up blockers and virus threats? We know that even SideStep eventually had to go to the web-site play even though they were really sucessful with the download app.

More importantly, what's up with that 400% stat? What is the source? What does it mean? That average fares start at say $150 and end as high as $750? Fares don't even really change much, do they-availability changes? So many questions for such a petty point. But if consumers take the bait - more power to Yapta.

Put it on Credit -

A few months ago – we profiled a new company called Yapta.com, that tracks specific flights, and alerts a user if their flight(s) have dropped in price. The beauty of this service was that you can actually get money back if you’ve already purchased your trip. Some airlines would issue a credit voucher for the entire price drop difference, or charge you a $100 fee if you wanted cash back instead. However, according to a Wall Street Journal article (subscription may be necessary) - it looks like some airlines are switching practices and treating credit the same as cash:


"[I]n mid-July, US Airways quietly changed its policy on vouchers for price changes after you purchase tickets. The carrier now charges a $100 change fee regardless of whether you want cash or a voucher… American, Delta and Continental airlines also charge change fees in these cases; Alaska, JetBlue, Southwest and United airlines all offer vouchers for the full price difference…


Yapta says even as airlines tighten up rules on refunds when they cut prices, its service is still useful in tracking price changes before you buy tickets. Yapta President Tom Romary says 78% of all itineraries tracked by Yapta are pre-purchase -- people get alerts from Yapta when prices change so they can make better buying decisions."


A few points on all of this:

1) This doesn’t seem the optimal result for the airlines. By charging a $100 fee no matter what – they are effectively forcing people to ask for their money back, rather than settle for credit (why would you choose credit over cash??). As a result, they lose some stickiness on getting people to fly their airline again, and they will lose the breakage potential on these credits. Seems like there is a definite advantage for the airlines that they are forgoing here.

2) We note that United is currently an airline that allows the full difference back through a credit voucher. FMV predicts that this will change before the turn of the year. United’s corporate theme song is U2’s “I Will Follow” – and if the major carriers are starting to lean one way – we think they will eventually follow.

3) No matter what they say – we think this really reduces the value proposition for Yapta. 78% of all itineraries are pre-purchase?? Wow. It then becomes a bit mixed with Orbitz’s Deal Detector, SideSteps’ FareTracker and others - and probably underperforms without a related travel product (i.e. actually allowing you to shop for and/or book flights).

4) FMV is waiting for Expedia's Fare Alert and Travelocity's FareWatcher Plus to step it and get a better set of names! (FYI - Fare Market Value can be bought.....)

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.