One of the biggest problems in the tourism industry is the soaring airfares. In recent years, more and more low cost airlines that fly passengers from one country to another at discounted rates with no extra costs, such as meals that no one likes anyway, have emerged, but the high cost of air travel still continues to rise.
The problem doesn’t end with the high prices – the broad range of prices offered by the airlines to travel agents and online travel websites is another major concern. You can buy a ticket for one price, and two hours later, someone else might buy the same ticket for $100 less. It sounds unreasonable, but you only need strike up conversation with the person sitting next to you on your next flight to discover the bitter truth.
Israeli start-up FairFly (website is currently Hebrew only) aims to dive into the murky waters of airfare pricing.
Three young entrepreneurs, all graduates of the successful Zell Entrepreneurship Program at the Interdisciplinary Center (IDC) Herzliya, teamed up with Waze co-founder and serial investor Uri Levine to develop a service to make it possible for anyone who buys an airline ticket to receive a notification if the price drops before he or she boards the plane.
How does it work? FairFly co-founder and CEO Aviel Siman-Tov explains that one must first download the app, which is available for iOS and Android phones, and buy a ticket online through one of the many existing platforms that buyers are already accustomed to using. Next, the user must forward the e-ticket he or she receives to [email protected]
From this point and on until flight time, the company’s service kicks into real time action. The service monitors the Internet and international airfare databases, and searches for a cheaper fare, factoring in the ticket’s cancellation fee. The system then alerts the user if it finds an option that costs at least 5% less than the original ticket, after fees, or saves $50 (the higher of the two).
The company emphasizes that the cancellation of the original ticket will take place only after the cheaper fare has been purchased, except in cases where the ticket was purchased through a travel agency. The company further states that refund for the original ticket will be issued within a few weeks to the user’s account, in accordance with the policies of the company through which the ticket was purchased.
FairFly co-founder and CMO Gili Lichtman explains that the cancellation of the old ticket and the purchase of the new, cheaper one may be carried out through the FairFly system, or independently. Siman-Tov says that the notifications sent to users based not only on price, and include other, better deals such as shorter flight times, more convenient flight times, similar-quality airlines, and more attractive airports. “We offer users five more attractive ticket options, ” explains Siman-Tov.
Uri Levine’s idea
Lichtman and Siman-Tov, who co-founded the company along with CTO Ami Goldenberg, explained that the service is currently free, but that in the future, company plans to take a percentage of the user’s savings. The company also plans to extend the service to hotel bookings and vacation car rentals.
The company, founded in 2013, has raised hundreds of thousands of dollars to date from Uri Levine, who also serves as chairman of the board, and who brought the idea to the group. “Uri was our mentor at the Zell program at IDC, and after 6 or 7 meetings, he told us that our idea was not good enough, and that we should look for something else, something that will change the world, ” recalls Siman-Tov.
“A few hours later, he called and said that he booked a hotel room in Orlando for $120 a night, and he later saw that he could have booked the room for a whole week for the same price. So he cancelled the first reservation, and re-booked. Because of this side-story, the company was founded to find better deals for users on airfares, hotels, and rental-car bookings.”
Savings also in Business Class
In order to study the matter in-depth, the three young founders conducted some market research, and tracked the fares of 34 indirect business class flights from Tel Aviv to San Francisco. Fares went down for 19 of the 34 flights in the sample group. But they didn’t just go down; over the course of a few hours, the price dropped by $1, 000. Based on the data they gathered, the founders claim that they can save a business class traveler $822, and an economy class traveler $180. Although it does require a fair bit of effort to cancel and re-order a ticket – a service that the company also offers to carry out itself – it is still a lot of money to leave lying on the ground.
Alongside its advantages, the company still has a few drawbacks. For example, FairFly’s service is nearly useless when it comes to flights on low-cost airlines due to the fact that it’s nearly impossible to cancel a ticket on these airlines. Moreover, the service does not work on hotel+flight vacation packages.
Another issue, which is particularly problematic for frequent fliers, is that that the recommendations for cheaper tickets do not take into account the frequent flier points that each user has. These points, on various airlines, can earn discounts or even free tickets for those who accrue enough of them. The company said that these features are in development and will be added to the system in future versions.
FairFly’s website is currently only in Hebrew, and the product is currently available only for flights originating in Israel. The app itself, however, has an English-language interface.
Published by Globes [online], Israel business news – www.globes-online.com