let me preface this conversation by saying: i assume the airlines are on to us. they know when we plan vacations (how far in advance). they also know they need to fill seats up, or they risk losing money with every flight.

with these 2 inputs of data, i hypothesize that they seek to maximize profit by making tickets the most expensive at the time people wish to book their trip. let the early birds pay a “normal” fare and enjoy the widest selection, let the late-comers possibly eek out a bargain, or get fleeced, depending upon scarcity.

farecast.com apparently aims to give the consumer the power to harness trending in airline fares and choose to make their purchase at the most favorable time. farecast’s CEO blogs that their accuracy is between 70-75%.

read on for my first experiences using farecast, as well as my take on their objectivity and purpose.

first, i must say that i’m a data geek. i love trending. the best part about it, i find, is that it helps me to turn an arbitrary decision into a calculated one. even if i get burned after a calculated decision, i feel better having tried to do the smartest thing.

my first impression of farecast is quite positive: i like to see “buy now” or “wait,” and how sure they are of this prediction (if only meteorologists gave you a % of confidence in their forecasts!). i’d been watching a particular trip on their website for a while before i realized i could add it to my RSS reader, so for the past 10 days or so, i’ve been watching it there:

for the most part, they were right on the money. i even found that when i looked up airlines that are not included in their index, the trends were pretty much the same.

while monitoring a different fare (same destinations, different dates) i saw prices suddenly and inexplicably drop by about $100. i bought them. they immediately went back up to almost as expensive as previous.

did farecast predict this large a drop? technically yes. they predicted a drop, of $30 or more. so there we go.

is it a total victory? do i intend to trust all my purchasing decisions to them in the future? of course not.

i have a comfortable window inside of which i buy airline tickets. with useful tools, like farecast, i have now expanded that window. but i do not trust them implicitly. here’s why:

they’re still trying to make money. not the least noble of goals, but one has to figure that they will not carry this idea to its fullest logical extent, for fear of hurting the very business that provides them their lifeblood.

to use this tool most effectively, one would expand the scope and allow you retrieve a prediction based upon historical trends and analysis, e.g. instead of “prediction? wait.” one might get “the best time to buy this fare is two weeks from now.”

why should they not do this? widespread use of such a tool could drastically hurt airlines. the ability to predict sales and loading, and more importantly – the ability to generate marginal profit (that above and beyond operating expense and nominal margin) would be greatly compromised.

so, they’re still a business, and still must maintain a faustian bargain with the airlines. but they do provide a valuable tool that can help you save money, if you’re willing to trust them to your comfort level.

bottom line: i feel i saved money due to my usage of farecast.com to monitor airline fares.

Posted on April 30th, 2007 by mike
Filed under: travel, web