Have you ever tried to book a flight online only to find that the ticket prices were simply not within your price range? While finding the right ticket at the right price is often difficult, it is certainly not impossible. The truth of the matter is; it is only difficult to find such flight tickets because you (the consumer) are expending your vastly limited resources against the airline industry’s sophisticated dynamic price models. And while some really savvy consumers only require an hour or two to find a reasonable flight ticket, their time may still go to waste if searches are made at the wrong time. This is because flight prices have been known to change as many as seven times in a single day [1]. For example, the price fluctuation for United Airline roundtrip flight #169:169, from LAX-BOS departing in 2002, oscillated between $500 to $2350. One important question that frequently arises is, with this many changes in a single day how does anyone know when and where to search for reasonable airline tickets in their specific price range?
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Resolving this problem requires looking no further than the stock market and borrowing a concept that we can apply towards the dynamic pricing of flights. Think of stock brokers and how they have to keep track of stock prices of numerous companies in a single day, how do they purchase shares of companies of their interest at their specified prices? When asked, any broker with a dimple of experience will blurt out, “set limit buys”. So if “limit buy” can be employed to buy stocks at specified prices why then is there not a flight app that operates around such a feature? The simple explanation is that before this moment in time, no one saw the convenience of merging this “limit buy” concept into the purchase of airline tickets. But all this is changing because a new company called Flite is currently working on a prototype that they are planning to release by the end of November.
These guys are aiming to equip flight consumers with their platform. The flite app will allow users to be able to track and set price range for flight tickets from all the major airlines. A push notification to purchase flight ticket will be sent out once a user’s price range has been found. There is also a feature that will enable automatic flight purchase once tickets in user’s price range are matched. In a sense, Flite is relegating your valuable time and effort to their app, enabling you (the consumer) to go about your daily business while the app searches for an airline ticket within your price range. Their moto is simple, why waste time searching for flight deals when it can come to you? The convenience along with the utility of this app cannot be overstated since the airline industry has grown at an average of 5% for the past 30 years [2]. The flite team is solving a very relevant problem –– a problem that has existed since the establishment of commercial airlines.
Globally there are about 2000 airlines operating more than 23,000 aircrafts, and provides services to over 3700 airports. Airline growth is expected to double over the next 10 to 15 years [2]. The revenue of commercial airlines worldwide from 2004 to 2016 is shown below.
2009 marked the beginning of what people refer to as the golden age of commercial aviation with the worldwide revenue seeing a compound growth at the rate of 9.5% and reaching a maximum of 751 billion in 2014 [3]. The consistent growth in those years were driven by a world that is becoming increasingly more affluent and interconnected. This interconnection has made flight ubiquitous. And this ubiquity of flights makes this specific moment the most ideal time for the release of such an app.
Flite will initially focus on economy class since this class is typically comprised of a majority of the airline seats as shown below. They plan to add the remaining classes in their subsequent releases.
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In the long run, Flite intends to earn the trust of consumers by providing a simple interface, a receipt of guaranteed ticket delivery once a match is found and automatically purchased, and most importantly, through the lifeblood of good customer service. Their goal is to save consumers time and money by providing a platform that enables them to combat fluctuating airfare prices.
You can follow the progress of this project on http://www.theflite.io/
[1] O. Etzioni, et al. To Buy or Not to Buy: Mining Airfare Data to Minimize Ticket Purchase Price. August 24-27, 2003. Washington, DC, USA [Online] Available: https://pdfs.semanticscholar.org/b43e/0bb7e5393502fc599ecb22aa055839a0 3d4a.pdf Accessed: September 10, 2017
[2] Airline Industry Overview, [Online] Available:
http://www.columbia.edu/cu/consultingclub/Resources/Airlines_Eric_Henckel s.pdf Accessed: September 10, 2017
[3] Revenue of commercial airline from 2003 to 2017. [Online] Available:
https://www.statista.com/statistics/278372/revenue-of-commercial-airlines-w orldwide/ Accessed: July 16, 2017