Purchasing an airline ticket can be a confusing task. Prices tend to fluctuate wildly and donâ€™t necessarily seem to follow a pattern. Farecast is a new online application that uses historical data and real-time price monitoring to try to change that. John Battelle over at Searchblog was given a tour of Farecast, and suggests it may cause the kind of power shift that early car buying websites did by forcing companies to compete with each other.
I remember when the web was young and the first car buying sites were up and running. Dealers scrambled for that early business, and I bought two cars off the web by forcing dealers in the Bay Area to compete for my business. It really felt like the web was going to change the dynamic of who was in charge in a car buying transaction – because I could force dealers to their best price, I was always going to get the best price. It felt like this would be the model in most large transactions, like travel, loans, etc. Price would stabilize, and folks would differentiate on service, relationship, and approach.
But something funny happened on our way to internet mediated bliss: the big companies figured out how to game our demand. Dealers realized they can make more profit if they cooperate and withhold pricing information from the aggregators, and the aggregators got into bed with the supply side of the equation (if you think AutoByTel or Expedia is on your side, you’re kidding yourself). Nowhere is this more true that in how an airline prices its tickets.