In July, I took a look at Airfare and how to find the best price. One of the companies that I reviewed, cFares, agreed to talk to me about their most recent feature release.

The most important thing I would like to point out is that this version of the product is much more stable. To explain a little more about the update, I have Vajid Jafri, Chairman & CEO of cFares.

cFares

What facets of the airfare industry have changed that cFares is taking advantage of? How is your model different than that of your competition?

The online airfare industry is going through a sea of changes. Since the start of online travel in the mid 90s, the Online Travel Agencies (OTAs) such as Expedia and Travelocity have captured 80 percent of the market share, leaving the airlines with only 20 percent of the market share. The OTAs used to provide the consumer the capability to do both search and booking at the site, making its revenue from the bookings. The consumer, however, has been trending to buy directly from the airlines. For the first time in 2006, more consumers (56%) purchased directly from the airline sites than through the OTAs. The consumer still goes to the OTA to conduct a search but is now starting to book at the airline site, creating a revenue gap for the OTAs. While the consumer and the airline have moved on to do business directly, the OTAs are still trying to hang on to their outdated business model. With that in mind, the next generation of travel companies will be built around search, which the consumer wants, and booking will be directly via the airlines’ sites, which both the consumer and the airlines want. cFares is enabling this transformation by having built a travel search platform from the ground up that addresses this new reality.

Additionally, for the first time, cFares is bringing more than $20 billion worth of wholesale fares (20% of the US market) that have so far been offline, online for the consumers. These fares can deliver savings of 20 percent to 50 percent versus retail fares. The cFares patented technology platform also allows airlines to gain visibility and change prices at the Point of Sale based on then current market information provided by cFares, to beat the market and gain a sale they would have otherwise lost. This is the first time airlines have been provided with dynamic information. The consumer benefits from the new below market price created at the Point of Sale just for that consumer.

New Features

Explain some of the new features that we can expect from this new release. What type of feedback have you received that spurred these changes?

A recent Jupiter Research study showed that 86 percent of consumers purchase travel on the Internet based on price, followed by schedule. In our new release, we have a graph that addresses these two main drivers of a consumer’s purchasing decision. When a consumer does a search at our site, we collect information from the OTAs, airline sites and the wholesale market, as well as the fares that get created at the Point of Sale. Optional airfares are then displayed on our enhanced user interface that presents travelers with a visual dashboard that charts the tradeoffs a traveler can make between departure time and prices among similar flights. This first-of-a kind transparency into how airfares vary by departure time dramatically improves travelers’ ability to optimize their airline ticket purchases.

Although cFares delivers the lowest fares in the market at the time of search, there are times when the lowest fare may still be high for an individual’s budget. When that happens, a consumer can request cFares to continue searching the market for up to one week for a particular fare. The cFares search engine will keep tracking the changes in the entire market, and if that fare ever becomes available anywhere in the market, cFares will reserve that fare and hold it for the consumer for 24 hours. The consumer will have full visibility into the name of the airline, departure/arrival times, connections, etc. before making a purchase decision. If the consumer decides not to move forward and purchase that airfare, there is no charge for the hold. Think of this like Priceline.com, but we eliminate the hassle and inconvenience of the blind buy. Any cFares member can initiate a search, but you must be a Platinum member, which costs only $50 a year, to purchase these types of airfares.

Membership

What made you choose a Membership model for this site? This truly separates you from other travel brokers like Expedia and Travelocity. Explain what went into this decision.

cFares unlocks new value in the marketplace by bringing wholesale fares online for the first time. Additionally, our patented technology enables carriers to dynamically price fares at the Point of Sale, which are discounted more than any other fares available anywhere on the Internet, sometimes by tens or even hundreds of dollars. Therefore, we decided to go the way of the Costco model; we have a free Gold membership and a Platinum membership where we charge a nominal fee – only $50 annually — and pass the savings to the consumer. The annual membership fee is typically negated after only one or two ticket purchases because the savings are so deep. Anyone can come to our site though, and initiate a search — you don’t have to be a member. We will show you results from all across the Internet travel sites (airlines and OTAs) which will show up in the Gold section and are available to be purchased.

Traditionally, OTAs and the GDSes (Sabre, Galileo, Amadeus, i.e.) charge the airlines fees to distribute tickets for their air routes, which costs up to $10 billion per year for the airlines. cFares is turning the industry on its head and is in a unique position to pay the airlines to gain access to their deepest discounted airfares. cFares unlocks new value in the marketplace with its unique membership model, and is able to provide consumers with the deepest savings available on airfares that cannot be found anywhere else on the Internet.

The Burning Question

I try to ask all of the entrepreneurs that I interview this. As entrepreneurs, do you have any advice for people who have an idea but just don’t know where to start or how to get it off the ground?

If you truly believe your idea fills a need, then start with identifying how many people would use it. Make sure that someone else hasn’t already built it. Then build a prototype and test it with a small group of people to make sure the potential users will like it. Put together a brief business plan and build a financial model of how you are going to sell it and make profits. Get together a top notch team, even if you don’t hire them until after you have funding. Put together a pitch and start calling the investors. All these steps are there to test your mettle, and if you truly believe in your mission you will overcome adversity. You will never give up, you burnt you boats and there is no going back, “Failure is not an Option” are your mottos. If you stick with that, then victory will be yours.

Web 2.0 Roundup

If you haven’t taken a look at cFares recently, I suggest doing so. If there is one critique that I would still make it is that of all of the airfare aggregators, cFares still has problems with search speed. This notwithstanding, it’s an extremely good alternative to Expedia and Travelocity.