Air Canada and WestJet irked over Hopper's Secret Fares

UPDATE 5/4/2018

The Canadian Financial Post is reporting that Air Canada and WestJet have severed ties with Hopper due to confusion over the company’s suggestion that the two airlines are giving it access to “secret fares” not available elsewhere. 

An Air Canada spokesperson told the media outlet the airline had given Hopper access to a low fare on one route between the United States and Asia as part of a trial of the program.

In an email, a Hopper representative responded: “We value our relationships with both Air Canada and WestJet, and sincerely apologize for any confusion caused by the way we marketed this initiative.

"To mitigate the confusion, we are not marketing Air Canada and WestJet as part of our Secret Fares program. We would like to clarify that Secret Fares is a Hopper-specific marketing strategy and not a unique class of airfare.

"Airlines offer distinct fares to specific types of agencies, in our case online travel agencies, and they are marketed under a range of different brand names."

Original Story

Since its long-awaited launch in 2015, Hopper has established a unique - and, it appears, lucrative - platform to sell flights.

The mobile-only system predicts future fares by analyzing more than 10 billion prices per day in combination with its archive of historic prices, then it alerts users via push notifications whether to “buy now” or “wait for a better price” on their desired routes.

Hopper says it is currently selling about $1.5 million worth of flights every day through its app, making it the largest mobile-only online travel agency for airfares.

And now it’s lining up airlines that want to use a direct, private communication channel to offer exclusive discounted fares to travelers.

Here’s the crucial bit in Hopper’s latest development: It claims the fares will not be available on any other online travel agency or even on the airlines’ own websites. 

Introducing Secret Fares

The new “Secret Fares” launch today with six airlines covering more than 60,000 international routes originating in North America and fares that are 5 to 35% lower than published prices. Launch partners are Air Canada, LATAM Airlines, Turkish Airlines, WestJet, Copa Airlines and Air China.

Hopper head of growth and business Dakota Smith says it will add at least seven more carriers in the next six weeks, and coverage will expand to flights originating internationally.

“Hopper is using its mobile-only status and the unique way we sell things to be able to get prices that are better than Expedia and Priceline and Google Flights can have,” Smith says.

“We are actually like a closed user group. Airlines can load these special rates into Hopper that are distributed to Hopper users via push notifications in a way that doesn’t spark a broader competitive reaction and war and price reductions across the web and in a way that is actually private and cannot be leaked, forward-distributed or scraped by their competitors.”

Smith says some of the airlines are filing fares directly to Hopper’s pseudo city code through a global distribution system, while for others, Hopper is connecting directly to their systems to get fares outside the GDS.

The Hopper difference

Unlike other models for deeply discounted fares - such as Priceline’s former “Name Your Own Price” tool or flights bundled with lodging - Hopper’s Secret Fares will show users the price, airline, departure and arrival times and flight number before they book.

Hopper is using its mobile-only status to get prices that are better than Expedia and Priceline and Google Flights can have.

Dakota Smith - Hopper

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Canada-based Hopper, which has raised $83.4 million in funding from four rounds since 2007, tested the service on 5,000 routes for about a month beginning January 29 and says one of the carriers increased its booking share on routes from the United States to Asia-Pacific destinations from 4% to more than 30%.

“This is a way for full-service carriers - like the Air Canadas… the ones with the big networks and the good brand recognition - to avoid competing publicly on price with low-cost carriers and to win some of that share back from the Spirits and low-cost carriers of the world,” Smith says.

Another aspect of Hopper that’s attractive to the airlines: Users typically begin “watching” fares about four months in advance so the carriers can reach an audience that has already signaled their intent to travel and secure those bookings earlier than usual.

The Secret Fares are discounted from the published price and will fluctuate as that published price moves.

Hopper’s revenue model for Secret Fares is the same as other flights it sells, which it says is a mix of incentives from the airlines per segment and a per-ticket commission. But Smith says Hopper is not making more money from these than a regular ticket, so all savings are passed on to the consumer.