Seatfrog, an Australian startup which has developed an app-based platform for airlines to run live upgrade auctions for passengers with existing tickets, has signed a deal with UK rail operator Virgin Trains.
Last year HOWZAT Partners, the investment firm co-founded in 2006 by Cheapflights alumni David Soskin and Hugo Burge, invested AUS$1.2 million ($860,000) in Seatfrog. It is also part of the Amadeus Next network.
The statement says the ability to bid for an upgrade on a train ticket is "a world-first for rail passengers".
Operational connection
Iain Griffin, CEO and founder of Seatfrog, told tnooz that the integration behind the scenes with Virgin was "a lot more complicated than us just connecting to an API." Seatfrog accesses inventory from Virgin Trains' own booking and reservation systems and pulls it into its own proprietary platform from where the auction is handled and winning bids fulfilled.
But as well as connecting with the reservation system, Seatfrog also needs be in synch with operational systems as well. Anyone winning an auction is sent a bar-code confirmation once payment - which Seatfrog handles using Braintree - has been accepted. This bar-code needs to be read by the on-board ticket inspectors' scanning machines.
"Disruption management" is another part of the Seatfrog offer, with Griffin saying that there are processes in place which automate its communication with winning and potential bidders if there are any changes to the service on which they have bid for an upgrade.
"We spent a few weeks of discovery specifically with the operations team to understand any potential impact on services, what happens when there is cancellations or delays".
Seatfrog clients get access a customised dashboard which can be used, among other things, to manage the flow of inventory from its reservation system to the Seatfrog app by setting up business rules.
"In the case of Virgin Trains, it knows that certain services get a lot of walk-on passengers who buy a first-class ticket for immediate departure, so it can keep those seats available to sell at the station rather than allow us to offer them in the auction. On other routes with a different customer profile it can make more upgrades available through Seatfrog."
Seatfrog's platform has machine-learning capabilities and is designed to optimise revenues by looking at timings of offers or the reserve price. As well as an auction process, there is also an "Upgrade Now" option for passengers wanting the certainty of getting a better seat.
Integration
Griffin said that the integration with Virgin Trains took around seven weeks and that, because most of the heavy lifting is carried out on the Seatfrog platform, getting clients live is "a relatively light process, for them."
Virgin Trains is a "partnership" between Virgin Rail Group, part of Sir Richard Branson's Virgin Group, and international transport operator Stagecoach Group. It operates the UK's east coast and west coast routes. Currently the upgrade auction offer is only available on certain departures and itineraries. It is also only available to passengers who have booked direct with Virgin Trains.
As things stand, the Virgin Train auctions take place on the Seatfrog platform. Griffin said that Seatfrog is working on an API of its own so that its entire functionality can be integrated into the Virgin Trains app.
The move into rail is part of Seatfrog's bigger picture aim "to take the friction out of changing a trip." Griffin explained that "our core auction upgrade platform for air remains the focus, but longer term we are looking at everything that happens when any travel booking changes. Seat upgrades leads us into other areas."
Having said that, the scale of the opportunity in rail is greater than air. "It is estimated that 37 million premium seats are unsold every year by the world's top 30 airlines. The numbers for rail, within Europe, are twelve times that," he said.