FLYR is a US startup whose core technology predicts airfare and seat availability.
It began life as an idea for a consumer app. But it is shifting focus to a business-to-business (B2B) play, a software-as-a-service (SaaS) application that can offer fare predictions to travel management companies, airlines, and other third-parties.
The shift in emphasis coincides with a change in management.
New CEO Jean Tripier is well known in travel startup circles.
Tripier is a Harvard Business School grad who previously replaced the founder of WorldMate, the travel-planning app, and turned it into a enterprise software leader by focusing on white label deals. He sold it to Carlson Wagonlit, the corporate travel agency.
FLYR was invented by Alex Mans, a software engineer who successfully sold his first (non-travel) startup. Mans recently moved to the CTO position.
Says Tripier:
"Alex is brilliant mind. No doubt he could be CEO if he wanted. But he’s also a really good product visionary and architect. We're both very happy with that aspect of the equation."
The startup is pivoting from Mans's concept, called Hubskip, and has rebranded.
The founders are currently raising a $500,000 angel round, as convertible debt. An earlier press report claimed the company has raised more than $300,000 angel and seed investment since 2012, which the company didn't confirm.
B2C and B2B
Mans's first idea was to create an app for Apple devices that allows users to lock in low airfares for up to 7 days, track fare changes on a route during that time, and allow no-penalty switching if a better deal materializes.
The company still plans to release the consumer app. But its new focus is on building a a SaaS platform for travel professionals.
Last month, APIs went live. The startup says it is doing one-on-one API integrations now. As Tripier describes it to Tnooz:
The FLYR API enables developers to acquire insights into: the probability of airfares going up; when flights might sell out; and the likelihood of lower airfares becoming available in the near future.
Most importantly, developers can sell an airfare protection plan (powered by FLYR) that guarantees today's airfares on user-selected flights, while FLYR notifies them of better deals and allows to switch or cancel plans without penalty.
But they may just want to use our fare predictions for their own solutions, without the guarantee product. Any business that needs to predict fare trends can improve their models with our APIs.
The startup tells Tnooz that it has 10 employees. It recently relocated its headquarters from Sunnyvale to San Francisco's Brannan St. in the SOMA neighborhood.
The startup was picked out of 260 entries in a contest run by Ice House, a mobile design and mid-development firm -- which will invest $50,000 and help develop the app.
FLYR created a Vine to capture the app's promise in six seconds:
Q&A by e-mail with Tripier:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
FLYR was started as Hubskip by Alex Mans in 2012, then a 20-year-old traveling the world after selling his (non-travel) startup. He constantly ran into trouble getting on flights and avoiding fees when his plans changed and decided there had to be a better way.
We've come up with a product that works. Though not all flights generate a refund, the average saving on long-haul flights comes in at $72.
FLYR became a San Francisco startup in late 2013, with me, a veteran of the mobile and travel industry, and Cyril Guiraud joining in as CMO.
Other companies offer "fare lock" guarantees, such as Air France and United Airlines and the startup Options Away. What makes FLYR think it can stand out in the marketplace?
The first thing to understand is that we do not offer a "fare lock" solution or anything like that. We're a technology company that has developed the industry's most accurate prediction model for airfare and seat availability, and delivering that information to companies that can leverage it.
That can be packaged in many types of different services that can be implemented by partners that use our API. The forecasting could apply to a flight that has not been booked. You could apply it to a flight that has already been booked.
We want to show people what's possible with what we do, and a consumer app will illustrate the possibility of Big Data and analytics.
Many of these other services are not protecting you on a specific flight but on a specific date. You're stuck with whatever flight they get you that date at that price. A customer wants to know exactly what flight their going on. So their model won't work.
Travel management companies could use our predictions to more astutely help corporations manage their travel budgets.
Competition?
Some airlines offer a version of fare guarantees. However, users are locked into specific airlines; there is no search for lower fares, and the price and availability of these services are directed by the airlines’ pricing strategy.
Air France, Continental (and now United), and other airlines have had "fare locks," like $10 for 24-hours, $30 for 72 hours, etc. We're doing something different -- dynamically pricing our guarantees. That's available through our API.
While a half-dozen carriers offer fare guarantees, their solutions are based on their own yield-management needs and data.
The strategic objective of these airlines is not to allow you to reserve a booking, to get you to book. It's not a good proxy for this type of solutions.
Airlines might be interested in basing their fare lock offering based not just on its own inventory but on FLYR predictions of what other airlines might be doing.
Revenue model and strategy for profitability?
FLYR will charge a small, sliding-scale fee for its consumer service. It hasn't revealed its fee structure, though it says its fee should be below $30 on average for a $400 US domestic ticket, for a 7-day protection.
Users can protect their airfare for seven days, and the plan is to make that guarantee longer in the future.
It will also charge for access to the FLYR API. A successful sale of said airfare protection plan results in a substantial affiliate commission to the developer.
Companies can contact the founders directly at [email protected] to get access. Full public access will be later this month.
Estimation of market size?
• 90,000 airline tickets sold hourly in the US
• 20% change / cancel prior to departure
• 74% of travelers would pay $30 on a $400 trip to be able to cancel without penalty
• Major applications across travel distribution channels: OTAs, TMCs, GDSs, meta-search, etc.
Are you getting solid advice from mentors?
The company was mentored at Plug and Play Startup Camp.
Advisors include Tim Collins, Google director of engineering.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We will be a large and fast growing provider of advanced reservation solutions for flights, hotels, etc.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style... and why?
We are not sure –- we haven't spent much time trying to benchmark our culture. We are a fast moving, flat and customer driven startup.
What problem does the business solve? What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
Today, booking flights is ineffective -- by industry design. Travelers are faced with major friction and stress when purchasing flights. Either we spend time on research while prices increase, or we book immediately and risk overpaying and paying change fees.
Booking flights is a hassle:
•Spend time on research = price increase
•Book immediately = overpayment and change fees
Booking flights today: On average we spend 6.5 hours over a period of 29 days thinking, researching and booking a flight for our trip. During this period, we visit more than 22 websites and see airfares rise up to 25%, with a $200 average change fee on a domestic ticket.
We need to make this product more like retail goods in the US in general: returnable.
Why should people or companies use the business?
Booking flights with FLYR:
• 2 minutes spent
• Price set on day 1 • 1 Mobile App used
• Automated deals finder
• No change or cancellation fees
Tnooz view:
FLYR has a consumer side and a B2B side.
The consumer side sounds like "Farecast": The Next Generation."
A previous fare-prediction startup, Farecast, claimed a 75% accuracy rate. It was purchased my Microsoft for about $115 million in 2008. But the product never caught on, and its "buy now or wait" signaling has disappeared from the marketplace.
A year ago, Kayak rolled out its own version of the forecasts, but they've hardly set the travel world on fire.
It's not clear if the dynamic pricing model of the consumer app will capture consumers' minds, given the lukewarm success of similar precursor products.
The company says it has an accuracy rate of 81 percent on average. But it is the qualifying phrase "on average" that is a red flag. What happens if there's a "black swan" event like a volcanic ash cloud disrupting air traffic for days? Would the consumer app be exposed to financial losses?
As for the B2B implementation, it'll be important that it pays close attention to how its customers engage with its APIs, and iterate accordingly.
Also good: the company has brought on board a lot of people with interesting backgrounds, including four data scientists and engineers, a user experience/user interaction expert, and a marketing and sales professional to work with the CMO.
That technical emphasis is in contrast to the habit of many other travel startups to heavily fill marketing positions first.
The quality of the startup's forecasting may partly depend on the quantity of its data from suppliers. It's not clear what business partnerships the app has signed, though in trials it has used data from Travelport, the GDS, and Dutch agency Airtrade. It may need more comprehensive sources.
Tripier feels confident no one can cut the company off from the data it needs because of how it structures its data analytics, but he wouldn't elaborate.
In reviewing FLYR according to the the four-quadrant business model questions from the Harvard Business School, it is noticeable that the company seems to be trying for both a B2C and a B2B strategy. Does it need to pick its battle?
Jean Tripier once said, in a different context, "I believe it is impossible to chase both models simultaneously – it’s not just a question of resource allocation, but also one of culture and team composition."
When I reminded him of that, this is how he responded:
"In the mobile travel space, many companies have successfully had both B2B and B2C models. TripIt is an example. Worldmate, too. Both have had consumer brands but also had ecosystems of third-party developers and partners leveraging their solutions.
The mixed approach can work. But at end of day, you do often have to pick your battle. If that is the case for us, our priority is the B2B -- getting the API published and widely used. That's the way for us to scale fastest."