Seattle based airfare prediction service Farecast is testing what the company calls its first retail product beyond basic price forecasts; the company is now offering to lock in ticket prices against an increase for one week for $1. When the testing period for the product, called Fare Guard, has ended the price will become $10. See details below to test out this product.
Farecast uses millions of observations of past airfare prices to predict whether a ticket price between two cities for a particular date is expected to decline or increase in price over the next seven days. If the price is expected to go up, then Farecast recommends that you buy your ticket now. If it is expected to go down, then the service recommends that you wait for a lower price. The company currently offers predictions for flights originating in 75 US cities.
The company says that it is correct in its predictions about 70 to 75% of the time. If Farecast tells you a ticket’s price is going to drop and recommends that you wait, you can pay the Fare Guard fee to lock in access to the lowest price of that day for the next week. If you have purchased Fare Guard and the price instead goes up, Farecast will send you the difference between what you ended up having to pay and the price you locked in with them. If Farecast’s prediction was correct and the price does drop, you can buy the ticket at the lower price and they make $10 from the Fare Guard service.
This is just the first of several value added products the company says it hopes to offer as revenue generation beyond lead generation and contextual advertising. To test out the Fare Guard product, follow this link and login as username “techcrunch” password “fareguardtest.” See also our previous coverage of Farecast.
Will Fare Guard be a success with consumers? It may be a little difficult to explain clearly, particularly given that it’s only one way movement that will be guarded against. If Farecast predicts that a ticket price is going to go up, so I buy at the current price, and in fact the price goes down – Fare Guard does not offer to compensate me for the money I could have saved if I had ignored Farecast’s recommendation. That, according to the company, would be yet another product and this current one needs to be tested first. The current product will probably be much easier for users to understand than it is to explain in the abstract, sometimes you’ll be offered Fair Guard protection and sometimes you won’t. It’s fascinating to see what kinds of value added “products” can be placed on top of data mining.