Hello from bizjournals.com! David Mueller (dmueller7@lycos.com) thought you might like the following article from the Atlanta Business Chronicle: http://www.bizjournals.com/industries/travel/airlines_airports/2003/02/17/atlanta_story8.html Worldspan bringing 'transparency' to airline ticket prices Mary Jane Credeur Staff Writer ------------------------------------------------------------ Worried about paying too much for airline tickets? A new service by travel e-commerce firm Worldspan L.P. will let buyers compare today's ticket prices with historical prices over the past 12 months. Atlanta-based Worldspan's FareAware search service goes live Feb. 14 exclusively through local consumer advocate Clark Howard's Web site ( http://www.clarkhoward.com ). The site is free for users, and Worldspan gets a small cut of every ticket purchased through the FareAware service. "The fare structure is very complicated and we believe this will help reduce some frustration and angst the customer has toward [booking] travel," said Worldspan CEO Paul Blackney. "This is an opportunity to give the consumer more information and help them book travel efficiently." No other travel booking company or airline currently offers a 12-month ticket pricing comparison tool. Industry watchers say the availability of such a tool might make some airlines uncomfortable because it lends more transparency to their opaque pricing practices and may lead some consumers to hold off on travel until ticket prices come down. Worldspan is jointly owned by subsidiaries of Delta Air Lines Inc., Northwest Airlines Inc. and American Airlines Inc. "Airline prices are more fickle than Hollywood marriages — one minute they're up, one minute they're down and there are a lot of outside forces that come into play," said Henry Harteveldt, senior analyst with Forrester Research Inc. "There are capacity issues and competitive issues, geopolitical and economic factors. Buying an airline ticket is not like going to the Gap and buying a T-shirt." Deflated or depressed airline prices are especially critical as airlines struggle to recover from the 2001 terrorist attacks and the lingering recession. Additionally, the current model of airline pricing and operations returns razor-thin profits, if any profits are made at all. "It's nearly impossible for these guys to make money because they have to sell 80 percent or even 90 percent capacity just to break even, and these thresholds change every day on every flight for every route," Harteveldt said. 'Pandora's box' Inspired by the Internet e-commerce boom, online travel booking services like Expedia Inc., Travelocity L.P. and Orbitz LLC were created in the late 1990s to snare more revenue on distressed inventory and unsold seats. Online services quickly claimed nearly a quarter of all air travel bookings, and conditioned consumers to conform their travel plans around the availability of cheaper flights. "There was a sea change when information moved from the travel agents directly into consumers' hands, and there is no going back," Blackney said. "Pandora's box was opened when you gave people the Internet." Now Worldspan wants to push more information out to the consumer. FareAware has been under development for nearly a year and cost Worldspan about $1 million to build, although the company relied heavily on its existing ticket processing technology to make the new product work. Worldspan gathers its historical fare data from the 5.8 billion travel transactions it processes each month, then compares that data against current lowest prices for tickets on specific routes. Unlike many fare-search tools that are led by less-flexible departure times or dates, FareAware is led by ticket pricing first and shows date and time availability later during the search. The idea is to help consumers navigate the complex airline ticket pricing mechanisms by giving them another data point to consider when buying tickets, said Niel Bainton, vice president of strategy and new business development for Worldspan. "If consumers are flexible, FareAware can help them book tickets in advance at a very good rate," Bainton said. "This helps create some real transparency [to ticket pricing]. Nobody else has ever offered a historical pricing benchmark before." At first, FareAware will only include 15 departure cities and limited destination cities based on high-volume routes. The service is available only through Clark Howard's site because Worldspan wanted to position the product as a search tool for budget-conscious leisure travelers. Howard met with Worldspan a year ago when FareAware was under development, and informally shared his views on what consumers would want in such a product. New models Although Howard has not endorsed FareAware, he believes the concept is "brilliant" and that every business that books travel tickets or reservations will soon have "clear and obvious pricing models." "Most pricing models today are tired and outdated — it's a matter of 'Let's see who we can con into paying too much for their ticket,' " Howard said. "The industry is moving to transparency in pricing, but it's kicking and screaming the whole way." Howard says Web sites for discount carriers like AirTran Airways Inc. and Southwest Airlines Co. have some of the most straightforward pricing models available. "Instead of trying to play a game of hide and seek, they lay it out for you and show you all the prices they have for these flights at these times," Howard said. "How great is that? People understand that, and they trust that." Although analysts believe the FareAware service may "raise the hackles" of the Big Six full-fare airlines, all of the carriers are under enormous pressure to adopt better pricing systems so products such as FareAware are a big step in that direction, said Forrester's Harteveldt. "If the airlines felt this was a real risk, they would have told Worldspan to put it away and never let it see the light of day," Harteveldt said, adding that Worldspan's owners — Delta, Northwest and American — had to approve a product like FareAware. At least one Internet travel observer doubts the FareAware search tool will have much impact on travel bookings. Fred Allvine, a professor in Georgia Tech's DuPree College of Management, says FareAware is a "very noble gesture" but that consumers don't really benefit from backward-looking data. "There is no such thing as an average fare because of all the factors that can affect pricing, and the airlines want to keep pricing as secret as possible," Allvine said. "More information is better than less, but given all the variables, I don't see much usefulness in it." Worldspan disagrees. The $1 billion-a-year company is betting that the FareAware product will encourage travelers to research and hunt down bargains. "In the end, the consumer is going to decide what's a good deal and what's not such a good deal," said Charlie Sullivan, senior vice president and general manager of e-business for Worldspan. "We believe this may help some of them afford to travel more often or take trips they might not have taken." Copyright(c) American City Business Journals Inc. All rights reserved. You can view this article on the web at: http://www.bizjournals.com/industries/travel/airlines_airports/2003/02/17/atlanta_story8.html