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November 13, 2006

Reality Check: cFares

cfares.jpg

Garage is an investor in a discount travel company called cFares. First, here’s some background info about the travel business: A large portion of airfare expenditures flow through the GDS systems (ie: Sabre, Amadeus, and Galileo). “First generation online travel sites” such as Travelocity, Expedia, and Orbitz rely on available inventory within the GDS supply.

Newer “meta search” entrants such as Kayak and Sidestep go beyond ticket supplies in the GDS systems by also searching directly through the databases of airlines in order to get an expanded array of better prices and tickets. (Airlines do not put all their inventory in the GDS systems—they keep some for their own sites as a way of incenting consumers to come to them directly).

cFares.com also has access to the GDS systems and direct access to airline’s published inventories, but according to the company it stands apart from these other sites for three reasons:

  1. cFares is the first and only online travel site with exclusive relationships that gives it access to the $20 billion of consolidator “net” airfares. Consolidators are travel wholesalers who commit to buy large blocks of inventory from the airlines at volume (also called “net”) discounts. They are restricted from selling directly to consumers and have historically only offered these fares to travel agents.

    Also, while consolidators have inventory in one system (usually paper or a local computer), they have to access the GDS systems to determine whether a specific fare is actually available. As a result of these technical and business model impediments, consolidator “net” fares have not been brought online. cFares is the first online travel service that has developed technology to allow consumers to find and book these fares—often hundreds of dollars less than found elsewhere—directly and in real time.

  2. cFares offers something called “dynamic rebates.” cFares’s proprietary technology allows airlines to know what is happening at the point of sale and lower their prices dynamically to win a specific customer—for example, when they have lots of empty seats on a specific flight. cFares customers get a custom-designed price in real-time and receive the savings from cFares in the form of a rebate to their credit card after they submit their flight confirmation number.

  3. cFares has a unique name-your-own-price service called cAgent. Unlike other name-your-price services, which involve “buying blind,” cAgent provides total transparency so that consumers know the airline, itinerary, and price before they have to pay. Travelers can pick a specific flight and then set up a persistent search for a fare that they are willing to pay. cAgent will seek out that fare and can hold it for twenty-four hours before the customer has to pay. Since airfares typically fluctuate several times during the day, cAgent snags the fare on the downturn.

cFares’s business model is a combination of Costco and Walmart. Anyone can search the site to see what fares are available. People who sign up for free gold memberships can purchase any of cFares low, publicly available fares—this is comparable to the Walmart model.

However, in order to get direct access to cFares’s “net” wholesale airfares, one-of-a-kind deals, and cAgent, consumers must become Platinum members at a cost of $50/year. This is the Costco model where a membership-driven retailer brings consistently low wholesale prices directly to the consumer. With cFares this membership pays for itself in at most two trips.

cFares is offering a special deal for readers of my blog. If you enter “guysblog1” into the coupon code field, you will be able to sign up for the Platinum membership at 50% off. This offer expires on Wednesday at 6:00 pm Pacific time.


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Comments

A couple of comments:
- Slow, don't know if it is because I'm in Germany but loading is slower than the other sites I use (for example expedia or sidestep)
- GOOD FARES, the premium fares are better than the competition, I'm thinking of getting that membership
- interface could use some work, in particular
-- why do i have to click twice to specify a one way flight, that should really be one menu
-- the ajax for airport completion is nice, but one bug is annoying if i type in SEA for departure it opens up a drop down i hit tab it goes away and i type in ORD for arrival and hit tab again to go to the next box but the popup window doesn't go away. I'm using the latest Mozilla browser if it helps

Otherwise a great site and let me know when the next version is up

I just created a new article that I know you will want to get your hands on and read.

I am sure you benefit from it when you are a frequent airline traveller.

I called it the "really cheap airplane ticket".

It contans advise, tips and idea's you can profit from. Go to the website (click on the link to read the whole article).

Really Cheap Airplane Ticket

The best place to look for a really cheap airplane ticket is online.
Travel agencies can't compete with discount ticket sites. Search
online, for finding a cheap airline ticket, do a Google search ("cheap airfare to ....) or try any of the well-known travel sites. The
internet is a great place to search for and compare airline rates.Include travel date and return date in your query so that you
can get a specific quotation for your trip.

Read more at: http://www.www-airline-tickets-com.info/

Hi,
Absolutely interesting article about cFares a discount travel company whose airfare expenditures flow through the GDS systems.The reasons of CFares under GDS systems are helpul.THe more interesting is People who sign up for free gold memberships can purchase any of cFares low, publicly available fares—this is comparable to the Walmart model.I have some interesting info on this topic about discount travel which is also offering great services.

Guy has kindly asked cfares to respond to everyone's concerns. As the VP Marketing for cFares, I am happy to do so.

First, let me thank everyone who responded. cFares aspires to be the best internet travel site for our customers. While we love to hear all the positive comments, we also want to hear the criticisms so that we can improve and become that great site. We ARE listening, and I am happy to have you respond back in the blog or directly to me with concerns.

Issue #1: International credit cards and alternate forms of payment

Response: I apologize to Dele, Tahir, Jonathan, and others for this limitation. This is a known problem and frankly, its now been too long without being solved. Your comments have helped me to make it a priority and we will resolve it. Certainly, getting Paypal up is a bit of a "duh" - so we'll do that quickly.

Issue #2: Site Usability Needs Improvement

Response: This is an obvious lack, and we are working on V3.0 of the site with many useability enhancements. But, given that we are a Garage investment, we've followed Guy's adage from "Art of the Start" that says "Don't be afraid to be ugly." Getting the site up and workable, getting customers to sign up and tell us how we can improve- that's what a startup should do. As long as we don't wait too long to fix what is ugly.

Anyone who would like to be part of our consumer test panels write back to me and I'll give you a heads up when the new designs are on our development server.

Issue #3: Huge Price Difference on Lagos Flights and do we really have the lowest prices?

First, let's at least give cfares some credit for being able to originate internationally (Expedia, Orbitz, and Sidestep, for example, can't. Try this search on their sites if you need proof.).

To the specific issue, I don't know what Dele is seeing: I ran the search departing 12/30/06 returning 1/7/07. We are at $2,192 vs $2,269 for BA site. However, this search brought up other UI issues I want to delve into - so thanks Dele for being a catalyst.

Let me also say that to prove to myself that we have the lowest fares generally, in August I created a list of 100 origin/destination pairs, covering all aspects of air travel and had someone not associated with cFares run the searches. cFares came back as the lowest price in all but 1 search - so I'm pretty comfortable with our claims.

Issue #4: Same day flights

Well, that's a new one - but you are right. I've submitted a bug fix request

I think that covers all "categories" of issues raised by your comments. If I missed one, please let me know and I will respond.

Have you checked Trabber.com? is a search engine that aggregate air fares from different sources.

http://www.trabber.com

As others have said, cFares does not allow for credit cards with Billing addresses outside the States. This means I can't use it.

I searched for flights from Lagos, Nigeria to Boston for Dec 30. The cheapest fare I got was about 3,000 dollars. When I checked for a ticket on British Airways site for the same day, I got a ticket for $1,400 including Tax.

That's a whole lot of difference

Upgrading to platimum from gold is way too obscure. If your company is trying to make money, make it easy for the user to upgrade and clearly state the benefits.

This seems like a great idea; however, I tried to use it for a flight I was to take later today and the site will not allow that. For people like myself, who fly at the last minute, this site isn't that great. Now, if that oversight was fixed, I think ya got a winner!

Because Garage is an investor @ cFares, I visited the site sometime ago to see what its all about. I was not able to become a Platinium Member because of the USA only cc problem.

Most of my comments will be like Neil so I dont want to tell the story again.

I believe the business model behind cFares is lacking. If you have a search engine that finds the lowest fare available, you have to find alternative models for generating cash. Ex. $2 surcharge for tickets? and cFares must show the lowest fare available to all searchers maybe by hiding the Airline data, this is the only way they can make me a member. And please add Paypal its simple.

Hi,

I am a cFares platinum member. I have been using the company for almost 4 months now and have more than made the money back in savings. I still shop around, and buy a lot directly from airlines when I need to fly at exact times, but when I am flexible, I usually save using cFares.

Here is an itenarary I just priced for a conference in december where cFares was the second lowest to the Airline being priced by everyone else.

LAX to Berlin
leaving 11-30 and returning 12-4

cFares (Platinum) $465
Kayak $510
Expedia $515
ITA tripfinder $515
Continental Airlines $418

I wish all these new travel services help turn the process into a progressive-insurance type of model where there is greater transparency in the pricing of airline seats.

1. As a prospective customer, the site comes off almost like a used car salesman. It consistently goes out of its way to avoid providing a clear, definitive ticket price. On the top of the search results page, we are greeted with a comparison between the cFares price and the lowest on a travel site. This is great except there is no indication whether any of cFares prices includes taxes, surcharges, fees, etc. Next, we find that some of the cFares platinum tickets have rebates attached to their price, although no indication of how much or how long it will take to redeem.

2. Why is the contact link buried deep within the site? Don't we all like to know that if there is a problem with our flight reservations, we're not going to be on our Blackberries weaving through pages looking only for an e-mail address?

3. Whose idea was it to put Google Ads on the site? This almost seems like a modern equivalent of inviting your competitors to sit in on a sales call. After I was unsuccessful in a flight search, all I had to do was to glance over to see opportunities for "Wholesale Airline Tickets" from travelation.com, "Airfares from $44" at travelfleamarket.com and "Cheap Airline Tickets" with smartfares.com.

Perhaps one could argue that the ads bring in money even if the site loses customers, but that's not something that I would ever encourage in as a revenue model. Though, I guess it does lend credibility to the Advertising page of the site by offering companies a chance to get their piece of the travel industry, too.

So, to the cFares team, I offer these parting thoughts:

- Calculate how much customer service is worth to your customers and add $50. Are you providing that same amount of value back?

- Calculate how much you would charge your competitors to advertise directly on your site. Are you making that much money off their ads already?

- How can you simplify the ordering process further? (Taxes, rebates, etc.)

- Why not give a one-time use coupon out for platinum prices? You're already tracking address information through their billing details so abuse wouldn't get that out of hand.

- Hire a usability expert to review the site. Make it easier to distinguish between key points and ideas in the text instead of slamming it all within one big block. Even a simple form for submitting contact data would be a big improvement. Also aim for some consistency. On some pages, clicking the cFares logo will take you back to the homepage. On others, it does nothing.

First off, as a usability guy (with IBM, nothing travel related) I'm looking at these comments and I'm *praying* that the cFares people are reading - this is precisely the kind of thing they need to hear, e.g.:

- Mark Troutman - I shop at expedia because I like the online experience even if they don't have the best price every time, they're usually close. Message: savings are only a differentiator if they are significant. Message: design matters.

- Jose - My quote didn't beat Orbitz. Guy responds: "You probably weren't using platinum search." If that's true, it's cFares' fault, not Jose's. Message: your design needs to show prime customers like Jose, interested early adopters investigating the site's claims, the absolute top value-add. If the best hits only come with platinum status, fine, use that as an upsell opportunity but under no circumstances should you *fail to show* your best prices because they searched wrong. (For what it's worth, cFares best quote for YYZ-MAD Feb2-9 is $727, Orbitz is $711, but see Mark above - even if cFares was lower, someone has to ask the market whether $16 is enough of a gap.)

- Everyone - "This site is US only" -- Obvious what needs to change here, but I am also not surprised that their rollout starts in the states - we Canucks always get the shaft with early US startups (to say nothing of the rest of the world).

I know you know all this Guy, but I hope the cFares folks do too - your blog is an almost perfect match for their target demographic - every one of these comments, particularly in the early stages, is gold.

Second - as a marketing thought on these reality checks, consider adding a link at the bottom of the writeup as well. Your writeups generally have me scrolling the top paragraph off my screen before I reach the bottom of the writeup, at which point I don't have a link to click. A little thing, but if it doesn't give you 5% more clickthrough I'll eat my hat.

sorry - can't join as a platinum member because I happen to be one of the 5.7 billion people who don't live in the States. Amazing they let me fly really.

This sounds really good! I think it will be good to see the other side of the coin, too, that is feature how the customers find this product or service. :)

Guy,
I guess with all the "web 2.0" buzz
you could expect something better in terms of usability.

Check dohop.com - IMHO the interface far superior to anything out there.

regards
izo
P.S. I'm not affiliated with dohop in any way

hmm.. I got a lower price for JAX-DEN from Expedia than cFares. The price variances are so inconstent among these travel sites that I've decided to use Expedia because I like their website and service, not because they *always* have the lowest price - the price is always within a few dollars of competitors either way.

Guy,
I'm always curious, as a bootstrapper, how companies like this one get to the starting line. I know Garage is an early phase VC so I'm sure there was an elaborate business plan, but the coordination necessary to design the software and have the relationships in place to snag consolidated net fares right out of the gate seems daunting.I'm wondering, was this operation grown from a simpler start-up? If not, forget your pitch. I would have loved to have heard theirs.

@Alexander: For the CVV use the 4-digit number on the front of the Amex, printed just above the last digits of the card number

@Guy: trying to purchase platinum membership assumes a billing address in the US (and won't allow me to proceed unless I select a US state) - as Alexander says, is travel not global?

I still think the best flight search is ITA Software's one:

http://matrix.itasoftware.com/cvg/dispatch/prego

I believe their software drives a lot of travel sites.

Guy,
Pitch sounds great! Too bad three price checks on trips I am considering all yielded higher prices than Orbitz. Why would I pay $50 dollars a year to get a more expensive flight? Doesn't add up.

***********

Jose,

Let's do this. Tell me your itinerary. On Tuesday morning, you get your best quote from Orbitz. I'll get the best quote with cFares (you probably were not using a Platinum search).

If your price is lower, I will send you a copy of The Art of the Start. If my price is lower, you join the Platinum level.

[email protected]
Guy

Great reference..Never liked Priceline, and Expedia and Travelocity were ok...finally, a serious contender...~rick

Interesting site and, I think, one in a new generation of sites to drive better "micro" decisions that are personalized to customers.
Blogged about it.

I've been planning looking for flights from SFO to Rome and was very pleased to find the lowest flight with cFares at $573. Very impressive considering several of the flights on other sites came in closer to $1000. I'm glad to see that travelers like myself have another very attractive alternative for getting good airfares. Thanks for the heads up, Guy.

Guy,
About claim number one: "cFares is the first and only online travel site with exclusive relationships that gives it access to the $20 billion of consolidator “net” airfares."

Expedia had consolidated fares when it launched its UK version in 2000


***********************
Neil,

Please check with Expedia. Are these "net" consolidator fares or just consolidator fares. There is a difference.

Thanks,

Guy

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