Mining for Cheap Flights

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The patterns, variables, and trends that are collected from the price data are then used to make predictions on future flights. So, when a person goes to Farecast.com and submits trip information--departing and arriving cities, dates, and number of passengers--the company's software predicts whether it's a good time to buy a ticket. For instance, a flight from San Francisco to Kansas City, MO, will cost about $395 if bought now, but Farecast predicts that the price will drop about $50 within the next seven days and recommends waiting to buy. However, a user still has an option to buy a ticket through Farecast immediately. In addition to employing the ticket-buying tip, a user can refine her search in a way that's similar to how Expedia and Orbitz refine searches: by time of day, airline, and number of stops.

When Farecast predicts a price, it also determines a confidence level--a measure of how accurate the system deems a given result is. These levels vary, says Etzioni, from 60 to 90 percent, and they are based on performance of past predictions for similar routes and conditions. "Farecast is constantly scoring itself," he says. Based on Farecast's self-reported track record, the accuracy of past predictions ranges from 70 to 75 percent. This is good enough to prompt the company to sell, for $9.95, a guarantee that can be used when someone purchases a ticket. If the price drops when Farecast predicted that it would stay the same or rise, the company will compensate the customer.

Farecast's new feature, called Farecast Deals, uses the same pricing data that is collected for fare prediction, but it filters it in a way that mimics popular flight searches, such as last-minute weekend trips. Farecast Deals lets a user know if the ticket price for the deal will rise and how long it will be before the price will go down again, according to predictions.

"What's great about Farecast is that it provides you with a sense of perspective and takes steps to remove uncertainty," says Henry Harteveldt, vice president and principal analyst in travel research for Forrester Research, a technology analysis firm.

So far, Farecast has garnered a lot of positive attention from analysts and bloggers, including Michael Arrington of the popular blog Techcrunch. Arrington recently said that the company is "turning into quite a nice way to find cheap airline tickets."

As Farecast continues to collect more data about price history and evaluate its own predictions, its confidence level will improve, says Etzioni, although it will never reach 100 percent. The company expects to expand to offer deals on hotel rooms and car rentals, as these industries price inventory in a manner similar to the way airlines do.