New US startup SteadyFare aims to provide peace of mind to travellers by enabling them lock in airfare found on its website for up to a month by paying a holding price. Here Breaking Travel News speaks to Jack Connor, co-founder of SteadyFare to discuss the challenges of setting up a new business, customer response to the new product and his predictions for the online travel space.
Breaking Travel News: What is the vision for SteadyFare?
Jack Connor: Our vision for SteadyFare is to provide an alternative way for travel consumers to buy airline tickets if they are facing some kind of planning or scheduling uncertainty, and don’t want to want to spend a lot of money right now on a ticket that they might have to change or cancel in the future.
The fear of rising prices is results in a lot of travellers purchasing tickets early that ultimately go unused, or which they have to pay hefty fees to change.
We feel SteadyFare provides considerable peace of mind to the consumers using our product when they travel plan, so we can help eliminate this particular customer pain.
BTN: When do you expect to fully launch the product?
JC: That’s top secret at the moment, but keep in touch with us on our social media or keep checking our website, and you’ll be the first to know.
BTN: How has the beta trial gone so far?
So far the closed beta has gone very well, and resulted in a lot of interesting input from our customers.
We’re getting educated on what our customers want from a locked in airfare, when they use it, why they use, how long they want to hold a ticket price and which features are most desirable.
Our beta customers and visitors to our site have been sending us emails and messages telling us what they liked, what they didn’t like, and telling us what they want out of our product. This kind of feedback is worth its weight in gold for a startup.
We’ve also been collecting information indirectly during the closed beta which are also going to affect the way we shape SteadyFare’s product offering.
BTN: What are the key learning curves?
So many. We had to learn quickly how to build our product, and this was a tricky one with much trial and error using different systems and tweaks for our algorithm.
I’ve found becoming detail oriented at everything you do has been very important, as this is so critical to starting a business when there are only a few co-founders.
The three of us have to do everything, and we have to do it well. And there is still so much to learn, we have something new and unexpected happen everyday.
BTN: What are the main challenges for you?
JC: At the moment, there are two main challenges for us. The first is that competition in the travel space is extremely fierce and customer acquisition is costly.
This is why ultimately we are looking at a B-to-B model for SteadyFare where we create a licensed product for use by online travel agencies. Margins on ticket sales for these companies is razor thin, they make almost all their profitability from hotels, and our product would further function as a means of further monetizing their high-traffic airline ticket business.
The second challenge is that this is a fairly new and different product, so getting customers is somewhat tricky. There is a clear value proposition for those who need flexibility or aren’t sure if they want to fly, but it’s always a challenge getting consumers to try something new.
However, we’ve been getting beta testers and the feedback has been quite good, so I think we’re on the right path. As overcoming this will take some creativity and unconventional thinking, I actually view this as a “fun challenge”, and I look forward to working to find customers whose needs we can fulfill.
BTN: What has feedback been on the product?
JC: Well, the feedback on our core product has been very positive. From our own personal experience we thought that unpredictable rising ticket prices was a major customer complaint in the travel industry, and digging deep into market research on the subject backed this up.
BTN: Who are your main competitors?
We have a few different types of competitors out there. One which gets mentioned a lot if Farelock, the airfare locking service from Continental/United, although actually we operate for significantly different customer bases. They provide a service to lock their airfares for 3 or 7 days, whereas we are currently able to hold a ticket for 10 weeks, and this will get much longer in the near future. This difference is significant because a customer who needs to lock in an airfare for 3-7 days is one who needs to confirm details, such as ensuring they can book a hotel, before they purchase. Someone who wants to hold a ticket price for 10 weeks because, for example, they are waiting to find out if they got an internship overseas or they won’t know until much later if they can get the time off work, has much different needs which will not be fulfilled by holding an airfare for a week or less.
Another competitor is the airfare alert systems that have been popping up from a few different companies. These inform customers if an airfare drops below a certain level, so you can buy at your ideal price. These are pretty cool, but also fit a different customer need from that of SteadyFare since when the price drops you still may not be ready to buy, and there is no guarantee that this price will stay where it is if you wait.
There is also ticket insurance which, in addition to requiring a customer to purchase the ticket in advance, usually comes with big restrictions on what will get you a refund on your ticket price. Often, this includes illness, job-loss, or death on the part of one of the travellers in the party or their families. Needless to say, these refunds do not occur frequently. SteadyFare is totally obligation free, so once you have locked in an airfare you may purchase a ticket anytime while we hold your airfare, or choose not to if your travel plans change, with no obligations or restrictions.
BTN: What is unique about Steady Fare?
JC: I’d say we’re pretty unique in that we’re offering a way to let people plan their travel at their leisure, as opposed to getting them better deals that are only available for a limited time.
This is how most of the airline industry operates, on a sort of “buy it now while it’s hot” kind of system, with no assurance that the deal will last.
Airlines, Groupon, Kayak, and airfare alerts, all of those operate on this system. Now, this is not a bad thing, it’s great for people who love finding deals, but it’s not my cup of tea and we’ve taken the opposite approach by letting customers take their time to travel plan without worrying about price changes.
We’re adding a flexible, hopefully more relaxed way to travel plan, and we think that some travellers will like this approach.
BTN: Have you been in talks with many carriers / airline websites to establish potential partnerships?
JC: We have been speaking with online travel agents and airlines, however we can’t really get into the details at the moment.
BTN: How many destinations do you expect to offer flights to? Will they continue to be US-based?
JC: We’ve been steadily growing the number of routes we cover as we go, and see no end in site to how many routes we can potentially cover. In fact, one day we want to cover everything, so that someone who wants to lock in an airfare can do it.
We are US based, but are definitely interested in international expansion. It is a straightforward business model to transfer to a new market, and we’ve actually reached out to a few European companies as potential partners.
Personally, the three co-founders love to travel, so opening to overseas markets sounds great, and we think SteadyFare could have a lot of value overseas for the same reasons it does in the US.
BTN: Why did you decide to focus on flights? Do you expect to add additional services down the line?
JC: Flights were where we felt this customer pain the most from our own personal experience, but for a lot of other reasons beyond that it made sense.
Our model works well with the way airline tickets are priced, and this market is extremely large. However, in the future we think that there could be potential for hotels, cruises, or others.
BTN: What are your predictions for the online travel space over the next five years?
The online travel space has been moving quickly in the last few years in some totally unpredictable ways. First, there’s a lot of hype around mobile, and I think
this will be important but not as the purchasing medium which many think.
While travel apps are downloaded at an enormous rate, these are being used mostly for informational and travel research purposes, and few people are using these to actually purchase airline tickets.
I think this is more of a psychological issue than a technological one, as the technology is there and it’s getting really good, but people seem to be unwilling to make large purchases through their mobile phones.
So, until consumers actually feel more comfortable with buying their travel goods through mobile, they will continue to use this for information and then switch to their laptops to actually purchase.
I also think that there will be major growth in low-cost carriers, as consumers seem to be moving away from the middle and towards the extremes of either luxury or affordability. Budget travellers are starting to see less distinction between traditional airlines and low-cost carriers, and as a result I think they will move more and more towards what’s inexpensive.
Finally, while I’d like to see a change in how airlines price their tickets, adding transparency to the consumer on how the price of tickets will change in the future, I don’t think it will happen. The current system has been in place for a long time, and I don’t think airlines would be willing, or even able, to completely overhaul this to eliminate the customer pain that SteadyFare is addressing.
However, you never know, but we’ll definitely be here for those consumers that want this assurance that they won’t be facing price hikes in the future if they wait to purchase.