Fair Air launches industry`s first ticket exchange

30th May 2001

In a market where there seems to be a saturation of Web sites and business models that take advantage of the Internet—some successful, others less so—a new Web company has launched with a concept designed to put more power into consumers’ hands.
Last week FairAir launched a system that sells fully transferable airline tickets on major airlines. The genesis of FairAir dates back several years ago, when Frank Levy, the company’s co-founder and CEO, had a frustrating business trip. He was stuck in an airport and unable to get a seat on a fully booked flight. What he found particularly maddening was the fact that a kid with a skateboard was going to get on the flight—and Levy was sure that the young man would happily sell his ticket for the right price—but regulations prevented it.
The result: FairAir, a site where consumers (and travel agencies) can buy tickets and have the option of selling them or transferring them to someone else. Inaugural airlines selling tickets on the site include Northwest Airlines, America West, Midway Airlines, and National Airlines. The airlines are selling tickets to cities including Atlanta, Boston, Chicago, Dallas, Detroit, Las Vegas, Los Angeles, New York, Orlando, San Francisco, Seattle and other cities.
“The only thing airline passengers have heard more frequently than `raise your tray table prior to landing` is `this ticket is non-transferable,` ” said Levy. “The mission of FairAir is to change that. With FairAir, passengers may buy, sell and transfer airline tickets the same way they buy and sell stocks. They can give their FairAir Ticket to their spouse or co-worker, or find a willing cash buyer on the FairAir Web site who wants that ticket more than they do.”
According to FairAir`s vice president of marketing David Glickman, the company plans to use its infrastructure as a platform that can enable airline Web sites and travel portal to issue and manage transferable tickets on their own Web sites. Glickman would not say exactly which companies they are currently talking to but says they are in discussions with the major online travel Web sites and also said that its current airline partners are “very interested” in using the technology on their own sites.
FairAir promises participating airlines an increase their market share by offering a more flexible product and sharing with them a portion of FairAir revenue generated by transaction fees. Passengers pay a small fee to FairAir when they buy and sell FairAir Tickets. Airlines set the initial ticket offering price and pay no travel agent commissions to FairAir. FairAir handles all fulfillment and customer service costs. After a FairAir Ticket is sold to a consumer, FairAir shares transaction fee revenues with its airline partners.
FairAir also handles all customer support inquiries for the airlines via their twenty-four hour support center.
For travel agents and corporate travel managers, FairAir provides a new product offering that allows customers and employees to change the name on a ticket and place tickets for sale in the FairAir marketplace. In addition, agents and managers can use FairAir to purchase tickets on sold out flights from passengers willing to sell.
For consumers, FairAir offers more flexibility and lets customers possibly find seats on fully booked flights by offering to buy FairAir Tickets from other ticket holders, especially as its customer base grows. With FairAir, a passenger knows exactly which flight they are booking, how much they are paying, the scheduled departure and arrival times, the number of stops en route before they book. Passengers also receive frequent flyer miles.
Levy first conceived the FairAir concept while working on projects for Continental Airlines in 1991 and was joined in 1999 by co-founded by Jim Lawrence, former CFO of Northwest Airlines and board of directors for TWA and Continental Airlines. Lawrence, who is currently the executive vice president and CFO of General Mills, serves as FairAir`s chairman.
In addition to Glickman, a co-founder of CHALK, a technology non-profit organization in San Francisco; other executives include vice president of business development Jason Singer, co-founder of CHALK and director of product development Dan Larkin, former director of revenue management at Alaska Airlines serves.
FairAir is launching in a time where volatile market conditions have caused many online travel ventures to fail. Among them: Savvio.com, which offered travelers discounted air and cruise fares and full disclosure of itineraries on international and domestic travel, something many analysts saw as an improvement over Priceline’s blind-bidding model. Another was eGulliver, a Web site with that matched consumers with agents, suspended operations indefinitely, citing a lack of funding.
So far, FairAir seems to have some solid backing and has received venture funding from Boston-based Megunticook Management. It has attracted additional equity investments from Mike Mauboussin, chief U.S. equity analyst at Credit Suisse First Boston and Steve Sanger, CEO of General Mills.
Glickman says he is confident that his company will be one of the winners in the online travel space.


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