The next time you’re on a plane, look around.

Almost everyone you see in your section has paid a different price for his or her seat.

Yet you’re all being served the same package of peanuts, and everyone has essentially the same in-flight experience.

Of course, if there were a rhyme or reason to the fare differentials — say Joe in Row 16 booked at the last minute, so he had to pay more, or Joanie in Row 12 reserved hers in advance through the airline’s website and thus scored a discount — air travel consumers might not mind.

Unfortunately, most frequent travelers will tell you that there really doesn’t seem to be any rhyme or reason… at least as far as they can tell.

Behind the scenes, however, there are complicated mathematics centered on supply, demand, and consumers’ past preferences. This math helps airlines determine whether to raise or lower fares for a particular route. And it’s this same sort of math that one company is using to empower consumers.

FARECAST

Data mining. Computer programming. Mathematical algorithms. Yes, many would consider these some of the least exciting words in the English language, but
recently, they’ve become a lot more interesting. Why? A little website called Farecast.com.

Farecast got its start thanks to computer programming Professor Oren Etzioni of the University of Washington. The professor, like many other air travelers, was frustrated by the airlines’ pricing structure. But unlike many other travelers, he decided to do something about it.

The professor began studying the problem, applying data mining techniques to sift through the volatile trends in airfares. Several years, a lot more studying, and several million dollars in venture capital later, Farecast was born. On June 27th, 2006, it opened to the public with a “beta” version for roundtrips from Boston and Seattle, and is now available for cities nationwide.

PeterGreenberg.com spoke with Farecast CEO Hugh Crean, a former executive at the National Leisure Group, Priceline and Citigroup, who has been running the company since November 2004, to get the inside scoop.

Veteran exec Crean seems excited about his company’s goal: “Farecast’s main mission is to empower customers to make more informed choices . . . and we want to take some of the uncertainty out of the system.”

What Farecast offers is a glimpse of pricing trends: it shows where the price has been, where Farecast thinks it’ll go, and even how confident the site is of that prediction. More simply, they take the complicated math that airlines use to determine whether fares should go up or down — and share it with consumers. Plus, to make the site friendly for those who might not like combing through numbers, they’ve added colorful graphs illustrating both the prices and trends available.

While this would seem to make Farecast an unabashedly consumer-oriented site, they maintain they’re good for the airline industry, too. “I really think of us as airline evangelists,” Crean said, “We’re trying to make people more comfortable and confident with their airfare purchases.” This, he says, will lead to happier, more confident travelers who will want to buy more tickets.

While “happy” and “confident” are not two adjectives normally ascribed to the average American air traveler, the sheer size of Farecast’s data pool is inspiring some confidence in travelers. In a world of secret fares and special insider deals, the idea of reliably, consistently getting an open, honest, competitive fare might seem a bit revolutionary. But nonetheless, that’s the goal.

IS SOUTHWEST SPECIAL?

So what’s the only major American airline that refuses to release its fare data to Farecast? The only large carrier that doesn’t let the major aggregator travel engines like Kayak and Sidestep search its inventory and compare its prices to other air carriers? What about the only major airline that doesn’t play ball with Expedia, Travelocity, or any of the other players in the online travel market? Somewhat ironically, the answer is the airline that would probably do the best in most direct fare comparisons: Southwest Airlines.

This low-cost, no-frills airline is somewhat infamous in the airline industry for doing things differently. In the past, Southwest has arguably been a strong force for clarity and consistency (not to mention lower pricing) in ticketing. Before Southwest,
getting a one-way ticket for half the price of a roundtrip one was almost laughably rare. And Southwest’s more fixed pricing policy actually inspired confidence in the fact that prices wouldn’t decline further as the flight got closer.

But Southwest today is looking increasingly lonely as a holdout against the flood of meta-search, or aggregator, websites. Fellow low-cost airline JetBlue has opened its data, as have the other major American airlines, allowing aggregator sites like Kayak, Farechase, and Sidestep to develop comprehensive comparison sites. To find out why Southwest has suddenly gone from seeming like a tech trendsetter to seeming rather neo-Luddite, PeterGreenberg.com spoke with Southwest’s Senior Director of Online Marketing, Anne Murray.

Asked why Southwest’s fares aren’t widely available on the Internet, Ms. Murray began: “Our worry was reliability and availability.”

She went on to say that with many online travel sites, fares could either show up and not be available — or not be available and not show up, perhaps causing travelers to think Southwest doesn’t fly the route or isn’t the cheapest. Another concern of Southwest’s was the ability to sell its own tickets — after all, 70% of tickets
purchased from the carrier were purchased online.

But what about sites that don’t actually sell tickets, but would simply point travelers toward Southwest’s website, like Farecast, Kayak and Sidestep?

“We believe the ‘Southwest Experience’ starts with the first point of contact,” says Ms. Murray, citing one reason why Southwest doesn’t want its fares appearing on other sites.

She also mentioned that their research showed travelers went to at least three
different sites when searching for travel deals. This means that Southwest is essentially counting on its high level of brand recognition to ensure that its site is one that travelers visit.

However, this also means that part of the “Southwest Experience” is having to re-enter data you’ve already input into previous sites, just to see if Southwest even flies the route you’re interested in, let alone has inexpensive tickets available. But Ms. Murray believes that Southwest’s “Ding” program is the solution. And it might be… if you’re willing to fly only Southwest, download a program onto your desktop, set up your preferences, and then allow Southwest to literally make a “Ding” sound on your computer every time the program thinks it’s found a fare you’d like.

While it may sound kind of neat, or even innovative, Kayak’s Buzz does something quite similar without the extra software on your desktop. A number of other airlines and search sites now offer Ding-like software, such as Expedia’s Fare Tracker. Of course, these other programs aren’t necessarily limited to just one airline as Ding is.

What it comes down to for Southwest, according to Ms. Murray, is “well, I don’t want to say ‘control’… but it’s part of having a consistent user experience.”

She was candid about the fact that there was — and is — a vigorous, ongoing debate at Southwest about allowing just this sort of information sharing. For now, the advocates of a more closed, monopolistic approach to the Internet seem to have the upper hand.

Presently, as the only consistently profitable American airline, and one known for its low fares, Southwest might seem to be able to afford flying above the fray. But with legacy air carrier costs dropping toward Southwest-like levels and competition heating up, the real question is whether it will remain that way.

THE FARE FUTURE

So what does the future have in store for domestic airfares?

Regardless of whether Southwest does decide to join the other airlines in opening up its flight databases, the trends toward more transparent airfare pricing are probably inevitable. From meta-search engines like Kayak and Sidestep that offer comparison pricing across multiple sites to fare predictors like Farecast and the still-very-beta FlySpy.com, the Internet puts a lot of airfare information in the hands of the consumer.

As tools like Farecast.com increase their visibility, airlines are going to find it tougher and tougher to be capricious with respect to pricing. It’s still too early to tell just how fast this shift may happen, but the process may have taken a definitive step forward
today with Farecast.com.

For info on more useful web resources that will help you find the cheapest flight, check out:

Finding Cheap International Flights

And for updated information on discounted trips, click HERE.