While other sites list airfares, newcomer forecasts where they're headed
A new travel search engine called Farecast.com says it can help consumers decide when to buy an airline ticket by predicting whether fares on a particular route are headed up or down.
Like other travel search engines, Seattle-based Farecast tries to present a comprehensive list of flights and fares available on the dates a traveler wants to travel. But Farecast takes the search process a step further, giving the consumer a look at the history of fares on a particular route and then predicting where fares are headed.
For example, a search last week on Farecast for a flight from Boston to San Francisco at the end of this month indicated the lowest fare on that day was $461 on US Airways. The fare history showed the lowest fare over the previous 65 days was $349 and the average lowest fare over that period was $385.
Farecast's prediction: Buy now because there was a strong likelihood fares to San Francisco would be rising $50 over the next week. The website said it was 70 percent confident about its prediction.
Fares have been rising all year, and Farecast indicates the trend is continuing. I checked fares from Boston to 15 destinations and Farecast predicted a $50 increase is coming on 11 routes, a $28 increase on one route, and price drops of $6 to $50 on the three remaining routes.
``We're doing the same thing the weatherman does," said Hugh Crean , Farecast's chief executive. ``We haven't achieved clairvoyance, nor will we. But we're doing travel search with a real level of advocacy for the consumer."
Henry H. Harteveldt , a vice president and principal travel analyst at Forrester Research in Cambridge, says Farecast is trying to do for travelers something no other website does.
``It provides guidance, much as a stock brokerage provides guidance to investors on whether to sell, hold, or buy a stock," he said. ``It's the next best thing to being married or related to the vice president for revenue management for an airline."
Farecast plans to make its website open for a public beta test in the next few weeks but initially will offer information only on flights out of Boston and Seattle, its two initial target markets. More originating cities will be added through the rest of the year, and the website hopes to have national coverage by the end of the year.
The big question is whether Farecast and the travel search engine business have a future. According to Connecticut-based research firm PhoCusWright Inc., leisure and individual business travelers purchased 62 percent of their airline tickets online last year, with two-thirds of those tickets purchased direct from airlines and the balance bought from online travel agencies like Expedia, Travelocity, and Orbitz. The three online travel agencies sell airline tickets, hotel rooms, and rental cars and charge a fee for the services they provide.
Travel search engines don't actually sell anything, but instead present travel options for their customers. Once customers click on a specific flight, hotel, or rental car, they're taken to the actual provider's website where the transaction is completed. The travel search engines make their money on advertising and referral fees.
Forrester Research says travel search engines like Sidestep, Kayak, Yahoo Farechase, and Mobissimo are starting to gain traction. In all of 2005, 6 percent of online leisure air passengers visited the sites, but that percentage doubled to 12.3 percent in the first quarter, according to Forrester.
In terms of its search function, Farecast is strikingly similar to Kayak, although not as extensive. Farecast confines its searches to airline websites and Orbitz. Like all other travel websites, Farecast doesn't have access to Southwest Airlines fares because Southwest wants its customers to go directly to its website. Farecast also lacks JetBlue Airways fares, but it's working on adding it.
What sets Farecast apart is its patented fare analysis system, which was developed by Oren Etzioni , a professor in the Department of Computer Science and Engineering at the University of Washington. He analyzed airfares looking for pricing patterns and developed algorithms that predict where prices are headed.
Farecast, with $8.5 million in venture backing, has spent three years refining the concept, analyzing billions of fares. Company officials are confident their predictions are on target, but the absence of Southwest Airlines and JetBlue Airways fares may reduce accuracy on certain routes.
Etzioni said he thinks airlines will embrace the site because it will help put customers in seats. ``The more confidence you have about getting a good price, the more likely you are to buy a ticket," he said. ``Most of the time the price does go up."
Moshe Mor , a partner at Greylock Partners in Waltham who led a $7 million investment in Farecast last year, said consumers are becoming accustomed to using the Web to find where to buy an airline ticket. What Farecast brings to the table, he said, is the ability to tell them when to buy.
``This is not a small incremental addition to the shopping experience, but a quite significant addition," Mor said.
Farecast has some other nifty tools. For any destination, the site tells you which airlines fly there and their respective market shares on the route. Farecast also lets you plan when to fly by allowing you to scan fares over an extended period of time to see the cheapest and most expensive times to fly.
Farecast chief Crean, who previously worked as a senior vice president at National Leisure Group in Woburn, said the site also must expand to include one-way flights, multiple-destination flights, and alternative airports. Its focus now is exclusively airfares, but theoretically it could add hotel rooms and rental cars in the future.
Paul English , the cofounder of Kayak, said he thinks Farecast is good for the travel search engine category because it will educate more travelers about the concept.
``It's a very, very sexy concept," English said of Farecast. ``If they execute this well, there's a chance they could be a very, very significant company."
Bruce Mohl can be reached at mohl@globe.com. 
