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Selling unsold airfare inventory, the next big opportunity in travel technology.

One of the great things about being an early stage travel technology investor, advisor and connector, is you can see technology, new business models and innovation coming into the market that may alter how the travel industry conducts business. As an example, prior to AI and mobile travel chat (MTC) bots being written about in the travel space we could see on the edges this technology developing and how it was going to enter and ultimately impact travel.

The next big thing coming will be an airfare startup akin to a Hotel Tonight like application, selling airfare at the last minute, within 7-days of departure, or on-demand airfare. Several airfare startups are in position to alter the airfare industry and this is not a small problem as one of the startups we are tracking has told us that close to 1B airline seats flew empty in 2016.

We believe the travel technology startups will crack this problem and change the market due to the convergence of the following movements in travel:

  1. Airlines are becoming more innovative. In the last year we’ve seen airline hackathon’s grow in interest, corporate airline incubators, accelerators and venture arms are launching to foster new ideas and investment. Airlines are experimenting with new retail e-commerce models and starting to sell airfare outside of traditional distribution channels making airfare’s unsold inventory a target in the very near future.
  2. Mobile technology will facilitate the ease of use to buy airfare at the last minute and support the new types of airfare retailing.
  3. A few travel technology startups are proving success in selling seat upgrades at the last minute, thus a stepping stone into selling an empty seat at the last minute.

Startups working in this space include, LastSeat, BidFlyer, jumpOn, Cape and a stealth startup positioning itself as the world’s first virtual airline. Nadeem Ladki, the founder of LastSeat says, “passengers want to be heard by airlines. They crave a dynamic relationship and the ability to communicate directly with airlines, yet no solution exists to give passengers the power they deserve. LastSeat is providing the best platform possible for our users to facilitate communication with airlines. We put the power of negotiation in the hands of our users through our bidding module, and empower them to get the best possible price on their tickets.”

A few of the new entrants have created unique business models that protect the airlines brand from commoditization and create a win-win for both parties. The business models vary from auction to the owned merchant inventory model.

Startups currently selling seat upgrades at the last minute include SeatFrog, Plusgrade and SeatBoost. Plusgrade is the market leader with SeatFrog not far behind and SeatBoost gaining traction.

Nicole and I just flew into San Francisco, CA on jetBlue Saturday April 23 on an evening flight from Ft. Lauderdale, FL on our way to the Eye For Travel mobile travel tech conference. We are moderating day 1 of the startup village panels. Nicole upgraded us to jetBlue’s “Even More Space” seats so we had more room on the 6-hour flight. The flight wasn’t full and there were at least 7, “Even More Space” seats available. Interesting enough, the flight steward got on the speaker system and asked the people in coach, if they paid $85 they could move up into the “Even More Space,” seats. We paid $45 more for the upgrade at the time of our booking so at the last minute jetBlue was seeking almost a 100% increase. Unfortunately for jetBlue, there were no takers and their prized seats went unfilled.

If you’re interested in learning more about LastSeat and Flightsayer and Fly Money two other airfare startups that are building unique technology in the airfare space you can connect with them directly on the TravelStartups.NET Deal Flow Platform our new match-making platform connecting breakthrough travel technologies with travel companies and investors.

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