Business Idea: Airfare Limit Orders

May 12, 2014 By: erik Category: Musings, Travel 260 views

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toy planeEvery time I shop for airline tickets, I find myself thinking about how little sense airfare prices make to me, and I’m reminded of the variability of the stock market. There are so many forces and variables acting on the price of a stock (or an airfare) that prediction becomes a matter of guessing probabilities where even the experts don’t really have much of a clue. The frustration at checking airline prices reminds me very much of that of playing the stock market. Prices seem to fluctuate for no reason and deciding when to make a transaction is painfully difficult…and the price seems to always go in the wrong direction right after you buy.

I’m a huge fan of a rather recent innovation in online airfare searching: HipMunk‘s “Fare Alert” that will email you when prices change for a trip that you searched for – with a nice line chart and everything! This feature alleviates a little bit the need to continue searching day after day to see if the tickets you want have gone down in price.

Today it occurred to me that what I really want in an airfare searching website is the ability to place a limit order, like you can with a stock broker, or an eBay bid. I want to have a “place limit order” button where I can say the price I’m willing to pay for these tickets, and if the price ever dips down to my limit, they will be purchased for me. That would be awesome.

A step further…

If a bidding system were widespread enough, the airline, whose worst fear is an empty seat, could scoop up all those customers who weren’t willing to pay the full price that the airline was asking for. If properly designed, the whole system could be lubricated enough to let the old Invisible Hand maximize everyone’s interests.

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