Farecast

About Farecast

Farecast, founded in 2003 by University of Washington professor Oren Etzioni, carved a niche in the online travel market by developing a platform to predict airfare price fluctuations. The company's genesis stemmed from Etzioni's personal experience of discovering a fellow passenger had paid significantly less for the same flight by purchasing it later. This inspired him to apply his expertise in data mining and machine learning to analyze historical airfare data and forecast future price movements, a concept initially developed under the project name Hamlet.

Operating as a consumer-facing website, Farecast provided travelers with recommendations on whether to buy an airline ticket immediately or wait for a potential price drop, claiming a prediction accuracy of around 70 percent. The platform systematically collected vast amounts of airfare data, tracking price changes to power its predictive algorithms. Beyond airfare, the service expanded to include hotel room analysis, indicating whether a current rate was a good deal. The business model was straightforward, generating revenue through online advertising and referral fees from sending qualified leads to airline and hotel partners.

A significant milestone was the introduction of "Fare Guard," a service that allowed users to lock in a low fare for a fee, offering a refund if the prediction proved incorrect. After launching its public beta in 2006 and officially premiering in May 2007, Farecast quickly gained traction. The company secured over $20 million in venture capital from backers including Madrona Venture Group, Par Capital Management, and Greylock Partners. This culminated in its acquisition by Microsoft in April 2008 for an estimated $115 million. Following the acquisition, Farecast was integrated into Microsoft's Live Search, later rebranded as Bing Travel, and eventually MSN Travel, though the original airfare prediction feature was discontinued in 2014.