Savvio, an Alviso, Calif.-based online travel agency that launches today, does away with so-called blind purchasing and allows customers to select the most optimal departure times and flights--or decide not to purchase any tickets. The site is one of several new players in the increasingly crowded online travel industry, which has transformed the way leisure travelers buy tickets and plan vacations.
Savvio customers can scan layover or nonstop options between various cities on a variety of airlines before providing their credit card information--a stark contrast to popular discount agencies such as Priceline.com, which require customers to purchase tickets before they know specific departure times or the airline. Blind-purchase requirements have frustrated many fliers who must settle for late-night flights on airlines not affiliated with their frequent-flier programs.
Savvio's pricing structure is loosely based on a reverse-auction format. Airlines drop their ticket prices continuously until customers purchase everything in a given block of tickets. The Web site tells customers exactly how many tickets remain at a given price, the airline and the travel times.
For example, a customer may purchase 21-day-advance, round-trip tickets from Detroit to San Francisco on TWA for $360 now or wait eight hours and possibly buy them for $340--if any tickets are available on the same flight at that price. If the customer misses a stated time window for a certain price, the maximum price for the ticket may increase because airline tickets typically get more expensive as the travel date approaches.
"Everything on our site is transparent," said Karen Ha, founder and CEO of Savvio. "You know how many tickets remain at that price, and you see a complete itinerary...There's really no mystery. The only guessing game is that you have to determine how many tickets are left and whether you should buy now or take a chance, say, six hours from now."
Savvio, which specializes in airfare and cruise bookings, is not the only travel site to launch this month. The number of companies fighting in the relatively new niche is growing quickly.
Hotwire, a discount ticket broker backed by six major airlines and a direct competitor of Priceline, also debuted this month. The Web site, which offers last-minute and nonrefundable airfare deals, is still in a public beta mode as it speeds its booking engine and adds more options.
American Airlines, America West Airlines, Continental Airlines, Northwest Airlines, United Airlines and US Airways are Hotwire investors. Delta Air Lines is an early partner of Priceline and not a Hotwire backer. The largest Hotwire investor is Texas Pacific Group, headed by financier David Bonderman.
Like Priceline, Hotwire doesn't allow customers to pick specific departure times, nonstop flights or airlines. But Hotwire CEO Karl Peterson said the site consistently offers the lowest prices on last-minute airfare.
"Most people, when they want to fly for leisure, care first about price. Second, they care about price. Third, they care about whether it's a quality airline," Peterson said. "We said, 'Let's make the site as simple as possible,' which is a great price on a great airline."
Another new player in the online travel niche is Orbitz--not yet operational, but by far the most controversial project as of yet. Competing online travel sites fear that Orbitz--also known as "T2"--will allow five participating airlines to restrict access to flight information and low-priced tickets. Detractors, including competitors such as Travelocity.com, argue that the site would kill off competition from rivals and increase prices.
The Department of Transportation and the Department of Justice are investigating the airlines' proposal. The U.S. Senate is conducting a hearing about whether the Web site, originally scheduled to debut this summer, can be developed. The DOT has said it will issue a decision on the proposal by the end of the year.
At the heart of the Orbitz controversy and the entire online travel industry is a fight for the growing number of U.S. leisure travelers. As baby boomers approach retirement and have more free time to take advantage of last-minute airfare bargains, experts say, the $350 billion travel industry will mushroom.
Online travel is one of the fastest-growing segments of the travel industry. Forrester Research predicted that online travel sales will quadruple from last year's level to $29 billion in 2003--and that represents just 10 percent of projected total travel spending.
According to PhoCus Wright, 40 percent of online consumers have bought airline tickets. By comparison, 44 percent have purchased computers or software, and 42 percent have purchased books.
The popularity of online travel sites has already changed the face of leisure travel in the United States. Before the widespread use of discount sites, last-minute travel was exceedingly expensive and out of the question for most leisure travelers.
But discount brokers have changed that, allowing last-minute deals similar to those offered before the airline deregulation of 1978. Before that, airports were the haunt of college students and others who were long on time but short on cash.
"We've come full circle, back to the concept of the standby passenger," said Roy Cook, assistant dean at the School of Business Administration at Fort Lewis College in Durango, Colo., and director of the Colorado Center for Tourism Research. "It's the same as moving any distressed inventory: If your bananas are rotting, you discount them."