Priceline.com's flight price is right
The service will let consumers name the price they'll pay for airline tickets, aiming to save travelers on air fares and help airlines fill empty seats.
Priceline.com, an Internet firm founded in 1996, expects to add new cars and home mortgages to its reverse auctions later this year.
Priceline.com chairman Jay Walker said that although the service initially will be available only on the Net, it is not aimed solely at Net-savvy consumers or business travelers.
"Priceline.com lets consumers communicate the price they want with potential sellers in a quick and powerful way," veteran marketer Walker said in a statement. He dubs the model "buyer-driven commerce."
Here's how the system will work: Ticket buyers post the price they'll pay for a seat on one of the major national airlines to travel between two cities on a specific day, providing a credit card number for the nonrefundable fare. Participating airlines then decide whether to sell a seat at that price for any flight on that date.
The system requires travelers to be flexible on the time they fly, but seats can be booked up to six months in advance. For airlines, it is designed as a way to fill a half million empty seats on U.S. flights every day, a Priceline.com spokeswoman said.
But Julia Pickar, an e-commerce analyst at Zona Research, suggests Priceline.com may face a marketing challenge in getting its service in front of the right consumers.
"They're targeting the leisure travel market, people with flexible schedules," Pickar said, noting that the service isn't designed for business travelers with specific schedules. "If they get people to participate initially who think they'll like the service but don't like putting up a credit card, for example, there's possibly a negative backlash if people don't understand what they're getting involved with."
She notes that with so many travel offerings on the Internet, Priceline.com may have trouble differentiating itself from what other travel sites and the airlines themselves are doing on the Web.