Entrepreneur Ian Cumming has closed down his airfare sale search site GetFlight.com.au after two years. “We led the way for Australian flyers to see where they could go for how much using sale airfares from Jetstar, Qantas, Virgin Australia, and a host of other airlines,” he said. But “there’s a lot of competition for airfare search that has made it challenging to keep our business viable.”
Especially when you have no marketing budget which was the case with this bare bones start up.
Mr Cumming said GetFlight in its brief history distributed “more than half a million airfare alerts, found one hundred thousand sale airfare deals, and sent more than $4 million worth of sale enquiries directly to airline websites
“We had a lot of fun building, developing, and launching GetFlight.com.au and learned many things along the way. Thanks for being a part of it and thanks to everyone who supported us.”
Update – Mr Cumming also answered some questions from TravelTrends.biz.
1) Why not simply keep the site going – was it costing you too much time/money/aggravation?
I think if you’re going to be brave enough to launch a startup company, you’ve also got to be brave enough to close it down if it’s not successful. I spent two years working on GetFlight developing the site myself and launching it with my own funding. I needed to decide whether to continue to commit myself to building the business, however I felt that I had explored all the possible revenue models and there wasn’t much more I could continue to achieve.
2) Were you (dare I say it) a little naïve to think you could run a site like this without a marketing budget?
Not at all. My goal wasn’t to launch just another meta-search site. I launched GetFlight to explore new ways to innovate airfare search and to bring new features to Australian consumers such as map-based search. I explored and experimented with a lot of different business models, so while GetFlight.com.au was the public site, I was also actively exploring other revenue models such as licensing our interface and search engine.
3) What is your view now on the airfare search space?
I’ll give you one example of the challenges that startup companies face in the airfare search space:
Without a lot of funding I don’t see how new entrants can grow their distribution to the minimum size that airlines currently require in order to pay commission. Depending on the airline, the minimum is typically $20,000 to $40,000 a month worth of bookings referred before they will agree to pay commission.
With this in mind, if you are a startup company and build a new and innovative website that helps consumers search for flights, and you refer a customer (even tens of thousands, like GetFlight did) to the airline’s booking engine, you won’t get paid any commission.
So the only way you can have a piece of the pie is to send the customer to an OTA like Expedia and earn an affiliate commission of around 1%. That’s 50 cents commission on a cheap flight from Melbourne to Sydney and not even enough to buy a cheeseburger!
If you look a bit closer at what is happening in meta-search, the strategy adopted by even the biggest players such as CheapFlights.com is to throw the consumer across to as many OTA websites as possible in order to maximize the chance of earning a referral commission. Not only does this create a terrible user experience by making the consumer visit yet another website to find their fare, but it also fuels the distribution of the OTAs and keeps them firmly on top.
Currently every airline including Jetstar and Virgin Australia are pursuing their own distribution channels to get customers to book directly online, so it seems odd that airlines haven’t opened up their own affiliate programs to grow more direct traffic. After all, a paying customer is a paying customer no matter what website they were referred from, right?
If the airlines paid commissions to all legitimate referrers and not just the biggest players then I think this would encourage more innovation in airfare search because it would lower the distribution threshold for startup companies to become profitable and grow.
Instead, I think innovators in airfare search face a steep cliff to climb in order to build enough traffic and revenue to survive. Most of the main players in our industry seem to be scared of innovation and trying new things, and so it’s the Australian consumer who has to suffer with limited ways to search for flights.
4) I know you’ve tried to sell it – what happened with that?
One of the strategies we worked on was to develop GetFlight as a white-label product, and I spent a lot of time talking to potential partners about how to integrate our technology such as mapping, real-time alerts, and GetFlight’s data engine. I felt there was more opportunity to scale GetFlight’s technology in a larger OTA than to compete ourselves. In the end the timing wasn’t right to close a deal and the Australian market is also very small with only a few companies who could consider us.
5) What are your plans now?
I’m still working on a number of ventures both in and outside of the travel industry. Currently I’m collaborating with a few people in a future-thinking idea for the travel industry which will be launched later this year. I’m also taking some time off to travel again and think about what to do next.