Startup Farecast has announced the release of Fare Guard, a predictive analytics tool that allows consumers to hedge against airfare price changes.
Farecast was launched out of research by text-mining guru Oren Etzioni and students at the University of Washington. The system is built on a data warehouse that stores flight pricing for flights on all airlines between more than 75 airports. In total, they have collected more than 150 billion data points.
A user searches for flights and Farecast will provide it with its prediction for that fare (whether it's likely to go up or down by a specific amount) and a confidence score. The application graphically displays a 90-day history for that fare, along with a recommendation of whether to buy or wait.
Now, Farecast has added a new feature, putting its money where its predictions are. Farecast will allow users to purchase a "Fare Guard", a hedge for fares that it predicts to either drop or remain steady for the coming 7 days. If the fares increase during that period and you book your flight at the higher rate, you can submit your Fare Guard for the difference in price.
Though heavily used in CRM to identify cross-selling opportunities (and, of course, in the intelligence community), predictive analytics still has yet to become a mainstream application. Publishers and aggregators who capture transactional data may find predictive analytics and data mining capabilities can dramatically increase their value proposition.
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