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Editor’s Note: Skift is publishing a series of interviews with online travel CEOs talking about the Future of Travel Booking, and the evolving habits and device preferences of travel consumers. Check out all the interviews as they come out here.
Sam Jain is the founder and CEO of Fareportal, which operates two online travel agencies, namely CheapOair, the largest company in the group, and OneTravel.
CheapOair, which is among the top five online travel agencies in the U.S., is a hybrid in that it not only offers online bookings, and has hundreds of engineers dabbling with every aspect of its Web page, but it also owns its own call centers, employing hundreds of agents, and publishes its toll-free number on every page.
Jain believes being a private company that has a small group of decision-makers is a competitive advantage, but on the other hand its hybrid model takes investment to scale. Skift spoke to Jain over dinner recently, and discussed CheapOair’s strategic issues, along with his views on the future of travel booking.
Skift: CheapOair was founded in 2005 with a focus on flights. You now have scores or perhaps hundreds of engineers working on tweaking flight bookings on your site. What is so difficult about airline tickets?
Sam Jain: After being in this business for eight years and having a presence in multiple countries, having about 200-plus engineers is very normal and usual because just maintaining millions of lines of code requires a ton of engineers. You have different languages, different countries, different products. We have a huge pipeline of product development. If you design 30 new products only one will actually see the light of day because the rest will either not pass the test or the consumer experience will fail. Very stringent new testing is done.
Skift: Thirty new products? I’m not asking you to give away the secret sauce but how many new products can there be at one time? OK, your are handling Spirit Air’s bag fees and American Airlines is doing its thing with you. Why 30 new products?
Jain: For us product development is in three or four sections. It can be a small product that a new consumer or a returning consumer may not even notice that it’s actually there. But it definitely helps them improve their user experience. For us it’s still a product design or innovation. Then there are more complex products that could be front end, could be design-related. There are even more complex products that are back end-related.
There are millions of types of fares. For us every origin and destination is a skew for us; it’s a different product. If you optimize just one origin and destination pair, say New York to Paris, there are thousands of fare options, airline options, routing options. So we really go into the nitty gritty of every route, every airline and we have to optimize all of this.
Skift: How does this compare with what Expedia or Priceline may be doing for flights? Are they doing the same sorts of things?
Jain: I’ll take Kayak as an example. You have one page. Say their total sales are $300 million. It all happens on one page, which is their listings page. Imagine how much optimization they have to do on that one page to get to $300 million in revenue. Every square inch of that page has to be thought about, optimized.
We have people looking at just the widget. There may be errors that are happening. What people are typing may not be recognized by our system. So we get error reports that say instead of typing “JFK” they are typing “Kennedy.” We get hundreds of reports every day that our product designers and engineers have to review, and see what can they optimize.
Skift: On the mobile front, how are your views of mobile bookings evolving, perhaps apps versus mobile Web? And what are you finding interesting about customer behavior on mobile?
Jain: We are in the top 10 apps [U.S. June data from App Annie for travel aggregators]. We just gained four ranks to get into the top 10. Apps are definitely a great tool for us for regular, repeat users. We want to provide them all the services so that once they book their flights they can go in and do self-service such as exchanges, name changes and the common things that people ask for. We have a free feature for tracking flights. A lot of apps don’t provide that for free.
Our app downloads are doing tremendously well. We don’t spend any money on advertising it. Regarding user engagement from people who book flights from us, there’s a very high uptake on that.
The mobile Web is really where the future is in terms of customer acquisition because the same trend on the desktop is moving over to mobile devices, where people go on Google and they search for their keyword. The ads come up or the SEO organic results, and then people go to the mobile Web and make that booking.
Skift: Are you seeing different behavior mobile Web versus apps?
Jain: Your acquisition on the mobile Web will be always, I think, on the higher side because people are actively searching for a certain item they are looking for. App is just there already. Maybe the first time I downloaded my app I did it for a particular reason. If a customer has already booked a flight with us then it is not going to be for a new booking immediately. It may just be for some new information. for an exchange or just to have the itinerary available to them.
But on the mobile Web people are actually going onto Google and typing in “flights to Los Angeles” or “flights to Paris” and then our organic listing or our ad would come up and they would click on it. So the conversions are much better on the mobile Web that way.
Skift: What about mobile Web versus desktop?
Jain: The conversion rates for the apps are better than the desktop just because desktop volume is still higher, but it is growing. I think the total volume of the mobile Web is growing very fast. The percentage growth is much better than the desktop.
Skift: What’s new and exciting about airline ancillary services besides bag fees?
Jain: Ancillaries are the next frontier for us on the airline side because every airline is really unbundling all of their products. That is the new reality. I don’t think there is any going back to the old way where everything was included in one bundle. That is great for the airlines. They are profitable for the first time in so many years.
Fareportal is really in the leadership role working with the carriers. We are currently working with over 10 airlines, integrating their ancillaries. I think we are the first for pretty much all of them. We have Spirit bags, American’s Choice Essential and Choice Plus, which bundles a lot of different fares into one, such as priority boarding, free changes, discount miles. For Air Canada we were the first to integrate all of their services like lounge passes, beverages, food. It is extreme unbundling, I would call it. Even the smallest items are unbundled.
We are the first ones to add all of this in the booking path. That’s a great value for consumers. Preferred seats, for example, is limited inventory. You buy it then, you will get it. I’ve tried it on JetBlue. When I go to the airport they only have three rows of preferred seats with extra legroom. They are always taken. So if you book it in advance in the booking path, you have a much higher chance of getting it. And, it’s only $30 or $40 extra, but you are getting a much greater value because the legroom is much more.
Skift: eDreams Odigeo, the European company that is probably the closest in DNA to CheapOair, recently did an IPO. Are there any discussions about a combination with eDreams Odigeo or how do you view the competition? And is an IPO for CheapOair in the cards?
Jain: We really haven’t discussed it internally or thought about it. We are very happy being a private company. We think we are very nimble and fast-paced, and very innovative in that way. We don’t have layers and layers of approvals. We are a small core team in decision-making and we can do approvals, and we can do things and roll them out really fast. I think that gives us a huge advantage over our competitors.
We would like to keep it that way as long as possible. Eventually scale does matter. There are no talks right now with any company.
Skift: Metasearch is the fastest growing category in travel. What’s your thinking about it, and how does CheapOair engage or not engage?
Jain: Metasearch for us is not really a competitor. They are more friends for us. We work collaboratively with most of the major metasearch engines. They bring us good, qualified traffic. The market is big enough for metas and online travel agencies to coexist. It is a very different model. Metas don’t do bookings. They don’t have that deep customer relationship.
Skift: But, isn’t there a convergence going on? TripAdvisor doesn’t do a lot of air, but they are doing their own hotel bookings now through partners in their apps. Kayak is doing it with the Priceline Group companies. And Orbitz now has metasearch prices through their hotel results.
Jain: Fareportal/CheapOair started when one thing that we noticed was that the online travel agencies were gong away from the traditional travel agency model. We are really about bridging the gap between an OTA and a traditional travel agency model. It is truly a hybrid. We are the only OTA that publishes prominently our phone number on every Web page. And we are the shortest booking path in air. Consumers don’t have to go through layers and layers of pages and cross-selling and upsellng.