UPDATE 5/4/2018
The Canadian Financial Post is reporting that Air
Canada and WestJet have severed ties with Hopper due to confusion over the company’s
suggestion that the two airlines are giving it access to “secret fares” not
available elsewhere.
An Air Canada spokesperson told the media outlet the
airline had given Hopper access to a low fare on one route between the United States
and Asia as part of a trial of the program.
In an email, a Hopper representative responded: “We value our relationships with both Air Canada and WestJet, and
sincerely apologize for any confusion caused by the way we marketed this
initiative.
"To mitigate the confusion, we are not marketing Air Canada and
WestJet as part of our Secret Fares program. We would like to clarify
that Secret Fares is a Hopper-specific marketing strategy and not a unique
class of airfare.
"Airlines offer distinct fares to specific types of agencies,
in our case online travel agencies, and they are marketed under a range of
different brand names."
Original Story
Since its long-awaited launch in 2015, Hopper has
established a unique - and, it appears, lucrative - platform to sell flights.
The mobile-only system predicts future fares by analyzing more
than 10 billion prices per day in combination with its archive of historic
prices, then it alerts users via push notifications whether to “buy now” or “wait
for a better price” on their desired routes.
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Hopper says it is currently selling about $1.5 million worth
of flights every day through its app, making it the largest mobile-only online
travel agency for airfares.
And now it’s lining up airlines that want to use a direct,
private communication channel to offer exclusive discounted fares to travelers.
Here’s the crucial bit in Hopper’s latest development: It
claims the fares will not be available on any other online travel agency or
even on the airlines’ own websites.
Introducing Secret Fares
The new “Secret Fares” launch today with six airlines
covering more than 60,000 international routes originating in North America and
fares that are 5 to 35% lower than published prices. Launch partners are Air
Canada, LATAM Airlines, Turkish Airlines, WestJet, Copa Airlines and Air China.
Hopper head of growth and business Dakota Smith says it will add at least seven more carriers in the next six weeks, and coverage will
expand to flights originating internationally.
“Hopper is using its mobile-only status and the unique way
we sell things to be able to get prices that are better than Expedia and
Priceline and Google Flights can have,” Smith says.
“We are actually like a closed user group. Airlines can load
these special rates into Hopper that are distributed to Hopper users via push
notifications in a way that doesn’t spark a broader competitive reaction and
war and price reductions across the web and in a way that is actually private
and cannot be leaked, forward-distributed or scraped by their competitors.”
Smith says some of the airlines are filing fares directly to
Hopper’s pseudo city code through a global distribution system, while for
others, Hopper is connecting directly to their systems to get fares outside the
GDS.
The Hopper difference
Unlike other models for deeply discounted fares - such as
Priceline’s former “Name Your Own Price” tool or flights bundled with lodging - Hopper’s Secret Fares will show users the price, airline, departure and arrival
times and flight number before they book.
Hopper is using its mobile-only status to get prices that are better than Expedia and Priceline and Google Flights can have.
Dakota Smith - Hopper
Canada-based Hopper, which has raised $83.4 million in
funding from four rounds since 2007, tested the service on 5,000 routes for
about a month beginning January 29 and says one of the carriers increased its
booking share on routes from the United States to Asia-Pacific destinations
from 4% to more than 30%.
“This is a way for full-service carriers - like the Air Canadas…
the ones with the big networks and the good brand recognition - to avoid
competing publicly on price with low-cost carriers and to win some of that
share back from the Spirits and low-cost carriers of the world,” Smith says.
Another aspect of Hopper that’s attractive to the airlines: Users typically begin “watching” fares about four months in advance so the
carriers can reach an audience that has already signaled their intent to travel
and secure those bookings earlier than usual.
The Secret Fares are discounted from the published price and
will fluctuate as that published price moves.
Hopper’s revenue model for Secret Fares is the
same as other flights it sells, which it says is a mix of incentives from the
airlines per segment and a per-ticket commission. But Smith says Hopper is not
making more money from these than a regular ticket, so all savings are passed on to the consumer.
Read more about Hopper...