Although airlines have a simple goal of getting people into seats, they rely on outdated and inefficient statistical modeling methods to forecast the prices and other conditions that will sell tickets.
FLYR Labs is your source of information. The company developed a deep-learning platform that forecasts airline demand and sets airfare prices. It has now received $150 million in Series C financing to expand its core business as well as into new verticals.
Jean Tripier, Cyril Guiraud, and Alex Mans founded the company in 2013. It was originally a consumer-focused platform. FareKeep was a product that allowed travelers to lock in the price for a ticket for up to seven days for a nominal fee. TechCrunch covered it in 2017. In 2019, the company decided to shift away from consumer and into B2B due to increased interest from airlines.
In a recent interview, Mans explained that the traditional pricing and forecasting systems airlines used [] only used booking arrivals and inventory levels as indicators of demand. They also used very simplistic forms of regression forecasting, which he said to TechCrunch. FLYR says that this method is flawed because it throws off the entire forecast when a new variable is added, such as a competitor entering the market.
He added that they were surprised at how little data was directly fed into their decision-making and how simple their models were.
FLYR Labs developed Revenue Operating System, a deep learning platform that analyzes data from airline bookings, accounting data searches, capacity, weather and promotions. This data is used to predict demand and revenue, as well as to determine the final price of an airline ticket.
To inform its modeling, the company also uses competitor schedules. FLYR does not train its model to any customer using data from competitors. This means that one airline would not have to worry about historical data being used to boost the revenues of another. The model can understand trends across flights and times, which can be used to inform new flights.
How can I price a seat to sell, since the problem is the same for all airline customers? FLYR predicts that the model will become smarter with time.
Mans stated that the company is capable of increasing the revenue of airlines by 5-7%. This does not mean raising prices everywhere. He said that we create both lower- and higher-priced opportunities in the market which ultimately increases revenue. He said that 70% to 80% of travelers pay the same, or less, as they would under legacy airlines forecasting systems.
FLYR provides a low-risk onboarding experience for new customers. It deploys its software and goes live with it on a small subset of airlines, usually 20-40%. The platform then runs an A/B testing for approximately 3-4 months, to show that it increases revenue. It takes its payment as part of that incremental revenue performance.
FLYRs methods are paying off. The company currently manages around $14 billion of airline revenue. This means that it sets the ticket prices to cover this amount of revenue. Although the startup has not revealed the names of its customers, it expects to manage around $100 billion in airline revenue by 2023.
The company's actual growth in the last 12 months is evidence of this explosive growth forecasting. FLYR will open three offices in Los Angeles and Dallas in September, October, and November, respectively. It also has a headquarters in San Francisco, and an engineering office located in Krakow (Poland). The company's workforce has increased from 50 to 150 people nine months ago, and another 100 will be added by January. Mans stated that 80% of the company's workforce will be in data science and engineering.
FLYR began to gain traction with airlines and started receiving calls from car rental agencies, railway companies, and even event businesses interested in FLYRs platform. Mans quickly realized that the data that these transportation and travel companies use, as well as their optimization goals, are very similar to those of airlines. He stated that the company will focus on 2022 by expanding into other verticals.
The company also wants to increase the product's capacity. Mans stated that the company is also trying to scale its product's capacity.
WestCap led the funding round, along with Silver Lake Waterman and WndrCo as well as Peter Thiel (Streamlined Ventures), JetBlue Technology Ventures, and Gopher Asset Management.
