U.S. patent application number 12/868667 was filed with the patent office on 2011-02-24 for system and method of protecting prices.
This patent application is currently assigned to Farecast, Inc.. Invention is credited to Jay Bartot, Hugh Crean, Oren Etzioni, Michael Fridgen, David Hsu.
Application Number | 20110046989 12/868667 |
Document ID | / |
Family ID | 39370311 |
Filed Date | 2011-02-24 |
United States Patent
Application |
20110046989 |
Kind Code |
A1 |
Crean; Hugh ; et
al. |
February 24, 2011 |
SYSTEM AND METHOD OF PROTECTING PRICES
Abstract
A method and system for protecting prices is provided. The price
protection system increases consumer confidence when making
purchases by reducing the risk associated with fluctuating prices.
The price protection system receives a purchase specification from
a consumer. Next, the price protection system determines the risk
that the prices of items matching the purchase specification will
change and reports a protected price to the consumer that
represents the price that the price protection system will protect
based on the determined risk for a protection period. Finally, the
price protection system receives a request from the consumer to
purchase protection of the protected price.
Inventors: |
Crean; Hugh; (Seattle,
WA) ; Bartot; Jay; (Seattle, WA) ; Hsu;
David; (Santa Monica, CA) ; Etzioni; Oren;
(Seattle, WA) ; Fridgen; Michael; (Seattle,
WA) |
Correspondence
Address: |
PERKINS COIE LLP;Attn: Maurice J. Pirio
P.O. Box 1247
Seattle
WA
98111-1247
US
|
Assignee: |
Farecast, Inc.
Seattle
WA
|
Family ID: |
39370311 |
Appl. No.: |
12/868667 |
Filed: |
August 25, 2010 |
Related U.S. Patent Documents
|
|
|
|
|
|
Application
Number |
Filing Date |
Patent Number |
|
|
11599607 |
Nov 13, 2006 |
7797187 |
|
|
12868667 |
|
|
|
|
Current U.S.
Class: |
705/5 ;
705/26.35 |
Current CPC
Class: |
G06Q 30/0609 20130101;
G06Q 20/10 20130101; G06Q 30/02 20130101; G06Q 30/0206 20130101;
G06Q 30/0207 20130101; G06Q 30/0283 20130101; G06Q 10/02 20130101;
G06Q 30/0633 20130101; G06Q 20/4016 20130101 |
Class at
Publication: |
705/5 ;
705/26.35 |
International
Class: |
G06Q 10/00 20060101
G06Q010/00; G06Q 30/00 20060101 G06Q030/00 |
Claims
1-32. (canceled)
33. A price protection system for protecting a ticket price, the
system comprising: a memory storing computer-executable
instructions of: a component that provides predictions of ticket
prices for flight itineraries; a component that receives a flight
itinerary specification; a component that offers to sell price
protection for a protection fee to protect a protected price for a
protection period for a flight itinerary matching the flight
itinerary specification based on a current ticket price and a
prediction of a ticket price for a flight itinerary matching the
flight itinerary specification; and a component that, when a
purchaser purchases the offered price protection and then purchases
a ticket with a flight itinerary matching the flight itinerary
specification within the protection period, establishes a
redemption price for the price protection and compensates the
purchaser based on the protected price and the redemption price;
and a processor for executing the computer-executable instructions
stored in the memory.
34. The system of claim 33 wherein the price protection is offered
when the predictions indicate that the ticket price for the flight
itinerary is likely to decrease.
35. The system of claim 33 wherein the protection period is fixed
and the protection fee varies based on risk associated with the
price protection.
36. The system of claim 33 wherein the protected price is the
lowest ticket price for a flight itinerary matching the flight
itinerary specification at the time of the offer.
37. The system of claim 33 wherein the redemption price is the
lowest ticket price for a flight itinerary matching the flight
itinerary specification when the ticket is purchased.
38. The system of claim 33 wherein the redemption price is the
lowest ticket price for a flight itinerary matching the flight
itinerary specification during the protection period.
39. The system of claim 33 wherein the protection fee is fixed and
the protection period varies based on risk associated with the
price protection.
40. A method performed by a computer for protecting a price for an
item, comprising: providing predictions of future prices for items;
receiving an item specification providing characteristics of items;
providing price protection to protect a protected price for a
protection period for an item matching the item specification based
on a current price and a prediction of a future price for an item
matching the item specification; and when a purchaser purchases an
item matching the item specification within the protection period,
establishing a redemption price for the price protection and
compensating the purchaser based on the protected price and the
redemption price.
41. The method of claim 40 wherein the price protection is offered
for sale to the purchaser for a protection fee and wherein the
purchaser is compensated only when the purchaser purchases the
price protection.
42. The method of claim 41 wherein the item is a ticket for an
airline flight.
43. The method of claim 42 wherein the compensation is based on the
difference between the protected price and the redemption
price.
44. The method of claim 42 wherein the redemption price is a lowest
price available for an item matching the item specification.
45. A computer-readable medium containing instructions for
controlling a computer to protect a ticket price for a flight
itinerary, by a method comprising: providing predictions of likely
directions of ticket prices for flight itineraries; receiving a
flight itinerary specification; offering to sell price protection
for a protection fee to protect a protected price for a protection
period for a flight itinerary matching the flight itinerary
specification based on the likely direction of a ticket price for a
flight itinerary that matches the flight itinerary specification;
and when a purchaser purchases the offered price protection and
then purchases a ticket with a flight itinerary matching the flight
itinerary specification within the protection period, establishing
a redemption price for the price protection; and compensating the
purchaser based on the protected price and the redemption
price.
46. The computer-readable medium of claim 45 wherein the price
protection is offered when the likely direction of a ticket price
for a flight itinerary matching the flight itinerary specification
is to decrease.
47. The computer-readable medium of claim 45 wherein the protection
period is fixed and the protection fee varies based on risk
associated the price protection.
48. The computer-readable medium of claim 45 wherein the protected
price is the lowest ticket price for a flight itinerary matching
the flight itinerary specification at the time of the offer.
49. The computer-readable medium of claim 45 wherein the redemption
price is the lowest ticket price for a flight itinerary matching
the flight itinerary specification when the ticket is
purchased.
50. The computer-readable medium of claim 45 wherein the redemption
price is the lowest ticket price for a flight itinerary matching
the flight itinerary specification during the protection
period.
51. The computer-readable medium of claim 45 wherein the protection
fee is fixed and the protection period varies based on risk
associated with the price protection.
Description
BACKGROUND
[0001] Consumers depend on passenger airlines to take them all over
the world. Business travelers use airlines to take them to visit
clients, negotiate business deals, purchase equipment, and much
more. Personal travelers use airlines to go on vacations, visit
family members, and so on.
[0002] A number of factors affect ticket prices for airline
flights. Using the money that passengers pay for tickets, airlines
must pay for the purchase or lease of airplanes and other
equipment, fuel costs, maintenance, employee salaries, government
taxes, terminal fees, and still leave enough to make their business
profitable. Each of these factors can vary substantially. For
example, the cost of airplanes can vary from year to year based on
competition between airplane manufacturers and other economic
factors. Fuel prices can vary based on the current price of oil,
and major disasters such as hurricanes that affect the price of oil
and refining capacity. Employee salaries can change based on
strikes and contract negotiations. Government taxes on airlines
often change, and may vary among countries thus affecting airlines
that fly internationally. Airlines sometimes incorrectly balance
these factors and undergo bankruptcy or other business
reorganizations that affect the price charged for tickets.
[0003] In addition to each of these factors, competition among
airlines is often intense, leading to fare wars in which one
airline attempts to fill seats by undercutting the prices of each
of the other airlines servicing a particular route. Moreover,
unexpected events may affect the demand for a particular route. For
example, a sports team may make it into the playoffs leading to an
increase in flights by fans wanting to attend the playoffs.
Similarly, a dignitary such as the Pope or President may announce a
visit to a particular city, leading to an increase in flights to
that city by those that want to see the dignitary. There are also
seasonal demands for purchasing airline tickets, causing an
increase in ticket purchases around holidays such as Thanksgiving
and Christmas. Route changes may also affect demand. For example,
an airline may stop servicing an unpopular route. This leaves fewer
carriers servicing that route and can lead to a situation where one
carrier has a monopoly on that route such that prices increase.
[0004] All of these factors affect the price of the ticket charged
to consumers. Price fluctuations in airline ticket prices are very
common, making purchasing tickets for an airline flight a daunting
task. It is difficult for a consumer to determine the best time to
purchase a ticket to get the best price. A consumer may purchase a
ticket one day only to find out that a fare war has begun the next
day leading to a large drop in the ticket price. However, if the
consumer waits to purchase the ticket the ticket may increase in
price. This may cause the consumer to spend more than they intended
or to cancel the trip altogether. A lack of confidence in ticket
prices negatively affects consumer spending for airline tickets and
frustrates consumers.
BRIEF DESCRIPTION OF THE DRAWINGS
[0005] FIG. 1 is a block diagram that illustrates components of the
price protection system in one embodiment.
[0006] FIG. 2 is a flow diagram that illustrates the processing of
the offer protection component of the system in one embodiment.
[0007] FIG. 3 is a flow diagram that illustrates the processing of
the process redemption request component of the system in one
embodiment.
[0008] FIG. 4 illustrates a display page of the user interface of
the price protection system for purchasing protection in one
embodiment.
[0009] FIG. 5 illustrates a display page of the user interface of
the price protection system when no protection is offered in one
embodiment.
[0010] FIG. 6 illustrates a display page of the user interface of
the price protection system for confirming a purchase of protection
in one embodiment.
[0011] FIG. 7 illustrates a display page of the user interface of
the price protection system for redeeming protection in one
embodiment.
DETAILED DESCRIPTION
[0012] A method and system for protecting prices is provided. The
price protection system increases consumer confidence when making
purchases by reducing the risk associated with fluctuating prices.
The following describes the price protection system in terms of
protecting airline or flight itinerary prices. The price protection
system may, however, be used to protect prices for various
purchases, leases, rentals, and other types of acquisitions for a
variety of items such as hotel rooms, rental cars, cruises,
automobiles, houses, stock, and so on. In one embodiment, the price
protection system initially receives an itinerary specification
from the consumer. For example, when searching for air travel the
itinerary specification may specify a location where the consumer
wants to travel, what airport they want to leave from, the dates
and times that they want to travel, whether the consumer wants a
direct flight, how many companions are traveling with the consumer,
and so on. Next, the price protection system locates available
tickets that match the itinerary specification, and determines the
risk that the current lowest prices of the tickets will change. For
example, available tickets may be determined using a flight
reservation system, such as Sabre, ITA Software, or an online
travel agent. Risk of price fluctuations can be determined in a
number of ways, including based on technologies described in U.S.
Pat. No. 7,010,494, entitled "PERFORMING PREDICTIVE PRICING BASED
ON HISTORICAL DATA," which is hereby incorporated by reference.
Assuming the risk is acceptable, the price protection system
reports to the consumer that price protection is available for the
itinerary specification, along with a protected price and a
protection fee. The protected price represents the price that the
price protection system will protect against price changes based on
the determined risk. For example, if the current lowest price of a
ticket for an itinerary is $200, and the price protection system
determines that the price of tickets for the itinerary is likely to
drop by $50 in the near future, then the price protection system
may offer a protected price of $200 to the consumer for the
itinerary for a protection period. The price protection system may
track the lowest available prices for the itinerary during the
protection period (e.g., seven days), and if the lowest price of
the itinerary increases during the protection period and the
consumer purchases a ticket for more than the protected price, then
the price protection system will offer compensation to the consumer
based on the difference between the protected price and a
redemption price (e.g., the lowest available price tracked by the
price protection system) for a ticket matching the itinerary
specification.
[0013] The redemption price may be the price that the consumer
actually pays for the ticket, or it may be calculated based on the
lowest price found by the price protection system on the day or
time of the consumer's purchase, the lowest price available during
the protection period, or a similar method. If the redemption price
were less than the protected price, then the price protection
system would not owe the consumer any compensation. If, however,
the redemption price is greater than the protected price, then the
price protection system will offer compensation to the consumer
based on the difference. For example, if the consumer received a
protected price of $200, the redemption price is $250, and the
consumer buys a ticket for $250 during the protection period, then
the price protection system will offer compensation to the consumer
for the additional $50 the consumer spent over the protected price.
If the consumer actually bought a ticket for $300 even though the
redemption price was $250 (e.g., the lowest available ticket
price), the price protection system may still offer compensation
for only $50. If, on the other hand, the consumer found a ticket
for $150, then the price protection system will not offer the
consumer any compensation. Compensation may take many forms such as
cash reimbursement, bonus frequent flyer miles, credit to an
account, payment through PayPal, and so on.
[0014] The price protection system charges a protection fee to the
consumer to purchase the price protection for the itinerary. If the
price protection system correctly predicts that the price will not
increase, then the price protection system keeps the fee and does
not offer the consumer any compensation. If instead the lowest
available price for tickets matching the itinerary specification
increases and the consumer purchases a ticket at the increased
price, then the price protection system still keeps the fee, but
also offers the consumer compensation. In this way, the price
protection system protects the consumer from unexpected price
increases, but the consumer may still benefit from a price drop by
purchasing the protection while delaying their purchase of the
ticket. This price protection allows the consumer to buy with
confidence and wait for a better price than the protected
price.
[0015] In some embodiments, the price protection system protects
the consumer against decreasing prices after the consumer purchases
a ticket. For example, if a consumer purchases a ticket for $200
based on a prediction from the price protection system indicating
that prices are likely to increase, but instead prices go down,
then the price protection system can still protect the consumer. In
this situation, the protected price is the price that the consumer
actually paid for the ticket, and the redemption price is the lower
price that becomes available. Protection may be limited to a
protection period (e.g., seven days), similar to the protection
period described above for protection against price increases. For
example, if the consumer buys a ticket for $200 and purchases
protection against price decreases for seven days, and the price
protection system determines that the price decreases to $150
within the seven days, then the price protection system offers the
consumer compensation based on the $50 difference in prices.
[0016] In some embodiments, the price protection system offers
tickets for purchase as a convenience to the consumer. In general,
the price protection system need not determine whether the consumer
will actually purchase a ticket or whether a ticket is available on
the day that the consumer decides to purchase the ticket. However,
by offering ticket purchases through the price protection system
(or a system affiliated with the price protection system), the
system may reduce the effort of supporting a redemption request by
eliminating a separate step of verifying the purchase price paid by
the consumer. Alternatively or additionally, the price protection
system may allow the consumer to purchase the ticket through other
outlets, such as a travel agent or the airline itself, and then
provide information about the purchase to the price protection
system to validate a redemption request.
Setting the Protection Fee
[0017] In some embodiments, the price protection system sets a
fixed protection fee. For example, the price protection system may
charge a fixed fee of $10 for protecting the price of a ticket at a
particular protected price. The consumer pays this fee whether the
price of the ticket goes up, down, or remains the same. For
example, if the consumer receives a protected price of $200, and
later purchases the ticket for $250, then the price protection
system offers compensation to the consumer for the $50 increase,
but retains the $10 fee. Conversely, if the consumer later
purchases the ticket for $150, then the price protection system
does not offer the consumer any compensation, and retains the $10
fee. Each consumer pays a fractional amount of the cost of a
negative event (e.g., a ticket price increase) for protection
against the risk that the negative event occurs. If the negative
event does occur, then the consumer's loss is limited to the price
of the protection (i.e., the protection fee). The protection system
may also set the protection fee at a fixed percentage of the
protected price. For example, at five percent, the protection fee
for a protected price of $500 would be $25, and for a protected
price of $800 it would be $40.
[0018] In some embodiments, the price protection system offers a
variable protection fee based on the likelihood of an increase in
ticket prices. For example, the price protection system may charge
a higher fee for protection for an itinerary that is particularly
prone to price increases. Many factors can make an increase likely,
such as a holiday itinerary, an itinerary that is close to
departure, an itinerary on dates of a large event (e.g.,
conventions, sporting events, and so on), an itinerary on which a
specific carrier dominates a significant amount of the market, a
carrier declaring bankruptcy that handles a large amount of
capacity for a particular route, or a natural disaster. The risk
may be beyond what the operator of the price protection system
would be willing to protect against using the fixed price method
described above, but a higher fee may make the risk manageable such
that the system can still offer the consumer some protection. A
variable fee allows the price protection system to determine the
cost of protection based on the risk of a price increase. The fee
may also vary based on other factors such as the historical price
of the itinerary, the likely magnitude of an increase, and so
on.
[0019] The price protection system may be used in conjunction with
various pricing models for protection fees, including not charging
a protection fee. For example, the price protection system may
offer a subscription model. An entity (e.g., an individual
consumer, travel agency, or corporation) may pay a periodic (e.g.,
annual) subscription fee for receiving price protection for its
itineraries. When the entity tries to book a flight, then the price
protection system provides a notification when price protection is
available and its protected price. The entity can then accept the
price protection and try to purchase a ticket for that itinerary
during the protection period. If the entity pays more than the
protected price for a ticket, then the entity can request
compensation. Periodically, the provider of the price protection
system can review the profitability of the subscription service
being provided to an entity and can adjust the subscription fee as
appropriate.
Informing the Consumer
[0020] In many cases, the price protection system can best help the
consumer to make a risky purchase by increasing the amount of
information available to the consumer about the risk.
[0021] In some embodiments, the price protection system reports a
predicted price change to the consumer. Rather than simply
reporting the current price of an itinerary to the consumer, the
price protection system may predict the likely change in price of
the itinerary. For example, although today's lowest price may be
$250, the price protection system may inform the consumer that the
price is likely to drop $50 within the next seven days. Based on
this information, the consumer may decide to wait to buy a ticket
for the itinerary for less money, but purchase protection to guard
against the risk of the price going up. The price protection system
may even offer a protected price that is less than the current
lowest price to induce the consumer to purchase price protection.
For example, if the current lowest price is $500 but it is
predicted to drop to $300 over the next seven days, then the price
protection system may set the protected price at $450. In such a
case, the protection fee may be even less than the $50 difference
between the current lowest price and the protected price. If the
difference between the current lowest price and the protected price
is greater than to the protection fee, then the consumer is assured
that by purchasing the price protection the savings will be greater
than the protection fee.
[0022] In some embodiments, the price protection system reports a
degree of confidence to the consumer. A predictive price system
deals with probabilities of various events, and a predicted price
change usually has an associated probability of being correct. The
price protection system can report the probability of a predicted
price change being correct as a degree of confidence to the
consumer. For example, the price protection system may report that
the price of an itinerary is likely to increase by at least $50
over the next few days with a degree of confidence of 60%. This
indicates to the consumer that there is a 60% chance of the price
going up by at least $50, and a 40% chance of the price going down
or going up by less than $50. The price protection system may
report several price predictions with a degree of confidence for
each. For example, the price protection system may report one
degree of confidence for the price going up $50 or less, another
for the price going up $100 or less, and another for the price
going down $50 or more.
[0023] In some embodiments, the price protection system reports a
recommended action to the consumer. For example, if the price
protection system determines that the price of an itinerary is
likely to increase, then the price protection system may be
unwilling to offer protection and instead recommend that the
consumer immediately purchase a ticket for the itinerary.
Alternatively, if the price protection system determines that the
price of the itinerary is likely to decrease, then the price
protection system may offer protection based on a protected price
and recommend that the consumer wait to purchase a ticket for the
itinerary. In either case, the price protection system may offer to
update the consumer when the price or recommendation changes, such
as by sending an email notification.
[0024] In some embodiments, the price protection system reports the
historical price of an itinerary to the consumer. The price
protection system may report the historical price before or after
the consumer purchases protection. For example, before the consumer
purchases protection, the price protection system may report a
price prediction to the consumer that indicates that the price will
decrease by $50, and report a price history to the consumer that
supports the prediction based on historical events similar to the
current purchasing environment. After a consumer purchases
protection, the price protection system may report a daily history
of the lowest available ticket price for the itinerary to help the
consumer know when to purchase their ticket for the itinerary. For
example, if the price protection system predicts a lowest price of
$200 for the next seven days when the consumer purchases protection
and the price two days later is $199, then the consumer may decide
to purchase a ticket on that day to secure the low price that is
below historical trends.
Compensation and Redemption Price
[0025] In some embodiments, the redemption price is the lowest
price found by the price protection system on the day the consumer
purchases the ticket and the price protection system bases the
amount of compensation on the difference between the protected
price and the redemption price. In the event that the lowest price
of the itinerary increases from the time the consumer purchases
protection to the time the consumer purchases a ticket for the
itinerary, the price protection system honors the protection by
offering compensation to the consumer. One way of calculating the
compensation is by determining the lowest available price on the
day the consumer bought the ticket, and subtracting the protected
price for which the price protection system protected the consumer.
For example, if the protected price is $200, and the lowest
available price on the day the consumer bought the ticket is $250,
then the compensation offered is $50. Using this method, the price
protection system does not necessarily need to know the actual
price paid by the consumer, and this method protects the price
protection system against the risk of an unsavvy or disinterested
consumer that overpays for the ticket on a particular day by not
purchasing the ticket for the lowest available price. The consumer
also benefits, because the consumer may purchase a different class
of service and still receive compensation. For example, although
the consumer may have purchased protection based on a coach class
ticket, the consumer may later decide to purchase a first class
ticket. The consumer can still receive compensation for the
increase in the price of the coach class ticket.
[0026] In some embodiments, the price protection system determines
the redemption price based on the actual price paid for the ticket
by the consumer, such as when the actual price paid is below the
lowest tracked price for the itinerary. For example, if the
protected price is $200, and the lowest price found during the
protection period by the price protection system is $300, but the
consumer actually pays $250, then the compensation using this
method is $50. This protects the price protection system from
over-compensating the consumer in the event that the consumer was
able to find a lower price than the price protection system was
tracking. This could happen if, for example, the consumer has a
relationship with an airline that entitles the consumer to extra
discounts not available to the public. The consumer reports the
actual price paid to the price protection system following the
purchase. The price protection system may also take additional
steps to guard against fraud by verifying that the consumer
actually purchased a ticket at the reported price, such as by
verifying a confirmation number or credit card charge provided by
the consumer.
Managing Risk
[0027] The success of a price protection system in part depends on
its ability to successfully predict and manage risk so that the
price of protection can be set such that more money is taken in
during the normal course of business than is paid out. However, the
more conservative the price protection system is with managing
risk, the less value that the system offers to the consumer in
terms of protection from risk, thereby making the consumer more
likely to forego protection. Therefore, the operator of the price
protection system will want to manage risk effectively in a way
that offers value to the consumer while still producing a
profit.
[0028] In some embodiments, the price protection system limits the
number of protection requests open at any given time. By limiting
the number of open protection requests, the price protection system
reduces the exposure of the operator of the price protection system
in the case of a catastrophic event. For example, if all ticket
prices suddenly increased due to a sudden increase in the price of
fuel, the operator of the price protection system would have less
exposure if there were 1,000 open protection requests than if there
were 10,000 open protection requests. The price protection system
may limit the total number of open protection requests by limiting
the number of users of the system and limiting the number of open
protection requests for each user. For example, the price
protection system may allow each user to have four protection
requests open at a time, and then manage the number of users to
provide the operator of the price protection system with a
manageable level of exposure to risk. To help reduce risk
associated with the occurrence of an unexpected event, the price
protection system may set a cap on the compensation that a consumer
will receive. For example, the price protection system may set the
redemption price to the lower of the lowest price on the day of
purchase or 150% of the protected price. In this way, the
protection system will have a maximum compensation risk that is 50%
of the protected prices.
[0029] In some embodiments, the price protection system limits the
protection period. For example, the price protection system may set
an expiration of one week on protection requests. The risk of any
event increases as the period of the event's prediction increases.
For example, it is safer to predict that an earthquake will not
happen for the next week, than to predict that it will not happen
for the next month. The price protection system may also set a
variable protection period based on the determined amount of risk.
By limiting the duration of protection requests, the price
protection system keeps protection requests within a range over
which prices can be more accurately predicted, and thereby reduces
the risk to the operator of the price protection system that a loss
will occur.
[0030] In some embodiments, the price protection system restricts
protection offers for poorly performing markets. The price
protection system may decline to offer protection for some markets
or increase the price of protection in those markets that
experience abnormal price fluctuations. For example, certain parts
of the world may experience wildly changing ticket prices due to
political unrest. The price protection system may not be able to
predict prices in such environments with sufficient accuracy to
provide an acceptable level of risk to the operator of the price
protection system. Therefore, the price protection system may
either not offer protection for those markets, or offer protection
at a higher price that effectively strikes a balance between risk
and profit. Similarly, the price protection system may restrict
protection offers for itineraries that are dominated by certain
airlines (e.g., if the airline recently declared bankruptcy or
recently received a union notice of an impending strike), or
difficult to predict periods (e.g., seven days before departure or
holidays).
[0031] In some embodiments, the price protection system limits the
time to submit a redemption request. As the number of days that a
consumer can submit a redemption request increases, the number of
consumers that will redeem the purchased protection also increases.
In addition, having a high number of outstanding potential
redemption requests leaves the operator of the price protection
system uncertain of the potential compensation that the system will
pay in a particular relevant period, such as a fiscal quarter. A
longer redemption period also makes it more difficult to obtain
evidence of the actual purchase price or lowest price on the
purchase day on which to base the redemption price. By setting a
limit on the allowable time for submitting a redemption request,
the risk of receiving a substantial number of redemption requests
or of uncertain redemption prices is reduced. For example, the
system may allow consumers seven days after protection expires to
submit a redemption request based on the protection.
[0032] The price protection system may offer price protection when
it is predicted that the price is unlikely to change over time or
when the direction of the price cannot be accurately predicted. In
either case, the price protection system may offer price protection
to a certain percentage of consumers. By offering such protection,
the price protection system may find the revenue derived from the
protection fees or from subsequent purchase of tickets through a
service affiliated with the price protection service to be
profitable. Offering price protection in such cases may also
improve consumer loyalty as a consumer may be more likely to use
the price protection service if offered price protection.
[0033] The following describes embodiments described above in
further detail with reference to the figures.
[0034] FIG. 1 is a block diagram that illustrates components of the
price protection system in one embodiment. The price protection
system 100 contains an offer protection component 102, a process
redemption component 132, and a user interface component 150. In
some embodiments, the price protection system offers a web service
interface (not shown) for accessing the features of the price
protection system. For example, a travel agent web site can access
web-based functionality for specifying an itinerary, receiving
quotes for price protection, purchasing price protection, and so
on.
[0035] The offer protection component 102 contains a receive
itinerary specification component 105, a determine itinerary
pricing component 110, a predict price component 115, a determine
risk component 120, a receive protection request component 125, and
a provide protection component 130. The receive itinerary
specification component 105 receives a specification from a
consumer that identifies one or more itinerary criteria. For
example, the itinerary specification for an airline flight may
contain a departure date, departure city, arrival city, and number
of companions traveling. The determine itinerary pricing component
110 determines the current prices for tickets that match the
received itinerary specification. For example, the determine
itinerary pricing component 110 may consult online travel agents or
other services to determine current ticket prices for a particular
itinerary or other event. The predict price component 115 predicts
the trends in the price of tickets matching the itinerary
specification during the protection period. For example, the
predict price component 115 may predict whether the price of the
itinerary is likely to increase over the next week. The determine
risk component 120 determines the risk of protecting a predicted
price for the itinerary based on the predicted price and other
factors, such as the route requested, fuel price trends, and so on.
If the risk is too high, then the price protection system 100 may
determine that the system will not offer protection to the
consumer, or may offer protection at an increased price. The
receive protection request component 125 receives a request from a
consumer to purchase protection. The request may include additional
information such as payment details, a preferred airline, or other
information. The provide protection component 130 provides the
consumer with the requested protection. The price protection system
100 may provide a list of open protection requests to the consumer
for later viewing through the user interface component 150. The
user interface component may also exchange information between the
consumer and each of the other components of the price protection
system 100.
[0036] The process redemption component 132 contains a receive
redemption request component 135, a validate redemption request
component 140, and a redeem protection component 145. The receive
redemption request component 135 receives redemption requests from
consumers that purchased protection. For example, if a consumer
purchased protection and 1) the price of the lowest priced
itinerary increased beyond the protected price locked in by the
consumer and 2) the consumer purchased an itinerary at an increased
price during the protection period, then the consumer may submit a
redemption request to recover compensation for the difference in
the price of the lowest priced itinerary on the date of the
consumer's purchase and the protected price. The validate
redemption request component 140 verifies that the consumer's
request is valid. For example, the validate redemption request
component 140 may verify that the consumer paid for the ticket and
that the price the consumer indicated is correct. The redeem
protection component 145 processes valid requests for payment. The
consumer may receive a payment by check or other form such as
credit card credit, online payment, bonus frequent flyer miles,
PayPal, or credit towards the purchase of merchandise.
[0037] The computing device on which the system is implemented may
include a central processing unit, memory, input devices (e.g.,
keyboard and pointing devices), output devices (e.g., display
devices), and storage devices (e.g., disk drives). The memory and
storage devices are computer-readable media that may be encoded
with computer-executable instructions that implement the system,
which means a computer-readable medium that contains the
instructions. In addition, the data structures and message
structures may be stored or transmitted via a data transmission
medium, such as a signal on a communication link. Various
communication links may be used, such as the Internet, a local area
network, a wide area network, a point-to-point dial-up connection,
a cell phone network, and so on.
[0038] Embodiments of the system may be implemented in various
operating environments that include personal computers, server
computers, hand-held or laptop devices, multiprocessor systems,
microprocessor-based systems, programmable consumer electronics,
digital cameras, network PCs, minicomputers, mainframe computers,
distributed computing environments that include any of the above
systems or devices, and so on. The computer systems may be cell
phones, personal digital assistants, smart phones, personal
computers, programmable consumer electronics, digital cameras, and
so on.
[0039] The system may be described in the general context of
computer-executable instructions, such as program modules, executed
by one or more computers or other devices. Generally, program
modules include routines, programs, objects, components, data
structures, and so on that perform particular tasks or implement
particular abstract data types. Typically, the functionality of the
program modules may be combined or distributed as desired in
various embodiments.
[0040] FIG. 2 is a flow diagram that illustrates the processing of
the offer protection component of the system in one embodiment. The
system invokes the component when a consumer requests a quote for
protecting an itinerary price. In block 210, the component receives
an itinerary specification that provides information about the type
of itinerary that the consumer is seeking. For example, the
itinerary specification may identify a flight by its number, or may
contain information such as desired flight times, departure
airport, and destination. In block 220, the component determines
the current price of itineraries matching the received itinerary
specification. For example, the component may invoke an external
fare pricing service or online travel agent to determine the
current price of itineraries. In block 230, the component predicts
the trends in the prices of itineraries matching the received
itinerary specification. For example, the component may determine
whether the price is likely to increase or decrease based on
historical trends and other information such as trends in fuel
prices and employee salaries. In block 240, the component
determines the risk associated with the predicted price. For
example, the component may determine a degree of confidence in the
predicted price or a probability that the price will follow the
predicted trend. In decision block 250, if the determined risk is
acceptable to the price protection system, then the component
continues at block 260, else the component continues at block 270.
In block 270, the component reports to the consumer that protection
is unavailable. In block 260, the component offers the protection
to the consumer for a fee. For example, the component may use a
fixed fee, or may base the fee on the determined risk or other
factors. The component then completes.
[0041] FIG. 3 is a flow diagram that illustrates the processing of
the process redemption request component of the system in one
embodiment. The system invokes the component when a consumer
submits a request to redeem protection. In block 310, the component
receives a redemption request from a consumer. For example, the
consumer may indicate that they purchased a ticket within the
protection period for $50 more than the protected price. In block
320, the component validates the price paid by the consumer. For
example, the component may verify the ticket purchase with an
airline or other agency, or require that the consumer provide an
airline confirmation number or send in a copy of the consumer's
credit card statement to verify that the ticket was purchased and
the price paid for the ticket. The component may also verify other
information such as whether the consumer submitted the redemption
request before the protection expired or before the end of a
limited redemption period. In decision block 330, if the redemption
request is accepted, then the component continues at block 340,
else the component continues at block 335. In block 335, the
component informs the consumer that the request was denied and then
completes. In block 340, the component determines the redemption
price and the compensation that is due to the consumer. The
redemption price may be based on the price the consumer actually
paid, such as if the price the consumer paid is less than the
lowest price tracked by the price protection system, or on another
amount such as the lowest available price for the ticket on the
date the consumer completed the purchase. In block 350, the
component sends a payment to the consumer based on the determined
compensation. For example, the component may cause the system to
issue a check to the consumer.
[0042] FIG. 4 illustrates a display page of the user interface of
the price protection system for purchasing protection in one
embodiment. For example, the display page could be a web page or
screen produced by a desktop application for interacting with the
consumer. The page includes an itinerary specification area 410, a
list of matching itineraries 450, an itinerary lowest price
prediction area 430, and a FareGuard button 440. The itinerary
specification area 410 displays information about the type of
itinerary specified by the consumer. For example, the itinerary
specification area 410 may contain a departure time 412, a
departure city 414 or airport, a departure date 416, an arrival
time 418, an arrival city 420, an arrival date 422, and a number of
traveling companions 424. The list of matching itineraries 450
lists currently available itineraries matching the itinerary
specification and the corresponding prices. The itinerary lowest
price prediction area 430 contains a prediction 432 of the likely
trends in matching itinerary prices, a degree of confidence 434 in
the prediction, a recommended action 436 based on the prediction,
and a historical price graph 438. The prediction 432 indicates that
the lowest itinerary prices are likely to hold steady, and the
recommended action 436 indicates that the consumer should buy a
ticket for the itinerary. However, to guard against an increase in
lowest price itinerary prices if the consumer is not ready to
purchase a ticket, the display page offers the consumer a FareGuard
button 440 for purchasing protection to guard against the risk of
increasing itinerary prices. Near the FareGuard button 440 the
protected price 442 is specified along with a protection fee
444.
[0043] FIG. 5 illustrates a display page of the user interface of
the price protection system when no protection is offered in one
embodiment. FIG. 5 is similar to FIG. 4, except the prediction in
this instance is that lowest price itinerary prices are likely to
rise. The fare prediction 532 indicates that the price is likely to
rise by $50 or more in the next seven days. The recommended action
536 indicates that the consumer should buy a ticket for the
itinerary now to lock in the best price. Because the price
protection system is predicting that prices are likely to increase,
the system does not offer the consumer the opportunity to purchase
protection. However, the consumer can use the fare alert button 540
to cause the system to notify the consumer if the trends in prices
change such that protection is available.
[0044] FIG. 6 illustrates a display page of the user interface of
the price protection system for confirming a purchase of protection
in one embodiment. The page contains details 610 of protection
selected by the consumer. The protection contains a protected price
620, an itinerary specification 630, an expiration date 640, and a
protection fee 650. The protected price 620 is the price for which
the consumer will be able to make a redemption request if the
lowest price itinerary exceeds this price during the protection
period. The itinerary specification 630 contains details about the
type of itinerary protected, such as the departure city, arrival
city, dates, and number of protected companions. The expiration
date 640 indicates when the protection period expires. If the price
increases after the protection period, then the consumer will not
have a valid redemption request. The protection fee 650 indicates
the amount charged by the operator of the price protection system
for protecting the price. In this example, the system charges the
consumer a flat fee of $9.95 for each of two instances of
protection.
[0045] FIG. 7 illustrates a display page of the user interface of
the price protection system for redeeming protection in one
embodiment. The page includes protection details 710 about
protection purchased by the consumer, redemption information 720,
verification information 740 requested for verifying the redemption
request, and booking information 750 requested about the ticket
purchased by the consumer. The protection details 710 contain
information about the protected price and type of itinerary for
which the consumer purchased protection, such as the departure date
and city. The redemption information 720 contains information about
the compensation available to the consumer based on the booked
ticket including the lowest fare 730 available on the booking day,
and the resulting compensation 735. The verification information
740 requests that the consumer send evidence of the consumer's
purchase so that the price protection system can verify the amount
paid and date booked. The booking information 750 requests
additional information about the booked ticket, such as how the
consumer made the purchase, and the confirmation number of the
purchased ticket. The system may also use this information to
verify the consumer's purchase.
[0046] From the foregoing, it will be appreciated that specific
embodiments of the price protection system have been described
herein for purposes of illustration, but that various modifications
may be made without deviating from the spirit and scope of the
invention. For example, although the above uses airline tickets as
an example, other non-travel-related purchases could also use the
techniques described, such as those for purchasing goods, sports
tickets, concert tickets, and so on. The price protection system
may also be used to reduce the risk associated with fluctuations in
prices of various items such as hotel room, automobile rentals,
cruises, and so on. In addition, decisions other than purchases
could use the described techniques to assist a consumer in making
decisions and alleviating risk in various situations, such as
predicting sports team wins, predicting political outcomes, and so
on. In some embodiments, the price protection offered by the price
protection system does not include a right to purchase the item
(e.g., a ticket for itineraries) whose price is being protected.
For example, the price protection system may be used independently
of any system for selling the price-protected items. As such, a
consumer may purchase price protection for an itinerary, but may be
unable to actually purchase a ticket within the protection period
because, for example, all of the flights matching the itinerary
sell out very quickly for an unexpected reason, are canceled due to
an airline emergency (e.g., a strike), and so on. Accordingly, the
invention is not limited except as by the appended claims.
* * * * *