adioso
7 years ago
 

TLabs Showcase – Adioso

TLabs Showcase focus on startups featuring Australia-based travel search site Adioso.

Who and what are you (including personnel and backgrounds)?

We’re Fenn Bailey, Tom Howard and Andrew Tipton.

Fenn and Tom are developers and longtime collaborators from Melbourne, Australia, who’d worked for a few years in the ISP/telco industry then as freelance web/software developers before founding Adioso in 2008.

Andrew is also a developer, who joined the team in early 2010. He’s originally from Tennessee, but moved to New Zealand several years ago, and has worked in a variety of freelance and startup roles.

We’ve all been avid travellers for many years, particularly in South-East Asia and Europe.

What financial support did you have to launch the business?

Adioso started out as a self-funded side project, until we received $15,000 Y Combinator funding in January 2009, which was followed by a $70,000 round from a group of Silicon Valley angels in March 2009.

In early 2010 we raised $270,000 from Australian angels, of whom most are from travel tech backgrounds.

What problem are you trying to solve?

A few problems:

Existing flight search websites don’t work the way increasing numbers of people actually want to travel. If you’re looking to take a vacation or visit family and don’t have an individual specific destination airport and departure/return dates, you either simply cannot search for flights or the manual effort required is intolerably cumbersome.

Significant numbers of of travellers are willing to go anywhere, any time if they can find a great deal or an interesting new destination, but no flight search tool properly lets people search with flexibility on dates or destinations.

Usability and aesthetics in travel search and booking sites are almost universally very poor.

LCCs offer travellers the ability to take long-haul trips very cheaply by interconnecting flights from disparate airlines, but as they’re sold as separate tickets, it’s not possible to find these options on traditional flight search engines or GDSs.

Travel search websites and OTAs don’t cater to the needs of LCCs.  The most common objection is that they divert traffic away from the carrier’s preferred direct channel, and erode margins by making it easier for customers to compare fares on popular routes while doing nothing to help airlines find new customers and fill capacity on their long tail. Others charge commissions and booking fees that LCC margins cannot accommodate.

Describe the business, core products and services?

Adioso is a flight search engine with a natural language interface that supports broad and open-ended queries. For example:

  • SF to NYC late September
  • LA to New Zealand
  • Atlanta to Vegas Friday
  • Boston to California
  • London to Spain early November
  • Melbourne to Port Douglas next week
  • Los Angeles to Anywhere next month under $150

So far our inventory includes a selection of LCCs in Europe, Australia, SE Asia and the USA, but it’s a priority to expand this rapidly.

A major new feature and core technology asset is a custom-built fare search & routing engine that can assemble itineraries for optimised routes consisting of segments from disparate carriers, independent of any codeshare or interlining agreements (which generally don’t exist with LCCs).

This engine is additionally optimised for answering queries over very broad, multi-dimensional date and destination criteria, eg, the best possible routes to all airports in all countries in western Europe in the month of December.

These capabilities have some major impacts on the economics of providing flight search results. Whereas flight search services like ITA’s QPX or Amadeus are usually charged on a per-query basis (with a month-wide date comparison charged at many multiples of the cost of a single day), Adioso’s engine allows us to evaluate large slices of our dataset at very low computational cost.

Additionally, our dynamic fare assembly or “virtual interlining” capability exposes regional or domestic LCCs (ie: JetBlue, easyJet amd VirginAmerica) to entirely new markets by allowing customers living outside of their network to find their fares as part of dynamically assembled multi-segment itineraries.

Who are your key customers and users at launch?

We have a loyal user-base of travellers in Australia, that has grown organically over the past 2 and a half years.

We have a partnership agreement with one major airline in Australia, and are in discussions with other airlines around the world who have expressed strong interest in using the technology once it’s available.

Did you have customers validate your idea before investors?

When we conceived and launched our first version in early 2008 we didn’t intend it to be our primary commercial venture; it was an experiment in building a consumer-focused web-app.  It was only the enthusiastic “where have you been all my life?!” response from users who discovered it that made us realise there was something in it.  We continued developing it and gauging users’ reactions for about 8 months before pitching it to YC.

In the past 12 months we’ve been actively engaging with leading LCCs in Australia and Asia, and taking advice from highly experienced individuals from various airline industry backgrounds. This has enabled us to develop the product in a way that aligns with industry trends and best satisfies LCCs stated requirements.

What is the business AND revenue model, strategy for profitability?

Initially we’ll go for the low-hanging fruit of referral commissions on accommodation and flights where they can be easily negotiated.

Longer term, our ideas for revenue are all about offering LCCs more effective ways of attracting new customers; inspiring people to take trips they hadn’t been planning, reaching customers located outside their own networks by virtual-interlining with other carriers, and making it easier to fill long-tail capacity and move distressed inventory profitably.

Operating on a very low cost-base is built into the fabric of the company, so we can become profitable quite quickly once we start tapping into revenue sources.

SWOT analysis – strengths, weaknesses, opportunities and threats?

Strengths:

  • Exceptional engineering capabilities, combined with strong UX design capabilities.
  • As outsiders to the travel industry, we’re able to look at the industry objectively and build things they way they should be, rather than being constrained by convention or preconceived limitations.
  • As avid budget-conscious travellers ourselves, we have an intimate understanding of the style of travel we’re trying to facilitate.
  • We’re addressing a growing market; the momentum in the airline industry is away from traditional airlines and towards low-cost. Spontaneous, adventurous travel is increasingly popular among people from more diverse age-ranges and lifestyles.
  • We have investors and advisors that believe in what we’re doing and are supporting us all the way.  Our investors offer a good balance of experience from the Silicon Valley tech world and the travel industry, and we have a strong network of well-established travel industry advisors who continue to offer tremendous guidance and encouragement.

Weaknesses:

  • As outsiders to travel, getting the attention of industry insiders can be more challenging, and it’s taken quite some time and effort to understand how the industry works, and where it makes sense for us to start trying to add value.

Opportunities:

  • We have an opportunity to resolve the disconnect between the way modern travellers want to discover and purchase travel products, and the way airlines and other travel suppliers are able to offer them.

Threats:

  • We’re entering a space occupied by powerful players with deep pockets.

Who advised you your idea isn’t going to be successful and why didn’t you listen to them?

Plenty of people, including senior players in the travel industry, that don’t believe that the types of people who want to be able to search for flights without having already decided exactly where they want to go and when, constitute a substantial or important segment.

We ignored them because we already had tens of thousands of users each month doing just that and loving Adioso for making it possible.  And most importantly, they were telling us they were travelling more often because Adioso existed.

Others point out that Kayak or SkyScanner or some other metasearch site or OTA already does what we’re trying to do, and are already too dominant for us to have a hope of competing.

Quite simply, they don’t do what we do from either a technical or a market perspective.

We’re servicing a different market and a different style of travel, one that to date has not been catered to by existing players.

We know we can succeed because we have a far deeper understanding of this style of travel than the incumbents have demonstrated, as well as the engineering capabilities and backing to execute well, and the persistence to see it through.

What is your success metric 12 months from now?

Brand awareness and sentiment among passionate travellers. Desire among talented, travel-obsessed engineers and designers to want to join the team.

Naturally, web traffic, booking volumes and revenue metrics are very important but in the early stages we consider the intangibles equally important in setting ourselves up for the long term.

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NB: TLabs Showcase is part of the wider TLabs project from Tnooz.

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Kevin May

About the Writer :: Kevin May

Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.

He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in 2017.

 

Comments

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  1. Peter

    Great to see the Adioso guys going for it!! Google’s ITA acquisition would have to be encouraging (in that it is an exciting space), but worrying at the same time…$355k start-up funding Vs $700m buyout. All the best to the guys, I like your product better anyway!!

     
 
 

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