Flyr Labs Raises $150M Series C Funding - WestCap & Peter Thiel

Revolutionizing Airline Pricing with Deep Learning

The primary objective for airlines – filling available seats – has historically been addressed using statistical modeling techniques that are often inefficient and outdated when it comes to predicting optimal ticket prices and associated conditions.

FLYR Labs is changing this landscape. The company has engineered a sophisticated deep learning platform designed to accurately forecast airline demand and dynamically set airfare prices. This innovation has been bolstered by a recent $150 million Series C funding round, intended to facilitate both expansion of its core business and diversification into new industry sectors.

From Consumer App to B2B Solution

Founded in 2013 by Alex Mans, Cyril Guiraud, and Jean Tripier, FLYR Labs initially focused on a direct-to-consumer product. Their early offering, FareKeep, allowed travelers to secure a ticket price for a week for a nominal fee. However, in 2019, the company strategically shifted its focus to a B2B model, driven by significant interest from airline companies.

According to Mans, traditional airline forecasting systems primarily relied on inventory levels and booking data to gauge demand, employing relatively simple regression forecasting methods. A key weakness of this approach is its susceptibility to disruption when new factors emerge, such as a competitor entering the market.

He further noted a surprising lack of comprehensive data utilization in the decision-making processes of many airlines, and the relative simplicity of their existing models.

The Revenue Operating System

FLYR Labs’ core product, the “Revenue Operating System,” is a deep learning platform that integrates a wide range of data points provided by airlines. This includes booking information, accounting data, search queries, and capacity figures. It also incorporates external data like weather patterns and promotional activities to predict demand, revenue, and ultimately, the price of airline tickets.

The platform also leverages competitor schedules and capacity data, sourced from external providers. FLYR ensures data privacy by not training its model on individual customer data from competitors, alleviating concerns about data being used to benefit rival airlines.

By analyzing these diverse data sources, the model identifies trends – even across different routes or flight times – which can then be applied to inform the introduction of new, previously unserved flight routes.

A Continuously Learning Model

Because the system is designed to address a common challenge across all airline clients – optimizing seat pricing for maximum sales – the model continuously improves its accuracy over time.

FLYR estimates that its platform can increase airline revenue by 5-7%. This isn’t achieved through uniform price increases, but rather by creating a wider range of pricing opportunities. Mans stated that 70-80% of travelers will experience the same or lower prices compared to legacy airline forecasting systems.

Low-Risk Implementation and Performance-Based Payment

FLYR offers a phased onboarding process for new clients. The software is initially deployed on a limited portion of the airline’s network, typically 20-40%, and its performance is rigorously tested through A/B testing over a period of 3-4 months. Payment is contingent upon demonstrable revenue increases generated by the platform.

Significant Revenue Under Management and Future Growth

Currently, FLYR Labs manages approximately $14 billion in airline revenue, meaning it determines the ticket prices for that volume of sales. The company projects this figure to reach $100 billion by the end of 2023.

This rapid expansion is driving physical growth as well. FLYR is opening new offices in Los Angeles, Dallas, and Amsterdam in the coming months, complementing its existing headquarters in San Francisco and its engineering office in Krakow, Poland. The company has more than tripled its workforce in the last nine months, from 50 to 150 employees, with plans to add another 100 by January. A substantial 80% of the workforce will be dedicated to engineering and data science.

Expanding Beyond Airlines

Following initial success with airlines, FLYR Labs has received inquiries from companies in related industries, including car rental, cruise lines, railways, and event management. Mans recognized the similarities in the data challenges and optimization goals across these sectors, making expansion into these verticals a key strategic priority for 2022.

Furthermore, the company aims to broaden the scope of its product’s capabilities. Mans emphasized that FLYR is more than just a pricing system, offering insights into capacity management, marketing spend optimization, and overall quarterly performance analysis.

Funding and Investors

The Series C funding round was led by WestCap, with participation from Silver Lake Waterman, WndrCo, Peter Thiel, Streamlined Ventures, JetBlue Technology Ventures, and Gopher Asset Management.