Skyscanner is global search engine that helps people find and compare the best offers in flights, hotels and car rentals. The main business model is a website that provides a free search service for a) travellers, and simply directs them to b) the third party travel agent, airline, hotel or car rental where the final transaction takes place; therefore, Skyscanner only charges a lead-fee to b) and does not intermediate in the final transaction, making this an example of a multi-sided business model and not a matchmaking business model.
Skyscanner was founded by Gareth Williams and co-founders Bonamy Grimes and Barry Smith as a response to Gareth’s frustration with the tedious process of searching for flights to visit his brother. The success of the first prototype, that spread by word of mouth reaching thousands of visitors per day, lead to the official launch of Skyscanner in Edinburgh in 2003.
The company grew to become the largest flight search engine in Europe and expanded internationally opening offices in Singapore, Beijing, Shenzhen, Miami, Barcelona, Sofia and Budapest. In 2013 the company received funding from Sequoia, the venture capital firm behind Apple and Google, who valued the company at $800 million. Today Skyscanner receives over 60 million visitors per month and offers search in 30 languages.
CUSTOMERS – WHO THEY ARE:
Skyscanner has two customers: travellers and service providers. a) Travellers are people around the world who like to plan their own trips, and only need Internet connection and a computer or mobile device to access the website or mobile app. The second group b) are travel agents, airlines, hotels and car rental companies.
ENGAGEMENT – VALUE CREATION PROPOSITION:
The search engine helps travellers find and compare the best available offers saving them a considerable amount of time, while getting very accurate results. The platform allows users to easily filter and customise results to find exactly what they need through an easy to use tool (website or mobile app). On the other hand, travel service providers benefit from the leads at a relatively low cost, while keeping the transaction in their site; Skyscanner offers them a powerful advertising channel that reaches more than 60 million visitors per month. The interaction between the two parties happens directly in the service provider’s environment, not through Skyscanner.
DELIVERY – THE VALUE CHAIN:
Users access the website or mobile app and enter their search criteria. Their proprietary algorithm and software enables searches many different service provider sites through a meta-search process. It presents the results in an easy-to-use interface on its website. Results are organised from the lowest price to the highest, and customers can filter by other criteria like number of stops or airline companies. Then, when the user clicks on the selected option she is immediately directed to the service provider’s website to finalise the transaction.
MONETIZATION – VALUE CAPTURE:
Skyscanner does not disclose financial statements and therefore we do not know its revenue breakdown; we know the company earns money from cost-per-click, cost-per-acquisition, and advertising displays and provides search services to other websites; however, as a search engine we infer its main source of revenue is per click leads charged to travel service providers.
Written by Alejandra Velez Ospina and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016
Published 21 April 2016