A Million Ways to Fly

How does a company survive in a turbulent industry crowded with giant competitors? It helps to be fast, nimble and easy to maneuver — like a kayak in rough water. That's the reason Steve Hafner, 39, and Paul English, 44, named their upstart travel website Kayak.com in 2005. "A lot of kayakers were annoyed with us," admits Kelly Pelletier, the site's vice president of communications. Why? Because Kayak.com doesn't actually tell you anything about kayaks. Instead, it uses proprietary technology to mine data from 450 airlines to help find the best rate for any trip. (It also searches hotels and rental cars.) "We're applying Google-like search technology to the travel market," says Hafner.

Unlike Google, Kayak.com gets just half its revenue from advertising, and unlike its main competitors Expedia and Priceline, Kayak.com does not sell any travel services directly. A referral fee of from 55¢ to $1.50 for each time a visitor clicks through to a site to make a booking accounts for the other 50% of its income — the airlines and hotels pay the fee, not consumers. That means the company has to make its site as easy as possible to navigate, so visitors will click through to buy a ticket. Programmer Jeff Rago developed a feature on the site called "sliders," which allow consumers to set the exact range of travel times and prices they will consider.

This novel business model seems to be working: while Expedia and Priceline are still the top travel sites in the world, Kayak.com has risen to eighth place in less than three years. The site attracts 6.3 million visitors a month, according to comScore Media Metrix, with traffic jumping 27% over the past year. And while much of the travel industry has been stung by higher fuel costs and tighter consumer budgets, Kayak.com's deal-hunting has more appeal than ever.