Airfordable spreads the cost of flights across biweekly payments consumers make leading up to their departure date. The startup launched last December and already has generated more than $500,000 in ticket revenue.
In the U.S., there are 72 million consumers who don't buy airline flights because they lack the necessary savings or credit, Airfordable says, citing data from the U.S. Census Bureau. Based on its average profit per ticket, the company estimates this is a market that's potentially worth $4.7 billion.
"These are people begging for a way to travel without tying up a significant portion of their hard-earned money up front," says Ama Marfo, CEO and co-founder of Airfordable. Marfo pitched her company to hundreds of investors on Monday at Y Combinator Demo Day in Mountain View, California.
Airfordable will bring its business model to hotel bookings as well next month, Marfo says. The company hopes to revolutionize the way consumers pay for their travels.
RELATED: 7 items to avoid buying at the airport
items to avoid buying at the airport
items to avoid buying at the airport
Wireless internet is often a necessity in order to keep in contact with your loved ones. Before you make the decision to purchase it at an airport, however, check to see if there is a local Starbucks or coffee shop where Wi-Fi will more than likely be free to use.
If you're looking for a last-minute gift then purchasing a souvenir from a shop inside the airport may be necessary. If you are able to stop beforehand, you may want to avoid buying a gift from the airport. Oftentimes, airports will increase the price of souvenirs that can probably be found somewhere else for a more reasonable price.
You may not realize it, but on average, bottled waters inside airports are about three dollars. You can avoid this trap, however, by purchasing a reusable water bottle or even emptying your water bottle before you go through the security checkpoint and refilling at a fountain once you get inside.
This is a common item that can be purchased online. If you aren't able to, however, buy one before you get to the airport to avoid paying double the market price for one.
Much like many of the other items on this list, snacks are extremely overpriced in airports. The best deal is to buy snacks in bulk and bring a few with you to last throughout your flight.
Reading a book is a perfect way to pass time while waiting for your flight -- but if you purchase a book at the airport, don't be surprised if it happens to be 40 to 50 percent higher than what it would be in a bookstore.
As convenient as it may be, you should try to avoid exchanging your money at an airport. Many times, airport transactions fees are much higher than if you were to pull money from the ATM at your destination.
"We're making travel as a whole affordable, practical, and possible," she says.
The inspiration for the company came to Marfo and her two co-founders as a result of their own frustrations with air travel. Marfo stayed on campus in Philadelphia every break during college because she could not afford the thousands of dollars for airline tickets to visit her family back in Ghana. Marfo worked in finance after college and became familiar with consumer lending and layaway business models.
The model has worked so far forAirfordable, which became profitable in July. Airfordable takes a one-time fee that ranges from 10 to 20 percent of each ticket sale.
Airfordable works with an insurance partner that assumes all the risk for consumers who fail to make their payments. The startup charges a 38 percent nonrefundable deposit to motivate customers to keep up with their payments. As a result, only 4.2 percent of Airfordable's customers break their plans, the company says.