Google-ITA Deal Threatens Kayak, Orbitz, and Other Airfare Search Engines
You can turn the faucet on, but whoever controls the water determines the flow. Or even if they'll be any water.
So, the 700 million dollar acquisition deal that that Google and Cambridge, MA-based ITA Software Inc., just inked, is very worrisome to Kayak, Orbitz, Trip Advisor, Expedia and any on line travel site that uses the powerful and ubiquitous ITA software to process and publish flight data.
And with good reason.
In effect, says CNET News, this is a marriage between the world largest search engine and the critical software that makes airfare searches possible. The deal will likely make Google the primary source for all travel information, starting with flight information and going on up the travel chain to car rentals, hotels, excursions, etc.
While Google won't actually sell tickets, the International Business Times points out that owning ITA gives Google control over collecting data on airfare, flight availability and flight times and then the power to organize the data for airlines, travel agents and online travel portals, as it wishes.
Kayak's Director of Marketing, Robert Birge says he's not especially worried because Google has promised to honor its commitments to existing ITA agreements.
Birge is whistling past the graveyard.
Forrester Research says that what's at stake here is nothing less than is dominance in the $80 billion market for online travel services, $44.8 billion of which flows from airfares. By 2014, this market is predicted to reach $111 billion, with the fares segment increasing to $59 billion.
So when Birge adds, "there is some reason to be concerned," he comes close to making the understatement of the year.
Expedia, Orbitz, Travelocity, like Kayak, Bing and Hotwire are very much at risk.
Even as Google enters the travel business, it will not be earning money on tickets sold, but rather it will send customers to the best airfare...and earn money on advertising in the process.
But online travel agencies may no longer have the ability to differentiate their product, as Zacks Research notes, or provide additional services, because Google through its ownership of ITA, controls the data.
With comparison shopping limited, will the consumer end up paying more for tickets?
The answer is probably, yes, even though an ITA post says, " The acquisition will benefit passengers, airlines and online travel agencies by making it easier for users to comparison shop for flights and airfares."
But with giants like Microsoft (which owns competitor Bing which uses ITA Software) and Expedia involved, it's certain the regulators will give this deal a very close look,
Still, the smart travel money is on Google.
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