online airline reservations technology company ITA
Internet search giant Google is set to delve into the travel market after signing a $700m deal to buy a leading online ticket reservations company.
San Francisco-based Google is set to acquire technology company ITA in a move which will see the search giant play a leading role on how airline reservations are booked on the Web.
If the deal is approved by authorities it could put Google in direct competition with many other flight comparison services such as Opodo, Expedia and TripAdvisor and may even lead to Google expanding into hotel, rental car and cruise reservations.
ITA, the company Google is set to buy, sells technology which helps run reservation systems of many airlines, including American, Southwest, Alaska and Continental. Its software also powers the tools that other travel websites use to track air fares.
“There is clearly more room for competition and innovation” in online travel, Google CEO Eric Schmidt said in a conference call. “We will improve the way flight information is organised.”
It might take up to a year for authorities in the U.S. approve the deal however Consumers and small-business travelers in the US will spend about $45billion on airline tickets booked online this year, and that figure is expected to rise to $59 billion by 2014, Harteveldt said.
And with thousands of engineers at its disposal, Google conceivably could build upon ITA’s success in the airline industry to expand into hotel, rental car and cruise reservations.
Bob Atkinson, travel expert from www.travelsupermarket.com, said: “It’s an interesting development from Google and we always welcome healthy competition as it’s, theoretically, great for consumers.
“However, Google tried meta search with credit cards before and it didn’t really change the online landscape, so we will have to wait and see what product they may offer to travellers.
“Flights are just one element of travel and on short haul routes only a small percentage of travel spend; with sites like travelsupermarket.com consumers are saving money across a vast range of travel-related items.”
Google is counting on ITA’s expertise to improve the quality of its search results when people are looking to make airline reservations.
Schmidt predicted the biggest winners in this deal would be consumers, but he also predicted Google would be able to drive more traffic to airlines and travel agencies such as Orbitz and Expedia. Google would profit from ITA’s technology by selling more ads alongside the flight data.
Microsoft’s search engine Bing has been picking up more traffic with features that help people figure out whether the prices of airline tickets are likely to increase or decrease.
Like other search engines specializing in travel, Bing checks multiple sites at once for the best deals and sends users to those sites to book there.
Travel websites generally earn fees for sending traffic to flight booking sites, but Google appears more interested in improving its travel search service so that it can retain users and sell more ads.
“That’s the allure for them,” said Gary Reback, an antitrust attorney who has been trying to convince regulators that Google has been abusing its power. “They want to control all that traffic” that has been going to the specialty travel sites.
Google intends to honor all of ITA’s existing contracts if the acquisition is approved. It’s unclear whether Google would still want to work with some of its rivals after the contracts expire.
This isn’t the first Google acquisition to come under intense scrutiny. Regulators took nearly a year to approve the company’s $3.2 billion purchase of online ad service DoubleClick in 2008 and six months to OK its recent $750 million takeover of mobile ad service AdMob.