What the Google-ITA Deal Really Portends 77
Much of the discussion about Google's bid to buy ITA Software, including here, has been limited by the lack of understanding all around about how airline search and reservations actually work now, and what it is exactly that ITA Software does. Travel expert Edward Hasbrouck wrote a detailed 3-part piece on his blog explaining the back story, what ITA Software does, and what it means for travelers. "...because CRS/GDS [Computerized Reservation Systems or Global Distribution Systems] companies are generally invisible in their intermediary role (and currently all owned by groups of private equity investors, so they need not report publicly on their finances or operations), few analysts outside the travel tech industry know how to interpret the implications of Google's decision to invest $700 million in this sector. Frankly, I'm not at all sure Google itself understands what ITA Software does (and doesn't) do, and what they are getting for their money. ... What will this deal mean for travelers? The short answer is that it is likely to be a bad thing for travelers ... because it is likely to exacerbate the trend toward personalized and less transparent pricing of airline tickets (and other travel services) and the de facto disappearance of key consumer protection principles embodied in the definition of a common carrier and the requirement for a published tariff applicable equally to all would-be customers complying with the same rules."
It's just a database... (Score:5, Informative)
ITA Software's main business is taking the various fare/schedule tables put out by the airlines, and then combine and standardize them so they're comparable, and finally put a user interface on top of all of this so the average user can figure out what their options are for getting from Airport A to Airport B during the time frame the user was interested in.
They're not a travel reservation system... although some of their customers add that themselves to ITA's flight selection tools. Google already has some simple flight tracking tools in their interface, and Bing has been trying to sell their "Decision Engine" as a tool for selecting flights and predicting fare movement, so this seems like a natural acquisition to add to Google.
It's a little 'the sky is falling' (Score:5, Informative)
I wouldn't consider myself an expert on this issue, but I have done a few years of development work for the travel industry in the past, including direct interface with the GDSs (basically, the central systems such as Worldspan or Sabre which provide airfare pricing/availability information for the flights on most airlines). The article (probably unintentionally) misses a few important things:
1) ITA's software is, by far, not the only way to get at the flight/reservation information from the GDSs. So, yeah, maybe Google has the power to analyze your data and say, "Hmmm... this guy just bought a luxury car, I'm going to mark up all the flights I offer him by an extra $100", but there still will be a bunch of other people willing to sell it to you for something closer to the "real" price.
2) Some carriers opt out of the GDS system entirely. For example, as far as I know, Southwest is still opting out of it, which is why you typically can't find Southwest flights for sale on most travel sites. There are some big advantages to being part of the GDS system, mainly in that it puts your product out for sale in a lot more venues -- but even if all the providers of GDS data somehow colluded to artificially raise fares, it would only make the fares of non-GDS airlines even mroe attractive.
I'm not someone who believes in the power of the free market to solve all problems, but in this case, barring the growth of some kind of ridiculous super-monopoly that the government would almost certainly break up, it really can correct for almost any kind of insidiousness on the part of Google or anyone else that I can imagine.
Re:IT reporting? (Score:4, Informative)
this story [...] could have done without all the pretense though.
No, I think the pretense is part of his brand. This guy, who apparently is a travel aficionado and a devoted travel privacy activist, is perhaps even more significantly a master of self-promotion. The only useful information about him is provided on his own blog (the bio linked from the summary), which does a fantastic job enumerating the various rippling waters that Edward Hasbrouck evidently walks upon.
I'd be repelled except that he really seems to know his stuff.
How ITA's software works in the back-end (Score:5, Informative)
Posting anonymously as I work for an airline and wrote a fair bit of the code which keeps ITA's software in realtime.
ITA's core product is a fares shopping engine. Basically, as laid out in the blog posts, the price you pay for your seat is a function of an airline's published fare for a particular "fare class" (there are 26 fare classes per flight in the SABRE GDS, with about 21 functional) and the willingness of the airline to sell you a seat in that class (due to seat allocation). So what happens is that as seats are purchased in real-time, ITA's software must get an update from the airline in real-time so that it constantly knows whether a particular fare is still available to be purchased. Otherwise, the fare you are presented would be rejected by the GDS when you attempt to make your purchase.
This real-time querying is a huge coordinated effort between the airlines and ITA, which basic functionality being that the airline will publish fares to ITA nightly (with push adjustments to these fares as airline analysts make changes throughout the day) and real-time seats sold information, with all information flowing as compressed XML via standard messaging protocols.
Obviously in a scenario like this, there is momentary lack of synchronization between the GDS and ITA's shopping engine, and in these windows exist the possibility for a failed booking as the GDS deems a class non-sellable but ITA's database has yet to receive the pushed data. The major goal of ITA and the airlines in this scenario is to reduce the booking failure rate to 0%, which is of course unattainable, but each percentage point north of this counts as major lost revenue to the airlines. Anything north of 5% booking failures is considered unacceptable and generally sends the rats scurrying in attempts to resolve the synchronization issues.
Re:It's a little 'the sky is falling' (Score:3, Informative)
Southwest, JetBlue, and others of the low-price carriers opt out of letting anybody other than themseleves sell their tickets, but they still have to register their flight times and fares with the government, meaning ITAsoftware.com's version of the platform can still display those flights (and tell you where to go should you want to book one), but the travel agency customers of ITA don't display what they can't sell you. Hopefully Google will continue to offer the "unbiased" edition of the software, and mix in a Google Checkout way of buying what they are able to sell through the system.