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Transportation Businesses Google The Almighty Buck

What the Google-ITA Deal Really Portends 77

Posted by kdawson
from the this-price-just-for-you dept.
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."
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What the Google-ITA Deal Really Portends

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  • IT reporting? (Score:3, Interesting)

    by Nargg (1678106) on Tuesday July 20, 2010 @01:59PM (#32967718)
    Is it me, or is everything reported that is IT related these days a conspiracy? LOL! Actually, this story was informative and helpful. It could have done without all the pretense though.
    • I remember debating in college a professor who thought that Microsoft's MSN was going to be a single-sign-on takeover of the Internet, and I had to point out that nearly everything offered by MSN at the time were also duplicated by Yahoo! or AOL Time Warner who also offered their own single-sign-on interface, and in some product areas the competitors were using the absolute same backend services.

      Google is now the "too big to leave alone" player... but seemlingly everything they do is something that there is

    • by digitig (1056110)

      Is it me, or is everything reported that is IT related these days a conspiracy?.

      Damn. He's on to us. Time to change plan, guys.

    • Re:IT reporting? (Score:4, Informative)

      by jdgeorge (18767) on Tuesday July 20, 2010 @02:33PM (#32968154)

      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.

      • Re: (Score:1, Interesting)

        by Anonymous Coward

        Unfortunately so. The Practical Nomad is an awesome book.

    • Is it me, or is everything reported that is IT related these days a conspiracy?

      Just because you think they're not out to get you, doesn't mean it's true. Technological development has ran rampantly unchecked for some time; as evident by erosion of personal privacy and rights.

  • by LostCluster (625375) * on Tuesday July 20, 2010 @02:05PM (#32967808)

    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.

    • Not only that, this is precisely the kind of problem good is good at solving. If there is one company that can do this better, faster, and easier to integrate, complete with a well documented SDK, it is Google.

      The submitard tried to make ITA look more complex or important that it really is.
    • by Daetrin (576516) on Tuesday July 20, 2010 @02:37PM (#32968202)
      "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."

      To be fair(?) this wasn't Bing/Microsoft's idea originally. As is so frequently the case it seems, a website called Farecast [wikipedia.org] came up with the idea of basically aggregating the aggregators (which isn't a big idea in itself) and using that information to predict future flight prices (which is, IMHO.) It was incredibly useful, and when Microsoft realized that they bought out the company and merged it into Bing. I used Farecast before the buyout and now it's the only thing i use Bing for, since as far as i'm aware no one else has implemented the idea. (If i'm mistaken about that then someone please inform me of the alternatives.) If this acquisition means Google is thinking about doing the same thing, then great!
      • Re: (Score:3, Interesting)

        by rsborg (111459)

        It was incredibly useful

        Perhaps for you, but for me, I relied on it (it said prices would go down) and lost a great fare once (spent about 10% more overnight per ticket), and never trusted it again. An impressive looking technology (forecasting fare prices) sounds great until you attempt to rely on it. What did save me money was using farecast and kayak's daily email update. Kayak specifically mentions how many fares are left at that price.

      • Re: (Score:3, Interesting)

        by stephanruby (542433)

        I used Farecast before the buyout...

        From your conclusions, I'm really having a hard time believing you. I also tried using Farecast from the time the 'Super Crunchers' book came out and before the time Microsoft purchased the company. And just like you, I was totally gung-ho about the concept and the startup company. And if someone had approached me just after reading the 'Super Crunchers' book, I would have easily invested everything I owned in that startup, I was so totally and utterly convinced by the arguments the author was making.

        And

    • by icebike (68054)

      And that is precisely why the hype and doom scenario in this story is utterly silly.

      Does the fact that I can search for and buy something with Google checkout, absolve either the seller or the shipper or the credit card companies of their respective obligations under the law?

      Its just an information service. Yes, they will probably add ticketing, hotel reservations, car rental somewhere along the way. Bring it on! If anything, Google would be more forthcoming about hidden fees and costs than the travel in

    • by mgblst (80109)

      ITA Software's main business is taking the various fare/schedule tables put out by the airlines
      WRONG There is no fair/schedule put out by airlines. What they do is try to create a fair/schedule themselves, by constantly quering the airlines databases, which costs them money each time they do it.

      read the articles, they are incredibly interesting.

  • by Mongoose Disciple (722373) on Tuesday July 20, 2010 @02:19PM (#32967974)

    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.

    • by bberens (965711) on Tuesday July 20, 2010 @02:33PM (#32968142)
      I doubt it will be "This guy bought a luxury vehicle, so charge him $100 more." It will probably be more like "This guy just bought a luxury vehicle, let's slightly alter the user interface so he sees the first class seats more easily."
    • When you're talking about airline flights there is no "real" price (thanks to rampant price discrimination).

    • Re: (Score:3, Informative)

      by LostCluster (625375) *

      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 mi

      • by dpalley (670276)
        Southwest and JetBlue are both available via the Sabre GDS. (I work for Sabre).
        • Huh. I don't doubt you, but I'm surprised to hear it. Out of curiousity, do you have any idea when that happened?

          (I've been out of travel for a few years now, so I'm not as informed anymore as I could be.)

      • My post is proven wrong. Please mod down.
    • by rickla (641376)
      ITA has some stuff that will surprise you, I can't say what it is but I certainly am not surprised google wanted it. It will blow you away, those guys know what they're doing and it's far nicer to work with than sabre that's for sure.
    • by Coldkilla (673243)
      Ticketmaster + Live Nation?
  • by teshuvah (831969) on Tuesday July 20, 2010 @02:56PM (#32968488)
    Do these people even think before they type? Do they really think google would spend $700 million on something that they have no idea what it really does?
    • by F34nor (321515)

      All ITA does is find palindromic pan-grams, nothing to see here, move along.

    • appeal to authority

    • Given Google's history of purchasing companies and leaving them wither on the vine, developing ideas and then not following through to completion, and generally acting like it has the attention span of an easily distracted five year old... It's easy to believe that Google would spend $700 million on something they don't really understand. They see it as a search-and-aggregation engine, and that's pure catnip to Google.

  • by Anonymous Coward on Tuesday July 20, 2010 @03:04PM (#32968588)

    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.

    • with all information flowing as compressed XML via standard messaging protocols

      Not that an anonymous coward would watch their own post, but just in case... what "standard messaging protocols" were they using, out of curiosity? Personal guess is JMS.

    • by yuhong (1378501)

      Posting anonymously as I work for an airline and wrote a fair bit of the code which keeps ITA's software in realtime.

      Personally, I would post non-anonymously whatever possible, even in situations like this. But posting anonymously is still OK.

    • by grantek (979387)

      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

      Not unattainable, it just seems to be impractical with current technology to make the user wait for their "lock" on a transaction to pass through the ITA before being granted. Perhaps if Google can optimise the process a bit they can integrate the purchasing to the level where a seat becomes unavailable from the ITA's point of view before the user can proceed with the transaction.

      • by rickla (641376)
        Impossible because the airlines "play" with the inventory all the time for marketing purposes and other reasons. When you query airlines for availability you don't get seat counts you get a number from 1-9 that is at best a hint. Also with all the traffic that books and cancels flights, the inventory thrashes around all the time. So you can't get it perfect but you can try to manage the failures, which aren't so bad because you can usually offer an alternative.
  • As someone who is unfamiliar with this part of the industry, I appreciate the articles and the clarity it brings to the different issues, including Google's probable interest in ITA Software. With that said, I find the conclusion - that Google is primarily interested in offering personalized ticket prices - is, while at least somewhat plausible and certainly disturbing, pretty unlikely. First, there's the whole thing about how that's illegal (though granted, few in the justice department would be able to

    • by swb (14022)

      And maybe even personalized fares make sense from the perspective of what *I* want a "personalized" fare to be versus the evil, how-much-can-we-take-him-for idea of personalized fares.

      For example, I have a gazillion frequent flyer miles; when searching for flights, I want to find the cheapest coach seat I can upgrade to first class via miles. I'd love a flight search that gave me that data as my "personalized fare" (ie, cost + miles). It's a total PITA to do that now on the airlines web site.

  • In the second part of his series he reveals that he has worked in the past for AirTreks, and continues to be involved with them. AirTreks appears to be a competitor to ITA, so while these articles are interesting, I think you need to take his conclusions with a large grain of kosher salt.
    • I disclosed my association with Airtreks.com partly as part of the basis of my expertise in the field, knowledge and partly because some might see it as a conflict of interest. If you want to disregard what I say for that reason, you are of course free to do so. However, Airtreks.com is not and has never been a competitor of ITA Software. ITA Software is a b2b provider of services for other travel companies; Airtreks.com has deployed its proprietary technology solely for its own use, rather than (to date
      • Okay, that does clear things up a bit. However, I think that you should have disclosed this sooner, maybe in the beginning of the series, and added some additional information to further clarify it. From what you've said AirTreks makes motorcycles, to ITA's Mac Trucks. Very closely related, and potential competitors, but not currently in exactly the same market. BTW, I enjoyed the whole series, it was well written and very easy to understand for somebody who's not involved in what appears to be a very b
        • I think your "motorcyles to Mack trucks" analogy is about right. My affiliation with Airtreks.com is described in detail in a "Disclosures" section of each of my books and on the Disclosures and Disclaimers [hasbrouck.org] page of my Web site, which is linked from my home page and every page of my blog (including each article in this series), and which goes into more detail than that of any other travel author, journalist, or blogger I know. Because it seemed particularly relevant, I also mentioned it inline within the ar
  • " ... because it is likely to exacerbate the trend toward personalized and less transparent pricing of airline tickets"

    Its already way too late for that my friend. There are millions and millions of public fares ('tenders for offers') on the market at any one time. Many are never even available, any many are locked down to only specific groups. The systems are so crazy that companies spend millions of dollars on systems just to figure out their -own- fares. That's just to see if I can make an offer for a fa

  • Maybe we'll all fly for free on jets that drag a giant banner ad across the sky!

  • I refused to read this just because the word "portend" was used. Are you telling me that /. is getting so classy to where no other more commonly used word could be use din the title??

  • With ITA Google doesn't just get a database, ITA's QPX system does much more than that. It could be thought of as a variation of real-time search--ITA gets fare updates thoughout the day (4 times a day, if I remember correctly). ITA has been working on making their fare search engine more general purpose, and I don't think it's a stretch to think of it as another way to improve Google's real-time search capabilities outside of the travel area.
    • by rickla (641376)
      Wait till you see what ITA does with google, QPX is great but they will do better.
  • I bet they will do a better job. Most of what they do turns out pretty good. But it's getting a little scary that we depend on Google for so many net infrastructure pieces now. This will be just one more. I can imagine a future in which something goes wrong and the gov't would have to step in because of the risk to society if some of their most critical services were allowed to fail. Or, in which Google is broken up after having monopolized too many industries.

  • Lisp is now supported language at google. ITA is one of the largest Lisp shops in the country.

  • ... you've used ITA's search engine. A lot of the major airlines have licensed it for their own websites as well.

    Unless you are one of the licensees, I don't think anybody has anything to worry about from this. The tech has already been out there for some time.

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