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Airlines

The new battleground

As Google joins the distribution sector with its Flight Search product, the debate over how airline tickets are sold is getting ever more heated. Ian Putzger discovers a market in flux
 

It looks as if the future of airline distribution might be determined by judges, juries and regulators. While American Airlines’ fracas with Sabre over Direct Connect is headed for a showdown in court later this year, Expedia and TripAdvisor have filed antitrust complaints against Google over its Flight Search offering. How these battles will be resolved is up in the air at this point, but there can be no doubt that the distribution segment is experiencing tectonic shifts that will bring about far-reaching changes in the landscape.

 

By dint of its towering stature in the search engine space, Google inevitably invited speculation about its intentions vis-à-vis flight search and booking long before it actually made a move into this space. The acquisition of ITA Software for $700 million in July of 2010 merely seemed to confirm what a lot of observers had anticipated all along.

 

Google signalled at the time that it intended to launch flight search functionality from its website, but it was in no hurry to deliver on this agenda. It took until September 2011 before the web giant launched Flight Search, and the initial offering was only accessible from desktop computers and covered only domestic flights within the US. A version for mobile devices followed in February, and it was not until March this year that the company extended Flight Search into the international arena, offering customers in the US more than 500 destinations around the world.

 

The functionality and scope on offer so far are hardly of a calibre that would suggest a sea-change in the distribution arena. Warren Chang, CEO of rival airfare search engine Fly.com delivered a broadside against Flight Search shortly after the launch of the international module. Its lack of comprehensiveness in covering airlines, travel agencies and fares left it lagging behind its competitors and struggling, he declared.

 

Without major online travel agencies in the search results, Flight Search is not able to deliver accurate price comparisons, he argued.

 

George Hamlin, president of Hamlin Transportation Consulting, has reservations about the appeal of the search engine behemoth. “What Google is doing is not stimulating any primary demand. Is this what airlines want?” he muses.

 

Nor does the pace of Google’s advance indicate an aggressive stance, remarks Michael Smith, managing partner at Airline Information. “Google is not going to set up ITA as an alternative GDS. That’s not how Google makes money,” he says. One interpretation of the ITA acquisition that has gained some traction in the industry is that Google aims to generate higher advertising revenues, he adds.

 

For all the limitations so far, Google’s lumbering presence still casts a long shadow. “Anybody who is in the distribution space should be watching Google with eyes wide open 24 hours a day,” says Jim Davidson, president and CEO of Farelogix.

 

With its dominant position in internet searches – especially in Europe, where it commands over 85% of search traffic, according to some estimates - the giant could occupy the entry point for searches, he warns. “If you have the point of entry, you are the winner,” he comments.

 

Expedia and TripAdvisor went on the legal offensive against Google in early April. Within days of each other, they filed complaints with the European authorities alleging anti-competitive and unfair practices at the search giant.

 

They have support from the GDS camp. “Amadeus shares the same concerns as Expedia and is therefore supportive of its decision to file a complaint against Google with the European Commission,” a spokesperson for the GDS provider comments, adding that: “it is critical to ensure that Google Flight Search does not mislead consumers into believing that Google offers comprehensive and neutral results, whereas in fact they may be biased, favouring Google’s own services even if they are of a lower quality and an even higher price than other services offered by independent travel distributors.”


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