DNS - Google to Fly into Travel with ITA Software

Google (News - Alert) Inc and ITA Software, a Boston-based software company specializing in organizing airline data, including flight times, availability and prices, have entered into a purchase agreement the two announced Thursday.

"While online flight search is rapidly evolving, we think there is room for more competition and greater innovation. Google has already come up with new ways to organize hard-to-find information like images, newspaper archives, scholarly papers, books and geographic data," said Marissa Mayer, Google's vice president of search products &user experience in the blog post announcing the deal. "Once we've completed our acquisition of ITA (News - Alert), we'll work on creating new flight search tools that will make it easier for you to search for flights, compare flight options and prices and get you quickly to a site where you can buy your ticket."

ITA's QPX software for organizing flight information is a customizable tool that is used by airlines and travel distributors around the world. The company has also launched a new airline passenger reservation system.

Some quarters were less than thrilled with the news. Andreas Pouros, COO, Greenlight, an independent specialist SEO and PPC consulting and technology firm, issued a statement calling the acquisition a "serious threat to travel intermediaries."

Pouros said the Internet has developed in two phases so far - phase 1 allowed manufacturers and suppliers to have direct interaction with their customers bases increasing market transparency in regards to prices and products.

"This ushered in Phase 2, new companies with innovative technologies entering the fray to provide a new level of market transparency. Sites like Travelsupermarket and Kayak, aggregating data, and essentially reintermediating the supply chain," Pouros said in a released statement, noting that search engines have become increasingly central to the consumer's online experience. 

"If the likes of Travelsupermarket have good technologies, the likes of Google have incredible technologies, allowing them to usher in what appears to be Phase 3 in this history of intermediation," Pouros said. "Travel Intermediaries should be very concerned, as Google moves towards becoming central to consumers' travel purchasing behaviour. All Phase 2 intermediaries should now be rethinking their business models in light of this move and at the very least determining how they should operate in the next few years."

However, in the information released about the acquisition, Google noted that it doesn't currently compete against ITA Software, so the deal will not change existing market shares.

 "We're confident that by combining ITA's expertise as the leading developer of flight information software with Google's technology we'll be able to create great user innovations in flight search. ITA has built a very successful QPX business, and we're looking forward to working with their current and future customers," Google's Mayer said. "Google will honor all existing agreements, and we're also enthusiastic about adding new partners."

The purchase price has been agreed at $700 million in cash, subject to adjustments.