In any retail business, when you are able to control or influence consumer behavior, your ability to dominate a particular product or service category increases exponentially. Take a look at the impact that the frequent flyer programs had on the airlines in the 80's when they were introduced. By awarding points and hence influencing choice, the airlines were able to build loyalty. Of course sustaining it has been another story for another day.
Rearden Commerce today said it hired Paul Todd to serve as chief products officer. Todd most recently worked at Google as product management director, where he "was one of the key leaders in the $700 million acquisition of ITA Software," according to Rearden.
Expedia executives on Thursday discussed strong performance for Egencia, the company's corporate travel division, and conveyed a somewhat bipolar perspective on Google.
Consultant Terry Jones, best known as the founder of Travelocity, doesn't think the global distribution system execs should be concerned about
Google's planned acquisition of ITA Travel. He also said people in his circles expect Google to spin off ITA's reservations business. Here are some tidbits from my interview with Jones, also a Rearden Commerce board member, chairman of Kayak and former CIO of Sabre, at the National Business Travel Association convention last week.
Now that the
Google acquisition has been announced a great deal speculation has emerged as far as Google’s intentions. Given the fact that regulatory approval is required and that the deal has not been completed, ITA itself has been unable to speculate on Google’s strategy. Google has devoted some energy in stating that it will not become a seller of travel, but hasn’t disclosed specifics on their plans other than stating that it will improve the consumer shopping experience.
What do the airline execs think of
Google's planned acquisition of ITA Software? They're not really saying, and in many cases they probably don't know. Contacted Wednesday, most carriers declined to comment, although Lufthansa and Southwest Airlines offered some words.
In light of Thursday's news, we thought readers might benefit from reading an interview with ITA Software co-founder Jeremy Wertheimer that took place in September 2009 at The Beat Live
and was published that month in The Beat. The interview occurred a few weeks after Air Canada said it suspended work on a new reservations system constructed by ITA. Wertheimer took questions from Jay Campbell and audience members. He discussed the Air Canada development as well as other topics related to airline technology, faring and merchandizing, the complexities of making things simple, tailored selling by airlines and the point at which consumers get perturbed by too much information...
Campbell: ITA Software and Air Canada were working for many years with a lot of effort and a lot of money to build a host reservations system and you didn't even get to the scariest part, which is actually converting. How far did you get?
Wertheimer: The product is built. The analogy we like to use is, "I built this artificial heart, now it's just a simple matter of doing the heart transplant. Who wants to be first?" In a nice way, we spent a number of years learning exactly what they wanted. They were wonderful teachers, both in terms of what an airline needs and doing that schizophrenic dance of being very new and very forward-thinking in terms of the new things they wanted to do--unbundling and rebundling and having travelers take care of themselves instead of needing the servicing of employees--and also supporting the full range of legacy systems. Plus [they are a] big flag carrier, a big international carrier and the icing on the cake, a member of the Star Alliance, which has its own additional rules--in case you don't have enough. So they were a nice partner and that partnership is still there. We are still working with them and they are still supplying resources to help us. Essentially, the code for the inventory system and res system is done. The departure control system, which is the airport system, we're still working on. We'll be finishing those over the next year. We'll be rolling it out at a certain rate with Air Canada and they'll be making announcements over time. And now we're talking to a number of other airlines about rolling out the whole system or pieces of it.
A traditional inventory system is flexible the way Henry Ford was flexible at the beginning: You can have a car any color as long as it's black. You can have any product you want as long as it has a fare basis code that identifies it, and as long as it is settled a certain way. Our inventory system, when it wakes up has no idea what anything is. You tell it. It is all in data. It is not in software or burned in. So you can say, "This is the kind of product; we only have some number of seats and this is how we sell them. Here is another product called lounge access, keep selling those. Here is a product which is how many skis we can take on the plane and maybe that depends on the plane. Here is a product that is someone else's product, maybe hotel rooms, and here is how you handle that."
It's confirmed:
Google has agreed to buy ITA Software for $700 million cash. ITA co-founder and CEO Jeremy Wertheimer will stay on. He told me Google is "pretty interested in talking to airlines and getting their views" on ITA's res system business, but he was unable in a short phone call just now to say whether Google plans to integrate ITA's airfare shopping results into its general search page. The companies do say the deal "will create a
new, easier way for users to find better flight information online, which should encourage more users to make their flight purchases online." The deal is "subject to customary closing conditions." More to come shortly.
