Google Acquires ITA Software, and the Likes of Kayak and Bing Cry a Little

In a move sure to shake up the online travel world, Google (GOOG) made good on its long-rumored plans to acquire travel powerhouse ITA Software. The potential for a sea change in the way people search for air tickets is now very real. There will be a lot of excitement and trepidation depending upon your point of view.

ITA Software is the leading airfare search company today, though most consumers have likely never heard of it. For instance, if you visit a travel site and enter your flight information, you'll soon likely see a simple matrix that shows the number of stops on the left side, various airlines on top, and the fares in the middle. That whole process is an ITA invention. It's now the standard for online travel sites and agents, but at the time, it was a revelation.

Being a pure search company makes ITA a natural fit for Google, which has long stayed on the sidelines when it came to travel search. A large number of airlines use ITA to power fare searches on their websites; so do major travel search aggregators like Kayak and Bing. It's basically the gold standard today.

One thing that ITA is not, however, is a consumer-facing company. That is something that Google is likely to change. Though Google has made it clear that it expects to keep contracts with all existing partners, the inevitable integration of airfare search into standard Google search is bound to hurt the other search aggregators.

ITA doesn't book air travel, and that's unlikely to change under Google, because Google's specialty is directing people to merchants, not making sales itself. So while the search capabilities may not be as necessary, online travel agents will still have an important place when it comes to completing the transaction. Search aggregators like Kayak and Bing, however, which pull together fare listings from a variety of other sites, will find themselves competing directly against Google. Good luck with that, guys.

Who else isn't bound to be thrilled her? Take a look at this graphic which Google posted: As you can see, the other technology providers like Sabre and Amadeus won't be happy. Though the fare search applications aren't the main business for these guys, that doesn't mean they won't be worried. This is just the beginning of Google's entry into travel, and the company could eventually work toward building the reservation system architecture that makes money for these guys. (That doesn't mean Google would take bookings, just that it would build systems that can.) When Google enters a space, competitors get a little nervous, at the very least.

ITA had already dipped its toes into the airline reservation system world with Air Canada, but that project has been scaled down to the point where it's unrecognizable. Google might decide that with a strong search technology, it can also add value to the booking process. There is certainly an interest from airlines if it can bring costs down and make things more efficient. Google is good at that.

While ITA's people have excellent industry knowledge, they don't necessarily have the firepower to reinvent something that's incredibly complicated and long-established, like a reservation system. Google can provide a lot more money and incredibly smart people if it's interested in doing that. At the very least, it has the opportunity to apply core search technology in ways that can improve the reservation system experience. Finding reservations and searching for alternate flights when things go wrong are just two areas where search technology could really make life better for everyone involved.