Google To Buy ITA, Develop Airfare Search Tools - Business Travel News

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Google To Buy ITA, Develop Airfare Search Tools

July 01, 2010 - 05:35 PM ET

By Jay Boehmer

Google on Thursday announced plans to develop new online airfare search tools through a $700 million acquisition of Cambridge, Mass.-based flight information software company ITA Software.

Though the companies didn't specify what Google plans to build with ITA Software or when it expects to bring new tools the marketplace, Google chairman and CEO Eric Schmidt during a conference call broadly outlined the plan: "What we're going to do is build new flight search tools that focus on end users, and those search tools will basically allow you to search for flights, compare flight options and prices—all that kind of stuff—and get you very quickly to a site where you can then buy a ticket," Schmidt said. "The idea here is that we're going to improve the way flight information is organized, which is a big engineering challenge, and something that people will generally enjoy seeing addressed over the many years we hope to be doing this."

Google was more specific in what it plans not to do, stating that it has no intentions to distribute airfares or sell travel inventory. "Google won't be setting airfare prices and has no plans to sell airline tickets to consumers," the company said in a statement. Asked during a conference call on Thursday with media and analysts if Google plans to process air transactions, Schmidt said, "on the processing of transactions, my bias to say less likely," later adding that processing air transactions "is not the part of the ecosystem" that Google plans to focus in future travel search developments.

Google said both companies have approved the transaction, subject to "customary closing conditions" and regulatory review, "which could take some time," the company said. Google said it could not begin work on new products until after closing.

Instead of licensing ITA Software, as some airlines and online agencies have done to help facilitate flight data categorization, Google said it could "make more significant innovations and bigger breakthroughs in online flight search by combining our engineering expertise with ITA Software's than we would by simply licensing ITA Software's data service." Schmidt said the company did look at a licensing arrangement with ITA, "but the kind of deep integration that is needed to produce really, really good search results for end users actually does require the technologies talking to each other."

Schmidt said he expects Google to bring to the market something very different from what's readily available today, be that from meta-search tools from players like Kayak or online travel agency capabilities from the likes of Orbitz or Expedia. Regarding players in the travel industry, Google in a statement said, "We'll work to continue to have productive partnerships with as many online travel companies and industry players as possible."

ITA Software president and CEO Jeremy Wertheimer said, "We haven't yet gotten to the point where our two companies are working together. Right now, we're still independent companies, so I think we'll have to see once we start working together what direction we'll go in."

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