ITA and Google
(This started out as a response to some friends of mine conversing about Google’s purchase of ITA Software…and it went a lot of places from there.)
Finding a cheap flight will only suck less when airlines lower their fares.
When it comes to finding cheap flights, there isn’t a lot of magic involved. Airlines publish their fares a few times a day to a few different systems. ITA Software is a fucking rad company, and they have completely revolutionized the way we all are able to search that data for airfares, but they don’t make low fares materialize.
(Note that ITA does not index Southwest fares since Southwest does not publish to the global fare feeds like almost everyone else.)
What ITA is good at, and why airlines and travel sites love their infrastructure, is flexible, powerful, and innovative modeling of all of the relevant data. At a very basic level, they were able to with awesomeness what (for example) the graying IT teams at the legacy airlines really struggled with. Those airlines were more than happy to shed their skunkworks airfare engines and plug in ITA. Corporate core competencies and all that.
I’ve used ITA Software’s public-facing QPX search engine for a few years. It’s given me the tools to find the cheapest fares, routes, and segments that maximized my frequent flier earning. Many people called that kind of flying crazy, and they are right.
But to the average consumer, the best thing that it has done has been to make it easier to find some of the “diamond in the rough” fares, many caused by too-complex fare and routing rules that the legacies inexplicably adhere to. For example, United used to publish crazy low fares to Hartford, Connecticut, sometimes as low as $200 round trip, including taxes and fees. There was never a good reason, from a marketplace perspective, for this. But there they were.
The catch was that couldn’t usually be booked with the most logical/direct routes, like Chico to SFO to Chicago to Hartford. With the crippled fare search on United.com there was never a worry about someone being able to buy this ticket. ITA allowed those tickets to be bought because they built something powerful enough to deeply analyze United’s asinine routing rules, apply those to its airfares and restrictions, and through that found the fare buckets that each segment along the way would need.
An example that might make more sense to a normal traveler is the same $200 fare from Sacramento, connecting in Denver and Dulles to Hartford, but with a 3+ hour layover in Denver and only available on Tuesdays if you left Sac on the 6am flight to Denver. Still a little nuts, but to the budget-minded traveler, probably doable.
The airfare search engines that everyone was using prior to ITA’s emergence couldn’t see that deeply into the vast sea of airfare data. Also, some of them were undoubtedly built not to.
But as airlines continue to become operationally more efficient across their business, they are asserting much more precise control over those loopholes and diamonds in the rough. United just nixed its crazy routing rules and its allowance of 4 connections in each direction of a one-way trip, for example. And with the pending United/Continental merger, decreased competition and decreased capacity could very well see frequent low-low fares gone completely.
Four years ago, there were 7 legacy carriers (American, United, Continental, Delta, Northwest, USAir, AmericaWest) plus the low-cost carriers like Southwest, JetBlue, Frontier, AirTran, Frontier, and ATA.
Next year, there will be 3 legacies left (American, United, and Delta) with USAir somewhere in between a legacy and a low cost carrier (its NYSE ticket symbol is ‘LCC’). For the low-cost carriers, ATA is gone, and Frontier is merging with the regional carrier MidWest. Combined with the fact that for most of the 2000s all of the airlines have been cutting capacity by reducing active airframes and number of flights, and the overall trend for airfares in the future is up. Unless the economy tanks again.
The past 3-4 months have seen the highest airfares in the last 5 or 6 years. Why? Two reasons: 1) airlines have cut capacity to the bone, reducing the number of available seats, and 2) a mini-recovery in a few of the sectors of our economy that spend money on airfares. The last time airfares were close to this high was the summer of 2006, at the height of the housing/finance boom.
Airlines (especially legacies, but Southwest does this as well) impose myriad wacky purchase rules (21-day advance, Saturday-stay required, lowest fares only available on Tuesdays and Wednesdays but not on the mid-day fights, etc) to maximize revenue. Understanding and working through those details can help consumers find cheaper fares. But the best indicator of where airfares are is the strength of the economy. There are microtrends, like seasons, holidays, and weather at the destination, but those will fluctuate within the much larger trend of “is American business booming?” Another good indicator of airfares along a certain route is competition — United’s Australia fares dropped significantly when Delta entered the market — but again, if the economy is booming and everyone’s planes are full, fares are going to be high no matter what.
If you are thinking that late 2008 and most of 2009 must have seen super-cheap fares, you’d be right. I hit top tier status on United by August of 2009 — in 2006, 2007, and 2008, I didn’t hit it before November.
Full circle: ITA is rad, they open up a totally new line of business for Google, they provide the ability for great companies like Kayak and Farecast to give consumers more ways to search for airfares and view airfare data, and over the last 5 years their tool has helped me fly over 400,000 miles cheaper than anyone could imagine. Yay for Google buying them.
