US View – December 2006

US View – December 2006

Searching for answers

Several years ago, meta search engines in the US created a storm when they began using screen-scraping to extract flight and hotel data from airline and online travel agency websites
without permission.

The practice, which placed enormous load on supplier sites, increased their costs and even crashed a few airline sites, led to strained relations between the comparative shopping engines and their data sources, namely airlines and online travel agencies, as well as a high-profile lawsuit by American Airlines against FareChase.

American and FareChase settled the suit, and now it turns out that although a lot has changed in terms of supplier-meta search partnerships, much is unchanged regarding the technology deployed.

In the US today, most airlines and hotel chains have partnered with search engines such as Kayak, Yahoo’s FareChase and SideStep to pursue their supplier-direct strategies. And while OTAs such as Travelport’s Orbitz and Cheaptickets, as well as OneTravel, dabble with the meta search crowd, Travelocity and Expedia generally decline to participate.

However, what is indeed stunning in the US is that screen-scraping, or HTML-scraping, as it can also be known, is still the technology used in the overwhelming majority of interfaces.

Only a few US airlines – including American, Continental Airlines and JetBlue – and Orbitz have deployed more efficient and nimble XML feeds to provide data to the meta search engines.

And, the US landscape regarding the use of screen-scraping and XML technology for meta search stands in stark contrast to trends in Europe.

Officials from two search companies, Mobissimo and Cheapflights, both of which do business on both sides of the Atlantic, concur that US airlines are ahead of the curve regarding the use of XML for meta search, while OTAs and hotel sites are more advanced in XML deployment in Europe.

“XML is rare on both sides of the Atlantic,” says Beatrice Tarka, co-founder and CEO of Mobissimo. “European suppliers are more familiar with tracking users and conversion rates. They use both CPC and CPA models via affiliate and direct relationships.”

Tarka feels strongly that the technology issue – XML versus screen-scraping – isn’t the paramount question because costs and implementation timetables can be similar.

While screen-scraping can be clunky or fairly efficient, depending on how it is done, Tarka believes that the strategic concern is establishing direct relationships between suppliers and meta search companies to better understand the high-yield city pairs or types of transactions that the supplier seeks to target.

In the US, Kayak has sidestepped a considerable amount of the screen-scraping question by using ITA Software, which has direct-connects with major airlines and gives access to GDS data, to retrieve flight information. But, at times, Kayak’s use of ITA brings availability issues to the forefront because Kayak often is not sourcing real-time data through ITA.

David Soskin, chief executive of Cheapflights, as well as Tarka, believes the recently introduced Amadeus Meta Pricer will find most utility in Europe and will not be an all-encompassing solution.

Meta Pricer would be an intermediary for airlines and search engines. Airlines would signal to Amadeus the specific fares and availabilities they want to offer, and the meta search companies would retrieve them from Amadeus.

“Like ITA in the US, though, it [Meta Pricer] is not a panacea,” Soskin says. “It is not likely to be cheap and while it will help suppliers to mitigate costs, it will still not be a crucial factor in the success of the meta search business model.”

And, Tarka points out that Meta Pricer is unlikely to be comprehensive in terms of the data the airlines make available.

In the US, meanwhile, Tarka believes low-cost carriers, which are less dependent on legacy technology and the use of global distribution systems, will lead advances in use of XML technology and APIs to partner with meta search companies. In Europe, she claims the IT departments of GDS vendors control more of the development and have slowed the pace of XML deployment.

Let the web games begin

History seldom repeats itself, but the US market may be heading toward a period that has parallels to the web-fare era, because US airlines are now expected to make a big push to unbundle fares and offer exclusive promotions on their websites.

The web-fare era, which had airlines offering Internet-only fares on their websites, ended in 2003 when major airlines received booking-fee discounts from the global distribution suppliers and agreed to make the web-only inventory available to agents for the first time.

The GDSs recently secured long-term ‘full-content’ agreements with major US airlines. The new deals allow airlines to offer exclusive promotions and mileage rewards to their frequent flyers; provide exclusive travel club services through their internal channels; and sell fares with perks, like advance seat selection, exclusively through airline channels if the GDSs don’t have the technology adequate to unbundled the fares in the manner the carriers desire.

This trend comes as Jupiter Research forecasts that supplier websites will command 62% of the anticipated $121 billion US online travel market by 2010. Diane Clarkson, a Jupiter analyst, notes that Travelocity and Expedia have unveiled points and loyalty programmes targeted at leisure travellers, but she doesn’t believe these will stymie the airlines’ supplier-direct efforts.

Instead, the OTAs’ programmes will probably have more of an impact in their competition with each other.

Many GDS officials believe the airline deals have locked in five years of stability for GDS pricing and travel agents’ access to full content. But from what airline officials have been whispering to me about their plans to develop their sites, I think the games have just begun.

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