Weekly Digest - September 19th, 2011
Google Launches Flight Search
And it is at an early stage of its development. Granted, Google kept true to their philosophy and presented a clean and easy to navigate interface. And so far their speed has been quite good. We do, however, need to put things into perspective. Namely, it is too early to judge the merits of the product.
So far, Flight Search offers only round-trip economy fares on a limited number of US carriers for a limited number of US origins and destinations. Booking-wise, the search has deep linking directly into airline websites and has so far shun any OTA participation. But everyone in the industry knew that ITA's QPX was a product tailored for a highly mature and restricted US market. If they cannot provide accurate fares fast for carriers which have worked with them for a while, Google's $700 M purchase might have been a bigger mistake that News Corp's acquisition of MySpace. Moreover, Google-maps integration for "inspiration" search was nothing but expected.
The real test will come when Google ventures into the world of international air travel. ITA does not have such close relationships with airlines outside of the US, not to mention the ubiquitous universe of low-cost operators. The possibilities there are enormous, especially for a company with so much computing power and human resources. The approach needed, however, is quite different from ITA's. Will Google manage to overcome the constraints of its ITA acquisition and evolve into a truly global travel search player?
Qunar Plans US IPO in 2012
Chinese travel website Qunar is preparing for a US IPO despite market volatility. The company, which is majority-owned by Chinese search giant Baidu, is hoping to broaden its reach and expand further the underdeveloped online travel market in China. In June Baidu payed for its stake in Qunar $306 M and is considering it as a strategic investment against Google's future ventures into the online travel market.
Lufthansa has formally started the sale process of its UK airline - British Midland Airways. The loss-ridden BMI holds 11% of the landing slots at Heathrow Airport which are some of the most sought-after and expensive in the world and has already attracted the attention of IAG, parent of British Airways and Iberia. Company CEO Willie Walsh has repeatedly expressed interest in buying the airline and an IAG spokesman was quoted saying "The ball is now in Lufthansa's hands."
Virgin Atlantic did not waste time and also made their interest known. Virgin and BA have a long history of commercial conflict, often revolving exactly around the number of landing slots each airline had at the coveted airport. A potential sale of BMI to BA will most likely trigger a regulatory investigation, but if upheld, such sale could cost Virgin dearly.
On a similar note, the Irish government is also considering selling its stake in national flag-carrier Aer Lingus in an effort to raise funds. The government, however, made it clear that Ryanair was not considered a desirable buyer. Ryanair responded by threatening that under the circumstances, a sale of its 30% stake in Aer Lingus might be the best possible course of action for the LCC.