Why Google's Purchase of ITA Software Would Be Good for Air Travelers

It hasn't received a ton of press, but last week, American (AMR) announced that it would be partnering with ITA Software to power the flight availability and pricing functions for its new reservation system. This is a big move, and it may put American's fight with its distribution partners in a different light. This should be very good for American, for ITA, and yes, for Google (GOOG).

There are so many different potential story lines with this deal that it's hard to even process. As you probably know, Google has announced a deal to buy ITA Software, but it's running into stiff opposition from retail sites who argue that would end up owning a new data monopoly

Google + ITA vs. the pending airline monopoly
Why would it be a monopoly? Because ITA powers the fare search functionality on a surprisingly large number of websites including Kayak, Orbitz, and Bing Travel. These guys are all afraid that if Google buys ITA, it will cancel the contracts and make Google the only place where travelers can get this information. Google says it has no plans to do so, and that makes more sense. ITA makes a ton of money on these deals.

But the recent fight between American and its distribution partners really changes the perspective here. With Expedia kicking American out and now Sabre saying it will do the same in August, there's growing concern about collusion on the airline side of things. With American's data being available on a dwindling number of sites, comparison shopping has become more difficult and it has nothing to do with ITA or Google. Since Google prides itself on disseminating information, this purchase could even help assuage fears from those who think comparison shopping is heading toward extinction.

So this fight between American and distribution partners helps Google's antitrust case by showing that there are issues today that Google can help alleviate. And now Google is pushing it even further -- or at least ITA is. This new deal will have ITA powering the availability and pricing functions on American's new reservation system. Why does that matter?

Well, ITA's technology allows for a ton of flexibility. In American's press release, Monte Ford, American's Senior Vice President, Technology and Chief Information Officer said:

The availability engine will serve as a hub for pricing, shopping and customization of American Airlines products and services. This technology lays the groundwork for the future of travel â€" with customized travel options as well as access to these options through every channel.

American + ITA = cheap data
That will help with accuracy a great deal. More important, it eliminates the costly data connections the plague the industry today. It will cost virtually nothing to distribute this information to all channels in any way the airline sees fit.

Many had wondered if Google would even be interested in ITA's attempts at building reservation system technology, and this clearly says it is. Why? Because it ultimately helps with the free flow of information (which Google can make money from), contrary to what retail sites are suggesting.

This must have been in the works for awhile, but the timing is great for both companies. And ultimately, it will be great for the consumer as well once it's in place.

Related:

• Sabre Makes the Wrong Choice By Removing American Airlines
• As Sabre Enters War Over Flight Bookings, American Has to Find New Strategies
• Expedia Drops American Airlines -- Right After Orbitz Battle