Google is now in the flight information business. The search giant just announced it is paying $700 million in cash for ITA Software, an essential provider of flight information to airlines, travel agencies, and online reservation systems. ITA raised a massive $100 million series A back in 2006 from Sequoia, Battery Ventures, and General Catalyst.
Travel is a huge segment of search and online commerce. Purchasing ITA signals Google’s intention to build out its travel search in a major way. A consortium of rivals including Microsoft, Kayak, Expedia, and Travelport tried to counter Google’s offer last Spring because they all rely on ITA’s data and wanted to keep the company out of Google’s hands. ITA was reportedly holding out for $1 billion, but Google got the deal at the original $700 million price it put on the table.
If you search for flights on Google today, all you get is links to results from the big online travel sites. Bing, on the other hand, offers a much richer Travel experience, complete with comparison prices for the same flight from the different travel engines, as well as predictive charts and graphs from Farecast (which was acquired by Microsoft for $115 million in 2008). Bing also gets a lot of its flight and fare data from ITA.
Google will use ITA’s data to create “new flight search tools” and promises to honor its existing agreements with partners. But can you imagine Bing paying Google for flight data? When that contract comes up for renewal, the negotiations will be anything but straightforward.