Bobby Healy, Chief Technology Officer at Dublin based CarTrawler, which offers travel companies a technology platform for ancillary revenue, had a stark warning for airlines at the CAPA Airline Leader Summit on 11-May-2017. "Google is bad for the airline industry." An inventor and entrepreneur specialising in booking engine software, Mr Healy has developed booking solutions that are now in use by 80% of the world's top 20 airlines.
There have always been intermediaries in the airline industry, but the internet has allowed them to have a closer relationship with the consumer. However, until now, intermediation of airline ticket sales has been fragmented and largely complementary to airlines' own direct channels.
Mr Healy's warning was based on Google's increasing exploitation of its monopoly positions in Search, on Android apps, and in digital marketing to intercept consumer searches for branded airline names and to direct them first to its Google Flights product. Regulatory remedies may be necessary, but Mr Healy also advised airlines only to provide Google with their inventories on their own terms, and to act like tech companies with better digital products.
Google is taking control of the "trip planning funnel"
At the CAPA Airline Leader Summit Mr Healy argued that Google's strategy in the travel industry is to achieve critical mass in the market, then to take the top of the funnel and concentrate it to squeeze airlines out, or to make them pay.
Mr Healy put forward his hypothesis that, it Google controls the top of the funnel, it will represent the biggest loss of control of distribution, and consequent rise in cost and margin erosion, ever seen by the airline industry.
"If you think GDS fees of USD5 or USD6 is bad, wait until you pay Google USD50", said Mr Healy.
See Mr Healy on CAPA TV: Google Flight Search And Why It's Bad For Airlines
Google "is a monopoly"
There are plenty of aggregators/intermediaries in the travel market, but Google is different because it is a monopoly in many of its areas of business. According to Mr Healy, Google has a 95% share of online search, 75% of digital marketing and 97% of apps on its Android mobile operating system.
Google knows more about consumers than any other organisation
It already knows more about consumers than any other organisation and this goes far beyond travel, thanks to the number and variety of consumer interactions with Google and the company's ability to process and analyse the data willingly provided to it.
"To the end user, Google is the best company in the world, it has everything I need", said Mr Healy, "but, as an airline, they know everything about your customer."
"Google will wipe out the metasearch operators"
Google Flights, the company's airline flight comparison site, has enjoyed a massive surge in popularity over the past five years. According to data presented by Mr Healy, the "google flights" is around three times more common as a search term than "kayak", and more than five times more commonly searched than "skyscanner".
Airlines should "push back on flight search"…
He also suggested that "airlines and only airlines can stand in [Google's] way".
They should raise the profile of this issue through lobbying and "push back on flight search", which is a key strategic asset. Mr Healy advised airlines, "Don't let Google have your data unless it's on your terms".
One leading airline that has been more circumspect about complying with Google Flights is American Airlines. A search for American on Google comes up with direct links to the airline's own website, rather than to Google Flights, although the first link is a paid advertisement.
AA flight data are in Google Flights, but this is only apparent once a consumer has entered Google Flights. American is balancing the cost of the ad and a likely lower occurrence of Google Flights fees with the loss of control and higher transaction costs of more frequent leads coming from Google Flights.
To read on, visit https://centreforaviation.com/insights/analysis/google-is-bad-for-the-airline-industry-says-cartrawler-airlines-need-vastly-better-data-skills-346097