I’ve finished up my week at APEX, and it was a great one. That being said, I have a ton of stuff to sort through for future posts, so I’ll be pretty busy until next week. Today, I’ve got a guest post from Henry Harteveldt on Google’s new flight search.
–

Two days ago, Google unveiled a new flight search function. Following its successful acquisition of ITA Software, Google’s move was expected — only the timing remained unknown. But after a bit of testing, I think Google launched the product too soon. Since you never get a second chance to make a first impression, I don’t think Google did itself any favors by launching it when it did.

Like Kayak, Fly.com, Hipmunk and other similar “meta-search” websites, Google’s new flight search function allows a user to search and compare airline schedules and prices. Google’s flight search certainly offers several benefits:

• Convenience. Google is the most-used search engine, and adding flight search will only serve to increase the site’s utility to its users. As an advertising-based business, this obviously stands to benefit Google enormously as well — more people using more pages, spending more time on Google.
• Page download speed. Once I’d selected my travel dates, Google returned results almost instantly. A search on Kayak produced a calendar on the right-side of the page showing the best available fares, but users must wait several seconds (six to eight seconds, in my tests) for all the actual flight results to be returned.
• Proactive filters. Google’s flight search allows users to filter by both price and travel time. Both of these are smart. Research I did in my previous job shows that a large number of US online leisure travelers — likely the primary audience for this application — allow price to dictate their first-choice destination. The travel time filter is helpful (if not original — Travelmuse.com first offered this at least three years ago) for travelers who want to avoid long flights, especially if they’re taking a long weekend getaway and want to maximize their time at their destination.
• Integrated — though slow — booking. After a user has selected both outbound and return flights, a red “Book” button appears (beneath that is an ad for the airline, read on to see how that will play out). Clicking on it will take the user to airline’s website where he or she may proceed to complete the reservation. In my experiences, though, it routinely took eight seconds or more for the airline website page to appear (I didn’t encounter other delays using the Internet or my web browser — Google Chrome — while waiting for the airline page to load).

That said, as analyst I think Google jumped the gun in bringing this product to market. Why?

• Poor presence on launch day. Hint: If you’re going to tout that you’re bringing something to market, it’s usually a smart idea to let users find it. I did 10 searches on Google.com using the suggested “flights from [city] to [city]” phrase. None produced the “flights” link in the left-side navigation menu, as illustrated on Google’s blog. The “flights” link did appear in the searches I conducted today, September 14. Nitpicky? Maybe No. If you’re going to bring a product to market and tout it, make sure your users can consistently find and use it.
• A clunky map. If there’s anything Google knows besides search, it’s mapping. Google offers two nice features on its flight search map. First, it shows the prices for the destinations based on selected travel dates. Second, the departure airport shows an icon of a plane taking off, while the destination city shows a plane landing. After that, though, Google — surprisingly — disappoints. It’s not at all clear how a user interacts with the map. To change origin and destination cities, a natural response would be to try to move the icons around on the map. That doesn’t work — doing so shifts the map in the window. To adjust the destination city on the map, a user must click a different city. To change the departure airport, users must change the “from” city in the flight search box.

• Incomplete flight search results. Not all airlines serving a city-pair were returned. For example, a search for San Francisco-Washington DC (all airports) returned results for United, but no other airline. With a 6 1/2 hour flight duration, Virgin America’s (VX) San Francisco-Washington/Dulles nonstops should have been included (VX schedules those flights for roughly 5 hours, 10 minutes). On other searches, like Oakland-Houston, Southwest’s (WN)flights didn’t appear. I can understand not showing WN’s fares, but not its schedules, especially since media presented WN flight results. A San Francisco-LA search returned flights for American and United, but not Delta. A Delta.com search showed 11 flights southbound, nine flights northbound on the same travel dates.

• Uninspired user sort controls. I give Google credit for allowing users to sort flight results by airline alliances — that can be very helpful, especially for international flight searches. But the other controls are fairly standard — number of stops, connecting airport, and departure and return flight times. This site has nothing on either Kayak or Hipmunk, whose user controls are more visible. Yawn.
• A display that emphasizes airline commoditization. Yes, this is a new product. Yes, airline pricing is complex. But airlines are working hard to differentiate themselves, and Google’s flight display does nothing to help them. Google presents the least expensive economy-class fare. Nothing wrong with that, but Kayak presents premium economy fares. Airlines like United and Virgin America can’t merchandise their premium economy offerings on Google’s flight search tool. Carriers that offer amenities like in-flight Wi-Fi, in-seat power, or in-seat audio/video entertainment systems can’t promote those items in the tool, either. Hipmunk shows users which flight have Wi-Fi. These items are important to distinguishing elements for the airlines. Not offering at least some merchandising capabilities at its start places Google tangibly behind its competitors.

When a firm introduces what is essentially a “me too” product, its launch should incorporate enough bells and whistles to create a distinctive, compelling experience to encourage switching. As of now, Google’s flight search may be convenient, but it’s far from compelling.

Finally, there’s been a lot of buzz about how the flight search shows only airline websites. Cranky Flier readers no doubt know that airlines would like to increase their direct sales, primarily via their websites — their lowest-cost sales channel — rather than selling tickets through travel agencies. Don’t expect this to last. Remember that:

• Google is a publicly-held firm. Like all publicly-held firms, Wall Street and investors expect growth in gross income and operating and net profits each quarter.
• To help generate those revenues and profits Google sells advertising. Travel is a prime category. Within that category, online travel agencies (OTAs) like Expedia, Orbitz, Priceline, and Travelocity are major customers.
• The OTAs generally have larger marketing budgets than the airlines. Both Expedia and Priceline have large cash balances, and have — or have had — larger market valuations than many airlines.

The OTAs will not allow themselves to be frozen out of Google’s flight search display. The OTAs are authorized agents of the airlines, so I don’t see how Google can prohibit them from participating in a public channel like its flight search tool. Plus, if consumers are not provided the same choice in shopping channels on Google’s flight search engine that they find elsewhere, Google will not get the traffic it seeks. Bear in mind that Kayak started as an airline-focused price aggregator, and then added OTAs as a booking option. That move must have worked, otherwise would have stopped it.

I understand, and respect, why airlines may not care to have OTAs compete with them in this channel. I don’t expect airlines to sit idly by, either. In talking with carriers, I get the impression that some may be willing to pay Google referral fees for users who book through their websites. Of course, it’s possible the OTAs may pay more. The OTAs can subsidize paying a larger referral fee on air tickets to a meta-search site, since they can recoup that by selling other travel products like hotels or insurance, to the air traveler. Though airlines sell third-party products, they don’t generate the same volume of those products as the OTAs.

–
Henry Harteveldt is a co-founder of Atmosphere Research Group, where he leads its airline and travel research practice. Prior to starting Atmosphere earlier this month, Henry spent more than 11 1/2 years as the airline and travel analyst at Forrester Research, Inc.

A lot has been written about American’s fight with Orbitz, Expedia, and now Sabre, but I still don’t think that it’s been made very clear for “normal” people. Why can’t you book American on Orbitz and Expedia? What does Sabre have to do with you, the traveler? In the end, there shouldn’t really be an impact on travelers, but the current fighting is putting a temporary wrench into things. It will pass, eventually.

The first thing to understand is that this fight is NOT with retail sites like Orbitz and Expedia. Yes, they are now involved and do not currently show American’s flights, but it’s not their fight. The real fight is between American and the reservation systems (known as global distribution systems, or GDSes) that retail agencies like Orbitz use to make bookings. (It’s no coincidence that the company that owns two of those systems also owns Orbitz – see why they’re involved?)

Here’s the current lay of the land when it comes to airlines bookings.

As you can see, when you book with an airline directly, you eliminate the middleman, the GDS. That middleman, of course, costs money and the airlines pay for it, so airlines like when you book direct. But that’s not the only reason they like when you book direct. The airlines are also unhappy that the middlemen haven’t been very progressive at including ancillary fees (bag fees, priority boarding, etc) in the reservation process to make them easier to sell. They really want there to be a shopping cart, something that is ubiquitous everywhere else on the web today. In addition, they want the ability to be able to vary those fees for frequent fliers. If you’re an elite member, they don’t want to try to charge bag fees, for example. The GDSes just aren’t providing this quickly enough, so it’s time to fight.

But the airlines (at least, the legacy airlines) know that you aren’t going to just go straight to the airline to book every time. That’s good for your basic leisure traveler, but what about complicated itineraries involving many different airlines? Or what if you have a corporate travel agent that books everything for you? The retail sites and travel agencies are still important. The airlines just want to change how they exchange data with those companies.

With data transfer being so cheap and easy today, what the airlines are proposing, and American is taking the lead with, is that they set up a direct connection to cut out the GDSes. That saves money for the airline and it provides the ability to better sell their ancillary products in the process. Makes sense. So here’s what they want.

You’ll notice that there are now a lot more lines coming directly from the airline reservation systems. In reality, there is an XML data connection that the airlines will have sit on top of their systems (I spoke in depth with Farelogix about this, one of the companies that creates these). That connection will then be offered directly to the agencies, retail sites, and even the GDSes. Why the GDSes? They aren’t just going to to go away. Let’s say you need to go from LA to Mfuwe, Zambia. To get there, you might fly American part of the way, but you’ll need to fly on Proflight Zambia from Lusaka. You think they’re going to have a direct connection set up? Yeah right. They’ll still rely on the GDSes, at least for awhile.

But as you can see, I’m not just talking about the GDSes as the intermediaries but suggesting there could be others. If the GDSes wanted to get with the times, they could corner the market on being the intermediary. They could collect direct connections, combine it with traditional connections, and all would be good. They would just have a new way of connecting with the airlines, they would be able to handle the new “merchandising” that airlines have gone to in the last few years, and the costs would drop dramatically. But since they’ve been mostly fighting this (I think Amadeus may be the most open to it), that opens the door for others to step in.

Sure, the big online travel agents and corporate agencies could afford to take the direct connections and do the development work themselves, but not everyone can afford that. What about the little guys? For that, Farelogix (they aren’t alone) has actually created a basic front end system that an agency can download and use with ease. The agency just needs to get the airlines with direct connections to open the spigot and they’re ready to go. Farelogix can even integrate with the GDSes so that they can mix flights from those systems along with direct connections so that it’s all easy for the user to see in one place. As you might imagine, the GDSes don’t like this, so they won’t let most agencies actually mix their results like this. But technically, it’s completely possible.

Can you really compare all these different feeds? Yep. There are a lot of scare tactics being used out there to make people think that a direct connection is going to mean that every airline will offer information differently and you’ll never be able to compare. That’s bull. The big legacy carriers have actually created the Open Axis Group which has a standard airlines can use. (No, I don’t recommend using “axis” in any name when people are fighting.) That makes it easy to start integrating new airlines into a single interface as they create direct connections.

It’s just like you see on sites like Kayak or Fly.com. They take data from multiple sources and display it for you in one interface. The only difference is they don’t do the booking – they send you to each site to do it. This new fight just takes it one step further.

In the end, it’s the reservation systems that stand to lose the most here, and you as a consumer don’t stand to lose anything. If anything, you stand to gain when these new systems start allowing for more robust shopping cart capabilities to help you buy everything you need before you go.

Expedia Drops American Airlines — Right After Orbitz Battle – BNET Headwinds
Expedia has now joined the fight against American, which seems ironic since it just gained an advantage after AA pulled out of Orbitz. This is much bigger than that, however.

Continental-United Merger: How the Airline Emboldened Its Pilots – BNET Headwinds
United lost its bid to put a Continental code on 70 seat jets in Continental hubs. That’s good news for pilots.

Southwest’s Muddled Attack on Change Fees May Backfire – BNET Headwinds
Southwest has released its new change fee ads, and the message isn’t nearly as clear as “Bags Fly Free.” In fact, this could backfire.

In the Trenches: Learning in the Aftermath – Intuit Small Business Blog
Now that the big winter storms during the holidays have passed, it’s time to revisit what worked and what didn’t. We do need to make some changes.

As Sabre Enters War Over Flight Bookings, American Has to Find New Strategies – BNET Headwinds
The distribution war that American started is reaching a boiling point, and now the question is whether American will be able to find a way to survive without the GDSes.

Sabre Makes the Wrong Choice By Removing American Airlines – BNET Headwinds
Now looking at it from the other side, Sabre is not making the right choice here.

Turkish Airlines Sponsorship Gets Kobe Bryant in Trouble – BNET Headwinds
Kobe is a global ambassador for Turkish Airlines now, but the Armenian community is up in arms.

United Airlines Examining How Wireless Internet Fits Into Its Future – BNET Headwinds
United has put satellite-based wifi on one of its airplanes. What exactly does this mean?

Yet Another Union Complaint Against Delta Generates More Noise – BNET Headwinds
Another day, another claim of interference by a scorned union. This time, there’s a little more substance involved, but it’s still clouded by a lot of noise.

American vs. Orbitz: How the Fight Could Change Travel Sales – BNET Headwinds
American has pulled out of Orbitz, and this is just the start of a brewing battle over travel distribution.

Why Airline Unions Keep Claiming Management “Interference” With Elections – BNET Headwinds
I dug deeper into airline labor election laws, and it now makes more sense why unions file interference claims so often. It can’t hurt.

In the Trenches: The Curse and Beauty of Facebook – Intuit Small Business Blog
Facebook is a great place to be for a business, but it’s also a pain in the neck.

I know, I know. It’s yet another onboard wifi story, right? Lufthansa has started putting internet on its airplanes and expects to have it on its whole long haul flight by the end of 2011. So why is this interesting? A couple of reasons, actually. I do find it really interesting the way that Lufthansa is working to bring air and ground together in a couple of ways, including the introduction of CloudStream. Here’s the default CloudStream playlist.

Now, it’s no surprise that Lufthansa is the first to bring back real broadband internet over the oceans. Lufthansa was really aggressive at doing it when Boeing first launched Connexion back in the day. But then, Connexion shut down and Lufthansa just kept flying around with a bunch of sad, useless antennas. So when Panasonic resurrected a new effort at onboard satellite wifi, Lufthansa jumped at it, especially since it could use some of the hardware it was stuck with from before.

The first flights were up and running with wifi on December 1. Lufthansa is starting with Frankfurt to JFK, Detroit, and Atlanta. Yeah, I know. I wondered about Detroit as well, but it’s just because the A330 is the first airplane to get the service, so those routes get it first. If you’re flying on an A330 before January 31, it’s free so check it out.

But what’s different about this versus, say, the stuff you can get domestically. It uses the same satellite as Row 44 (the one Southwest is installing), but it’s also more robust. For example, Lufthansa will allow people to use GSM/GPRS to use their mobiles to text message and surf the web that way. For me, the most interesting thing about this is how Lufthansa is integrating it with the ground.

The service is being handled by Deutsche Telekom (better known as T-Mobile’s parent, here in the US). So it’s really like it’s just another hotspot. Because of that, you can pay using miles, roaming agreements, or just with a credit card. There are a ton of options.

The pricing seems a little screwy to me, however. You have two options – either one hour of service or 24 hours of service. The one hour option is €10.95 (~$14.50) or 3,500 miles while the 24 hour option is €19.95 (~$26.40) or 7,000 miles.

First of all, let’s all just agree that the mileage option is shockingly dumb. I mean, it’s not dumb for Lufthansa to offer it, but it’s really dumb if you as a passenger choose it. The return on that is right around 0.3 cents per mile. In a world where most people benchmark 2 cents per mile as a good place to start, this is really throwing your miles away. But then there are the two options.

For one hour, $15 seems mighty steep. I guess the idea is to try to upsell you to the higher plan, but maybe this will change after testing. Chances are, if you only want one hour on a long haul flight, you simply want to do an email upload/download to reconnect with the world. So they should do something like 30 minutes for €5 for that purpose and then just go with an all-you-can-eat for 24 hours plan.

That plan, by the way, seems to be priced fairly to me. If you’re on an 8 to 12 hour flight, $25 for internet the entire time is absolutely worthwhile. I know that if I flew on Lufthansa, that’s the plan I’d choose. But the really cool thing is how they connect this with the ground experience.

Since it’s run by Deutsche Telekom, the 24 hour period isn’t just for access on the airplane. You can also access on the ground in the lounge. Not sure if you can use your access at any hotspot run by the company, but if so that makes it even more valuable.

Lufthansa has also put together this thing called CloudStream which it calls a digital carry-on. The idea is that leading up to your trip, you can create a virtual briefcase of stuff you want to read. You know you’ve run into those 10 page articles in the Atlantic that you want to read but never have time. So Lufthansa lets you compile everything you want to read for your flight and then you can just call it up and start sifting through while onboard.

Sure, you could do this on your own by just saving a bunch of links in an email, but Lufthansa has put this together in a slick package that also lets you share with others and get content recommendations. If you’re on a long flight, it’s a great way to pass the time.

I give Lufthansa a lot of credit for really trying to integrate its wifi offering into everyday life. Now if they would only put powerports in coach. But that’s a whole different issue.