Travel is no longer a novelty; it’s part of the Australian way of life. The average Australian travels interstate by air once every nine months and overseas every three years.
It’s big business. What’s more, travel is a fast-growing business, even when most of the world economy is sluggish or in recession, as it is now. And it’s the technology companies that are cashing in.
After the initial flourish of great technological ideas like Microsoft, Apple, Google and Facebook, the industry has begun to consolidate as IT companies buy other companies to strengthen their market position.
For example, online travel booker Expedia.com has bought TripAdvisor and Google has achieved global domination of the advertising business after proving itself the cleverest online search engine and watching its competitors fall away.
As part of its mission to take over the world, Google has targeted the travel industry for growth and, in its latest flourish, has bought the well-established travel guidebook company, Frommers.
However, Google’s position has become so powerful that state jurisdictions have struggled to evolve rules that can successfully regulate such multi-national behemoths.
The US government has clashed with Google repeatedly in the past five years as it has bought up advertising interests and, in April last year, imposed a series of conditions on Google’s $US676 million purchase of airline fare tracker ITA Software, which is undepinning its expansion into the travel business.
The US Justice Department required Google to license the ITA technology to other companies on reasonable terms until 2016. The government said it would also monitor Google to ensure it did not engage in anti-competitive behaviour in the travel data industry.
Microsoft, Kayak.com, Expedia and other Google competitors had banded together under the banner FairSearch.org to oppose the acquisition of ITA, whose software provides data for online travel sites such as Orbitz. They said the deal would reduce competition.
Technology companies will be even more inter-connected with the whole travel experience following the rolling out of tablets – miniaturised hand-held home computers – in the past year to deliver in-flight entertainment on board passenger aircraft.
One of the features of this technological revolution is vertical integration of the platforms in the same way that Apple has attempted to lock in its customers to its own branded products from home computers to smartphones.
Google, for example, having achieved dominance of the search engine industry, can now control and monetise what you are shown when you think you are calling up a straightforward directory of the most searched-for keywords on the internet.
But what you are not shown can be just as important. For example, when you use the US-based Orbitz to locate the cheapest available airfares on any given route, you are not shown results for airlines that don’t pay commissions to Orbitz or other companies in the Orbitz supply chain.
If you’re travelling in America, that means you are not seeing results for the country’s biggest domestic airline, Southwest, which only deals direct with its customers and does not pay commissions to “middle men”. That’s one of the reasons its fares are low.
The power of the internet itself makes it easier than ever to find out exactly “who’s up who” in the system that’s selling you an airline ticket and to locate the cheapest travel deals. But it’s still a bewilderingly complex industry that a casual buyer can’t be expected to understand.
That’s why travel sellers like Webjet, which promise to take all the worry out of travel buying in exchange for a substantial fee, are prospering even though you can “do it yourself” much more cheaply.
Who are the people and the websites that you absolutely trust in purchasing travel? Are there sellers that you swear by or others that you’ll absolutely never use?