Zooming to a travel site near you.
Before online travel sites like Orbitz and Travelocity gave ordinary citizens the ability to book their own trips, travel was the domain of agents who were forced to tame an unruly reservation system and track down flights by using, of all things, a printed schedule book. Then came the Internet boom, and with the future of travel e-booking upon us, at the forefront of the trend is Cambridge-based ITA Software, a developer of airline pricing and shopping software. The company’s CIO and co-founder, Dave Baggett, talks about life on the software runway.
How did ITA get started in developing such specifically targeted software?
When our founder, Jeremy Wertheimer, was still in college, he had some friends who were travel agents and one day he was looking at their software, and was appalled. They were working on systems that forced them to do all the work, that forced them to learn a lot of cryptic commands, and spend so much time on just navigating through the bad interface. It had been a very impressive system when it was introduced in the late 1960s, but thirty years later, it was just primitive. So, he began writing the code for a program that would be a search engine for airfares, so the travel agents wouldn’t have to deal with that clunky system.
Who are your customers?
We target a couple of different areas. One is the airlines themselves, because what they’re looking at is to get more control over the distribution of product, and to do that they’d like to have a more flexible pricing system. The way of doing it before was not flexible at all, but we run an ASP model where the airlines can license the technology, they don’t have to pay for the mainframe, so we can make changes to the software very quickly, and that’s very good for them. We’ve also been doing work with online travel agencies, like Orbitz. We developed the matrix of answers that you see on their site.
What makes your travel software different from others on the Web?
If you go on Orbitz and compare it to some of the other sites, you’ll see that our software is better, and I’m not just saying that because of where I work. Simply put, our software finds more solutions, you see more answers. It’s like looking at the whole store at once instead of just a series of shelves. That’s a big improvement over what’s come before. In the past, you could see only nine or ten options, maybe. But because we can do a deeper search, when you go to Orbitz, you can have a more complete picture, you can see many more options.
With online travel agencies and airlines trying to accomplish the same goal, but in different ways, is there any difficulty in developing technology for both?
Not really, but there is tension there. A carrier has to balance between wanting to own their product completely, and participating in a cross-shopping site. Most carriers split the difference and participate in both, because they don’t want to be left out of the cross-shopping, which has become so popular. There are carriers, like Southwest, that have decided not to be on online travel sites. They make customers go to their Web site instead, and that’s a controversial choice. But they think it works for them.
Does developing such complex software for a niche market mean less competition for you?
Yes, but there are a few companies that we view as competitors, mainly four that have computer reservations systems. However, they view themselves as service companies where we see ourselves as a software company, so it’s a very different business model. To illustrate: when you buy an airline ticket from one of those four companies, they get a booking fee, like an agency would. With our focus on making software and getting license revenue, the carriers can run the software themselves and keep the booking fee. So, if you compare models more closely, we do have some competition, but no direct competitors.
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