APEX Insight: During last week’s ACTE-CAPA Global Summit, CarTrawler CTO Bobby Healy cautioned that Google may ultimately control the relationship between airlines and their customers. Airline representatives in attendance had mixed views on whether technology companies present a threat or an opportunity.
During last week’s ACTE-CAPA Global Summit in London, Bobby Healy, chief technology officer at CarTrawler, spoke about the threat that Google poses to the travel industry. By monopolizing travel search and transactions, the tech giant may ultimately control the relationship between airlines and their customers. This, Healy says, is the natural extension of Google’s global reach, which is fueled by one of the most precious resources companies have today: data.
“It’s not a cliche to say that data is the new oil – it’s absolutely true,” Healy said. He detailed what he called the “virtuous cycle” of data mining that drives the rapid growth of today’s technology giants.
“It’s not a cliche to say that data is the new oil – it’s absolutely true.” – Bobby Healy, CarTrawler
“The more users there are, the more information Google collects. The more information you collect, the better your machine learning algorithms are. The better your algorithms are, the better the choices you make for customers and, therefore, the more customers you get,” explained Healy. “The data that is critical to all of this, from an airline perspective, is inventory and pricing. Right now, every airline in the world pretty much hands that data over to Google for free. Better still, they actually pay Google to take that data off them and sell it to their partners.”
Google’s engineering skills are giving the company an advantage over other players in the travel sector including review sites, like TripAdvisor; OTAs (online travel agencies), like Priceline and Expedia; metasearch sites, like Momondo and Skyscanner; and GDSs (global distribution systems), like Amadeus and Sabre. While the review sites are already starting to feel pressure from Google, Healy cautions that Google’s influence may stretch beyond these adjacent companies to stand directly between airlines and their customers.
“Google has a phenomenal engineering ability, better than the airlines have. It has deeper pockets than the airlines’ could ever possibly be. It has better customer access and better insight into your customer than an airline or an intermediary could ever possibly have,” said Healy. “That’s not because it has a better product. It’s because the airlines have given it data that enables it to put itself in front of the consumer, ahead of better products than Google has itself. Of course, with its amazing bunch of engineers, Google will ultimately catch up if not overtake its competitors.”
Airline representatives in attendance at ACTE-CAPA had mixed views on whether the capabilities of Google and other technology companies present a threat or an opportunity.
“We have to make sure we keep as much power as we have, to control distribution and price points.” – Anko van der Werff, Aeroméxico
Anko van der Werff, chief revenue officer, Aeroméxico, described the dynamic between airlines and technology giants Google and Amazon as “a power game.” That power is driven by the abundance of valuable data airlines have gathered, not only flight-related data, but also data frequent flyer and branded credit card programs. “We have to make sure we keep as much power as we have, to control distribution and price points. What if Google goes even more aggressively into the Google Flights application? What if Amazon becomes a PSS (passenger service system)? What if Amazon starts saying, ‘we’ll build your business for you’ and they start cross-selling and up-selling?” asked van der Werff.
Facebook could be among the technology companies which may veer closer to the travel space, offering transactional value. “When you Google, you’re actually just reacting; you want to fly to wherever [so you search],” said van der Werff. “Facebook, from a psychological point of view, would be able to influence your thinking; because your friends can say, ‘Hey how about flying to Paris?’ I think that’s very proactive.”
Van der Werff envisions Facebook creating a PSS that would encourage consumers to travel when they may not have originally planned to do so. He suggested that the technology giants already have a significant, perhaps insurmountable, advantage in this area. “Investing in data and controlling the data, then monetizing the data is what they’re very good at and they are going to do more of that,” he said. “What will we do with data? How do you monetize that data? The question is whether we will be the ones who can control that. When you see already that threat..would it be better to team up with them in some shape or form?”
“We need to be careful when we talk about data because we’re talking about people,” – Willie Walsh, IAG
IAG CEO Willie Walsh sees the matter of data very differently, shining a light on data privacy, which is too often overlooked, and the future of data regulation and ownership. “We need to be careful when we talk about data because we’re talking about people,” he said. “But data is very important, and how you use that data to improve the customer experience, make it better, make your business more appealing, is a great challenge. I worry sometimes, when I hear talk about data, that it’s completely impersonal, that we can just grab it all and exploit it. I personally don’t like that idea. I think this industry needs to be very careful with that.”