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How to Save $10 on Airline Tickets

2/6/06

We’ve noticed some interesting turbulence recently in the technological doldrums of airline reservation systems.

Led by Battery Ventures, last month five VC firms committed the huge sum of $100 million to ITA Software for the purpose of developing and marketing PC software that would replace the ancient, assembler-coded mainframe duopoly of Amadeus, Galileo, Sabre and Worldspan.

These oldsters charge airlines a rich $12 per reservation booked. ITA aims to lower that cost to several dollars. In a perfect market, that would mean something like a $10 savings in the pocket of each airline passenger. In addition, ITA has plans to modernize other airline software like the aging applications that operate call centers, gates and maintenance facilities.

For the past six years, ITA has mostly busied itself making airfare price shopping engines, selling these to discount airlines like US Airways, Continental Airlines, Alaska Airlines, and website price aggregators like Orbitz.com and Kayak.com.

ITA looks like its surfing another one of Schumpeter’s “creative destruction” waves, this one about to wash over the 30-year old airline booking industry.


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