KAYAK Flights, for those of you who don’t know is one of the USA’s most popular flight search engines. It was founded in 2004 by 3 co-founders of some of the biggest travel agencies online – namely Travelocity, Orbitz and Expedia. On November 8th 2012 it was acquired by Priceline.com for the price of $1.8 Billion. In this article we analyse KAYAK’s future and compare it head to head with Google’s new flight search offering.
The History of KAYAK Flights
The KAYAK flight search engine was developed to compare hundreds of travel sites at once and deliver the cheapest flights online to consumers (in other words it is a meta search engine or a flight comparison site.) The site went live in 2004 and was characterised by fast loading speeds and powerful flight filtering options. As the popularity of the search engine grew it was able to attract lucrative rounds of financing and soon made a number of acquisitions starting with Sidestep (a competing comparison site) in the year 2008 for the reported price of $200 million dollars.
In 2009 they launched their popular mobile apps which have since been downloaded over 20 million times. After a design overhaul in early 2012 it prepared to go public on the stock market (a move they had been planning since November 2010). By the time of public launch its platforms were handling 10′s of millions of flight queries per month and they had strong TV advertising campaigns running in the US. They also had a number of geographically targeted domains making it a truly global travel search engine.
Google Enters the Picture | July 2010
Meanwhile in July 2010, Google caught on to the fact that flight comparison and travel products were highly lucrative and they made a move to acquire the Massachusetts based software firm ITA. This was a highly significant move as the ITA software firm developed an airline pricing system that powered some of the biggest travel sites in the USA including Orbitz, American Airlines and of course KAYAK Flights. In fact at the time of the acquisition up to 60% of airline search queries on KAYAK were dealt with via ITA software. If Google were to gain control of ITA software they could potentially cut off this data source from current sites using the technology and reserve it exclusively for themselves.
After an intense battle to stop the acquisition (see Fairsearch.org, a lobby group formed by KAYAK flights and others designed to stop the takeover) the Department of Justice finally concluded in April 2011 that Google could buy out ITA which eventually sold for $700 million dollars. The deal however was only approved if Google agreed to a number of caveats. Some of the concessions Google had to make was not monopolising the organic search results for flight related queries and allowing current clients of ITA software to continue using their platform for another 5 years.
Google launches it’s own flight search
Google quickly developed its own flight search engine using ITA software and went live in September 2011. The whole online travel industry was holding its collective breath to see what type of search engine Google would produce. The product, when finally launched, was underwhelming to say the least. The speed of the search was immense but the coverage of flights was fairly disappointing – See our own Google flights review for more on this.
As KAYAK saw Google flight search falter they grasped the opportunity and finally went public in July 2012. They opened the day trading at $26 dollars a share and closed the day at $38 a share. KAYAK flights, it seemed, was confidently riding out the Google storm.
Priceline acquires KAYAK Flights
Priceline.com (the international travel giant worth $30 Billion) was closely monitoring this state of affairs and decided to make a move that would shock the travel industry. They put an offer in to buy KAYAK for the monumental price of $1.8 Billion dollars. This was a very surprising amount considering it was well over double what Google shelved out for ITA software – the very software that powers a fair percentage of KAYAK searches.
The future for KAYAK Flights.
KAYAK flights has only one year left of utilising ITA software by Google (their contract expires in December 2013). After that it is likely that they will have to rely on alternate methods of sourcing airfare pricing (they are forming close alliances with Amadeus in preparation for this occurrence). In the meantime Google is gearing up for bold moves in 2013 with its own travel products. They recently acquired Frommer’s travel guides and launched a powerful new flight explorer tool. If Google manages to perfect and market its flight search offering correctly it could seriously dent KAYAK’s future growth. They certainly have the tools at their disposal to do so.
In summary here are a few points of concern for KAYAK flights in the future
- Their contract with Google ITA software runs out soon (December 2013). This will force KAYAK to rely on other data sources for flight results such as Amadeus, which by KAYAK’s own admission are not as comprehensive as ITA.
- Google is making aggressive moves in 2013 with unique travel tools. (by acquiring Frommer’s travel guides, Zagat and launching flight explorer)
- KAYAK flights has very little influence outside of the US markets. A number of competing players already enjoy sizeable market share and brand loyalty in the UK, China and India.
- Google flight search is expected to go international very soon.
- KAYAK flights is not comprehensive enough to always differentiate itself from the crowd.
These factors put a big question mark on whether KAYAK can overcome these challenges. There are interesting times ahead. KAYAK’s main expansion plans were to become bigger in its international markets in the future but the truth is that they have been operating in a number of other territories for years with limited success.
If they cannot expand quickly and comprehensively it is feared that other established players will simply drown them out, especially in foreign markets. And in that case it may seem that the $1.8 billion dollar price tag was somewhat inflated.
Cheapflightsfinder.com believes that no single search engine has yet perfected the process of flight finding – be that Google flights or KAYAK Flights. The fact is that the perfect flight could be found on one search engine one day and located on another search engine on another day.
To combat this inefficiency we developed what we like to call a meta-meta flight search engine. In other words a search engine which enables you to search multiple meta search engines in seconds. We believe that this is the best way to ensure you are landing the best deals in the shortest possible time.
We easily compare over 16 flight aggregators including Google Flights and Kayak so you can be sure that the deal you get will be the very best of the best.
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