With many U.S. metasearch and online players mulling their air search options in light of the pending Google acquisition of ITA Software, Amadeus is negotiating with U.S. airlines in a bid to gain customers in North America.

Rudy Daniello, director of product management and distribution for Amadeus globally, says the U.S. is “definitely a target.”

“There is no barrier to Amadeus operating in the North America market,” Daniello says.

Kayak for several years has used ITA Software’s QPX solution in the U.S. and Amadeus Meta Pricer in Europe, and Kayak indicated several weeks ago that it is testing potential new providers following the Google-ITA Software announcement.

Other Meta Pricer clients include Skyscanner, Wego and Fly.com.

Like QPX, Meta Pricer enables airlines and metasearch sites to access airfare pricing and availability.

Daniello says Amadeus has embarked on a push to improve its content in North America and is negotiating with airlines on tighter integration of fares and availability.

“A lot of actors are looking around” for new solutions in the wake of the Google-ITA announcement, Daniello acknowledges.

ITA Software definitely has “the right connections in North America,” Daniello says, while “we [Amadeus] have ours in Europe and Asia.”

ITA Software has a handful of airline customers in Europe and Asia, where Amadeus dominates in air search.

Whether Amadeus can duplicate ITA Software’s access to airline pricing and availability data in short fashion in North America remains to be seen.

Daniello concedes that the push for Madrid-based Amadeus to establish more of a foothold in North America depends on the outcome of airline negotiations rather than any technical obstacles.

Ironically, Amadeus used to own a piece of ITA Software but the two had a falling out and Amadeus shed its stake.

Asked about the emergence of new airfare search players, including Everbread and Vayant, Daniello said new players such as Vayant “don’t play at the same level” as the more mature, ITA Software and Amadeus.

Benoit Janin, Amadeus worldwide vice president of development, pricing and shopping, concurs, adding that it would take a long time for new players to master the user experience and establish links with airlines.

Says Janin: “There’s a lot to be done beyond having a search engine with some fares.”

A Vayant spokesperson says: “We’ve received very positive feedback from airlines and other partners we’ve met with because we add  new layers of functionality and value that others cannot.”

About whether Vayant’s product has the maturity to gain traction, the Vayant spokesperson adds: “Vayant is both visionary and scalable as an industrial strength B2B platform and uniquely allows for personalization, split ticketing and all taxation, ancillary revenue models and so much more than search and pricing.   A GDS could consider Vayant competition or collaborator, and we’ve seen both reactions in the market.”

Amadeus has a competitive advantage in airfare search in Europe and Asia because its Altéa platform is the common IT platform for the Star Alliance. Amadeus therefore hosts the reservations systems for many European and Asian carriers and gets optimum access to fares and availability.

In fact, an Amadeus spokeswoman says: “Over 140 airlines contracted for Altéa Reservation, over 90 airlines are using or about to use Altéa Inventory, and more than 40 airlines are moving to Altéa Departure Control.”

In North America, both Amadeus and ITA Software are still looking for their first reservations system customers.

ITA Software had a reservations system deal with Air Canada and Amadeus landed United Airlines, but both agreements fizzled.

If Amadeus is making a new push for Meta Pricer customers in North America, other players, including Expedia, Travelport, Sabre, Everbread and Vayant may be doing so, as well.

Could ITA Software be getting a bit more consumer-oriented, now that it’s almost in Google’s clutches?

The Cambridge, Mass., company overhauled its website — its first redesign since 2007 — and added sections on Solutions for Travelers, Services and Support and ITA Labs.

The site has a much cleaner look and feel and several sections which have been beefed up or renamed, including Passenger Service System Technology, Data Aggregation [Needle] and OnTheFly [mobile app], are much easier to fathom.

The new Solutions for Travelers section, which supplements Airlines and Travel Distributors under the Solutions tab,  covers ITA’s revamped Matrix flight search for consumers and the company’s new OnTheFly mobile app.

ITA long had the original Matrix version on its website for demonstration purposes so consumers could try out its flight search technology, although they couldn’t book anything there.

OnTheFly is Google’s — I mean ITA’s — first mobile app, and could be a not-so-subtle hint about more consumer-oriented products to come, if regulators approve Google’s proposed $700 million purchase of ITA.

Like Kremlin watchers of old, ITA watchers will note that there is a lot more room in the layout under Travelers to fill in new consumer-oriented solutions in the future.

In other words, design-wise there is plenty of more space for consumer-product rollouts.

Another section that needs some filling out on the ITA Software website is the PSS section, which has no case studies since ITA doesn’t have any publicly announced customers signed up for its airline reservation systems solution.

It’s still unclear, if the deal goes through, what Google’s stance will be toward ITA’s foray into the airline reservations system business. Air Canada had been a signed customer, but withdrew after several years of development, citing the airline’s own financial problems.

For the website overhaul, ITA says it handled the design and content work in-house, and farmed out some tasks to a Web development company to build out html pages.

Month-old standards body Open Axis Group picked up Frontier Airlines as a full member and air-search vendors Everbread and Vayant Travel Technologies as allied members — but ITA Software is looking on from the sidelines.

Open Axis actually picked up seven new allied members, and it’s interesting to see which companies have joined and which others have kept their distance.

In addition to Everbread and Vayant, Guestlogix, Navitaire, Traveldata (Japan), TripIt and Ypsilon.net were named today as allied members. Allied members which previously joined are the Airline Tariff Publishing Co. [as a founding allied member], AOI Marketing, ARC, Datalex, eNett International, Farelogix, LUTE Technologies, Mobiata, Pass Consulting Group and Radixx International.

The airline founders are Air Canada, American Airlines, Continental Airlines, Delta AirLines, United Airlines and US Airways.

So, if ITA Software is airline-centric and still trying to get traction with its Passenger Service System, then why wouldn’t it join an airline-oriented group charged with developing airline standards for optional services?

“ITA is a strong supporter of industry standards, and will adopt new ones that will help us deliver the technology solutions that our customers demand,” says ITA Software spokeswoman Cara Kretz. “We are aware of the new standards proposed by the Open Axis Group and intend to monitor its developments.”

Actually, ITA Software for several years had been a member of travel industry standards body OpenTravel, but dropped out in January.

“ITA does support and implement OTA [Open Travel Alliance] standards, but we discontinued our membership and attending the meetings because it was not a good use of our developers time,” Kretz says.

Perhaps ITA is truly waiting to see what happpens with Open Axis after already getting all it needed to out of the OpenTravel standards it implemented and further developed.

ITA’s potential allegiances to standards’ bodies likely also will be influenced by the Google acquisition, if the deal closes.

Don’t expect an Open Axis or even OpenTravel announcement any time soon about Google signing onto either standards body even as Google seeks to close on its acquisition of ITA Software and gets more heavily involved in travel.

Google has gone its own way and uses proprietary XML schema to connect hotels to its maps with hotel search and pricing, even as one major chain pushed Google to adopt Open Travel schema.

“But, Google is not a joiner,” says one travel industry executive. “They won’t join anyone.”

Each company probably has its own commercial reasons when considering whether or not to join a standards body.

It’s hard to say what Open Axis Group’s membership roster — and notable no-shows — means for the organization at this time.

On the one hand, memberships give the organization stature and a sense of traction. After all, it’s been said many times that standards are not standards unless they gain wide acceptance.

However, even without joining, companies will be able to use any standards that Open Axis develops because they will be freely available.

Among the no-shows so far, the global distribution systems are still pondering whether they will join or how they will relate to Open Axis, even as they say they are developing their own standards for optional services.

So far, no online travel agencies — Travelocity and Orbitz have strong ties to GDS parents — have joined Open Axis, although Expedia, Travelocity, Orbitz and their sister OTA brands are members of OpenTravel.

Although Priceline and Kayak have used OpenTravel XML schema, they are not members of OpenTravel or Open Axis.

Southwest Airlines, the carrier with the largest domestic business in the U.S., has not joined Open Axis, and has traditionally been reluctant to connect much with anyone, although its distribution bent has softened in recent years.

And, much-sought-after foreign carriers, with the exception of Air Canada, have yet to enroll in Open Axis.

Also missing in action so far are huge system integrators, HP [which also owns the SHARES airline reservations system] and IBM, both of which are OpenTravel members and do a tremendous amount of work with airlines.

There are no travel management companies or tour operators on the Open Axis allied membership rolls, either.

Still, for an organization that was founded July 13, Open Axis has a fairly impressive who’s who list for such a short period of existence.

Kayak is aggressively testing alternatives to ITA Software’s QPX solution for air shopping and pricing, according to industry sources.

Kayak has been checking out offerings from Expedia, Amadeus, Travelport, Sabre and Vayant, industry sources say.

All of the above companies offer products that they would hold up as alternatives to QPX, although Expedia and Sabre haven’t been aggressive in commercializing their offerings.

It doesn’t appear that Kayak is making any imminent moves to replace ITA Software, which is just one of the solutions it uses to access air content and pricing.

Google has pledged to maintain ITA Software’s contracts if its pending acquisition of ITA Software wins approval and closes.

But, Kayak certainly isn’t alone in weighing possible replacements.

In one way, news that Kayak is testing other companies’ products would not be an unwelcome development for ITA Software and Google.

They are anxious to prove that the acquisition is not anticompetitive so the more viable other vendors’ products seem to be, the easier sell the marriage would be to regulators.

Travelport recently released revision 4 of its e-Pricing airline shopping and faring tool and President and CEO Jeff Clarke says e-Pricing will continue to compete with ITA Software’s QPX solution despite Google’s pending acquisition of the Cambridge, Mass., company.

Clarke, speaking during Travelport’s second quarter earnings call, said the fact that Google plans to spend $700 million to acquire ITA represents an endorsement of the growth potential and attractiveness of the travel industry.

He said e-Pricing, which doesn’t get all the publicity that QPX does, competes head-to-head with the ITA solution and actually has more of a global footprint.

Clarke noted that e-Pricing powers shopping and pricing for Priceline, ebookers, WebJet, Delta, Emirates, American Express and HRG, among others.

United Airlines, Clarke notes, splits its allegiances as the airline uses  ITA’s QPX for shopping functionalities and Travelport’s e-Pricing handles the faring.

The pending Google purchase of ITA Software is “a good thing,” Clarke says, as Google has publicly stated its intent is to improve search results for online travel agencies and suppliers and vows not to get involved with transaction fulfillment.

Clarke said Travelport will continue to compete with Google-ITA and noted that Travelport just released revision 4 of e-Pricing, a software upgrade that the company says is geared to provide “faster search, lower fares and larger result sets.”

On the metasearch front, where ITA is particularly strong, Clarke said Travelport’s e-Pricing just picked up a new metasearch client, with the name to be revealed in a few weeks.

The development occurs, too, as Amadeus gears up to renew its competitive juices with an upgraded shopping and pricing tool.

Meanwhile, asked about Travelport’s IPO prospects in the wake of its withdrawn effort in London in February, Clarke said the company will continue to evaluate capital markets and all possible exits.

Asked whether Travelport was leaning toward an offering in London or New York, Clarke said the company will look at the best markets.

Clarke was also asked about the financials involved in recent full-content agreement extensions with merger partners Continental Airlines and United Airlines.

He declined to get into the specifics of the United and Continental agreements, which run through 2013, but said overall — including all global agreements signed or in the pipeline — Travelport expects revenue per segment to be flat or to increase in the low-single digits through the rest of 2010 and into 2011.

Clarke explained that revenue per segment goes well beyond booking fees from airlines and contains other revenue-producing elements.

For the second quarter, Travelport’s adjusted EBITDA declined 2% to $176 million, on a 1% net revenue increase to $598 million.

Amadeus has started to roll out its new fare and pricing tools.

This includes several components: Basic Fare Storage; Fare Quotation, Pricing Engine; Fare-based results search; and Fare+Availability Caching.

Basic Fares and Pricing has been enhanced over the years.

Amadeus was unique when it launched Basic Fares and Pricing in deploying a separate fares and pricing engine using the old Unisys-based systems. This brought more flexibility than the integrated Fares and Pricing tools of the pure IBM TPF-based solutions. Amadeus was therefore able to deploy a more flexible private fare system — Amadeus Nego — than the other GDSs, although it was not as functionally differentiated.

In announcing the new platform [pdf] Amadeus says it took a four-year effort. Clearly Amadeus has developed a lot of learning along the way and seem to be putting it to good use.

Fares and Pricing generally is a very imprecise service offering. It is very hard to get things right. The complexity of the solutions are mind- boggling. Implementing the fare rules and then trying to mix and match them to availability has been a long-term problem that for specific itineraries.

Travel Agents were almost always better than automated solutions. However, human agents with these good skills are becoming a relatively rare commodity and of course they don’t scale very well.

The emergence of the Internet in the late 1990s resulted in adaptations of the traditional GDS-based core architecture. Amadeus benefited from its earlier major activity in things  like itinerary-based tools. But like its fellow GDS competitors, Amadeus continued through the last decade to adapt rather then re-write the systems. Worldspan (now part of Travelport) partnered with Expedia/Microsoft to develop a new generation of tools that were more in tune with the needs of online travel agency players. Sabre rewrote its fares application system to take it off the TPF host. However, all of them have had mixed fortunes in serving accurate online search results.

The reluctance of the GDSs to fulfill the demands of the OTAs and metasearch players — or indeed any search-results requirement for even single airline caching systems — created opportunities for companies like ITA Software to emerge. It is interesting to note that ITA was actually the beneficiary of this reluctance.

Indeed, Amadeus took an 18% shareholding early in ITA’s life, hoping to ensure that if ITA was successful, then it would benefit the core Amadeus platform. However, the relationship never matured and acrimoniously ended a few years ago.

Taking a lot of lessons from its original MasterPricer tool, Amadeus has upgraded it and given it a lot more capability. The new platform has more new names, and Amadeus is doing a great job in creating a degree of confusion. So far, the Master Pricer flavors  are as follows: Travelboard, Calendar, Special Offer and Agent Fare Families.

Among the new capabilities:

Master Pricer Standard is being replaced by Master Pricer Travel Board. This is essentially the first implementation of Amadeus’s new fares and pricing platform architecture and any advanced features will only be available from the new platform. New commercial terms apply so it is important for users to ensure that they are going to be able to keep their costs under control for these new options because — make no mistake –this is not a free upgrade.

In Master Pricer Travel Board the ability to invoke different search parameters is now possible. Amadeus has changed the basic algorithm in the tool to include more user definition, but also to add more price-friendly parameters rather than just availability and trip types alone. This will increase the inclusion of options such as 3-leg and multi-carrier solutions.

Cautions

Don’t assume the tool is completely definable by the user platform. Companies sometimes do this to prevent the user from hurting themselves. It will mean that users will need to undertake a strong degree of experimentation in the new platform.

As noted above, the cost to use the tool will rise, and therefore there will need to perform a cost-benefit analysis to ensure that the engine doesn’t start becoming a cash siphon.

The new capabilities are generic in nature, but just about all Master Pricer users, including OTAs and agents, can benefit from the tool. The new architecture is not entirely customer-serving. There is clearly a desire by Amadeus to reduce some of the wasted transactions and higher-cost items where that cost is not directly recoverable in user fees.

Whether the new platform is better at addressing the vagaries of airline-based point of sale and dynamic availability will be a critical element in determining the quality and ultimately the overall success of the solution.

And, it remains to be seen whether the tool will improve the quality of the results. A constant criticism of the current platform has been inaccurate results being returned with certain taxes and service fees ignored.

Competition

The market  for the first time is seeing competition from both the traditional GDSs and also the fare tool vendors. ITA is clearly a target here as would Expedia’s Best Fares Search if it decides to commercialize it. The new solutions from Everbread and Vayant also become targets.

In general, the trend demonstrates the how important the search process has become to the overall workflow. The user community at large (both traditional and online) now has some real options in GDS and independent solutions. Clearly, the legacy GDSs are feeling the heat from the next gen platform providers such as Farelogix, LUTE and Everbread. The airlines will be wanting to see if this new architecture is airline-friendly or not. If the latter, then you can assume to see a lot of talk about the results being “unsellable.”

The jury will be out for a long time to determine if Amadeus’s new platform does the job.

But make no mistake: Amadeus is in this for the long haul and it is going to do whatever it takes to ensure it has a competitive product. This is going to suck a lot of resources internally.

Can the giant move at the same speed as the new players? That remains to be seen.

Only the market — provided it is freely allowed to — will decide.

UPDATE: Expedia Inc. says it intends to raise $750 million in its offering of senior unsecured notes.

The offering of the notes, at 5.95%, is expected to close Aug. 5.

In its original announcement, Expedia hadn’t revealed the pricing, but did so in a second announcement later in the day.

The original story follows:

Expedia Inc. may be raising some money with acquisitions in mind.

The company announced today that it will begin a private offering for senior unsecured notes, with the principal amount and terms to be determined at the time of sale.

The net proceeds, Expedia says, will be used for general corporate purposes, including “repurchases of its common stock and future acquisitions by it or any of its subsidiaries.”

Over the past year, Expedia has spoken of being open to acquisitions involving its advertising and media business and/or those which would expand its geographic reach.

However, Expedia officials last week also issued stern warnings about the threat posed by the Google-ITA Software deal, and Expedia is believed to have been an active player with Kayak in attempting to keep ITA Software out of Google’s hands.

If Expedia is shopping around for an acquisition to serve as a defense against Google’s acquisition of ITA Software, it wouldn’t be the only major travel industry player pondering such a move.

Pressure is coming at Google from some of its biggest advertisers demanding that it plays fair when finally unveiling how it will use the $700 million acquisition of ITA Software.

Expedia CEO Dara Khosrowshahi told analysts during the company’s Q2 2010 earnings call late yesterday that the Google-ITA Software deal could have “very significant consequences” on the sector.

Highlighting Google’s “considerable market power”, Khosrowshahi said one of the main areas which Expedia will be monitoring is whether the search giant favours its own content and results over those of existing advertising partners, “whether it’s algorithmic, inside their system or hard coded”.

The extent to which such activity takes place would be a problem for Expedia, Khosrowshahi said.

“The way we’ve seen them operating in general has been fair, but we think they’d be wise not to kind of favor their own internal products over external products and create an unfair playing field.”

Despite the concerns, Expedia was in “good shape” to handle the likely impact of the deal, with Khosrowshahi acknowledging that executives at Google have “done the right thing” and will build “a great product”.

Meanwhile, questions emerged during the call over whether Expedia would be willing to expand its Best Fare Search product as a result of the Google-ITA deal so third parties could tap into its data, rather than remain customers of ITA.

Expedia’s chief financial officer Michael Adler said the ten-year-old BFS pricing system is competitive with any of the other pricing products in the marketplace (such as those from the GDSs and others highlighted in Google new travel ecosystem).

Adler admitted Expedia may talk to some potential partners or airlines about using BFS but hinted the product had been built as an “in-house solution” and a fair amount of work would be required to commercialise it for third parties.

He added:

“At this point, it’s not something that we know whether we want to invest in, put time in and whether, frankly, it’s practical. But we’ll see.

“We’re very happy, especially with Google buying ITA, that we’ve got the BFS team and makes us worry a bit less about what the potential consequences of that transaction could be, at least for us.”

NB: Earnings transcript available at SeekingAlpha.

Business as usual at ITA Software as it releases a mobile travel search application for iPhone users and available for integration with client systems.

Built on ITA Software’s QPX system, OnTheFly was placed in the iTunes app store overnight and offers the same comparison shopping features already used by many travel companies and also ITA’s Matrix airfare search platform.

The development of OnTheFly comes against a backdrop of the company’s proposed acquisition by Google and question marks over what the search giant intends to do with the business in terms of consumer-facing functionality.

Features include:

• Flexible airport selection.
• Travel date selector on a single calendar.
• Search by number and type of passengers, departure/arrival times, number of stops, cabin class.
• Map display.
• Search results by airline, number of stops, travel dates and airports, total mileage and carbon emissions.
• Build itinerary flight-by-flight.
• Full airfare calculation.

ITA says the B2B version of the app can be integrated into existing mobile and booking systems while the consumer-facing version on iTunes will remain search-only.

On the one hand developing a B2B mobile service for existing and future customers is a logical step for ITA, but the creation of a consumer-facing app will, once again, trigger further speculation as to what Google intends to do with its acquisition, assuming clearance is granted by the inevitable US antitrust hearings.

But in short: Google will have its very own travel search app for mobile.

ITA says OnTheFly will be rolled out for Android and Blackberry handsets later in 2010.

Airlines are doing a lot of watching and waiting about the Google-ITA Software deal, but a Continental Airlines official today noted that alternatives to ITA technology are available.

During Continental’s second-quarter earnings conference call today, Chief Marketing Officer Jim Compton said there are internal and external alternatives to the airline’s use of ITA’s flight shopping and pricing service.

“… We are going to watch the business plan at Google, and ITA has been a good business partner, but clearly [it's] way too early for us to comment on that, but knowing that there are alternatives, both internal [and] external to that shopping solution.”

Compton didn’t specify what those alternatives might be, but the “external” ones may include, to varying degrees, an assortment of tools from Expedia, Travelport, Amadeus, Everbread and Vayant.

Compton said Continental was an early adopter of ITA’s QPX system, which “has served us well.”

Continental chairman and CEO Jeff Smisek was asked whether Continental would file a complaint in any potential Justice Dept. antitrust probe of the merger, and he responded: “We are not going to comment on that.”

Alaska Airlines also uses QPX on its website and Joseph Sprague, vice president of marketing for Alaska Air Group, said the airline is studying the deal closely “to see what it might mean.”

“I think there is some intrigue that might even further strengthen ITA in terms of some of their research and development activities that could benefit us,” said Sprague, during the airline group’s second quarter earnings call today. “And so, like the rest of the industry, we’re going to be watching that closely over the next few months to see if that gets approved and how that moves forward.”

Other airline customers of ITA, including US Airways and Virgin Atlantic, also have chimed in about the Google-ITA Software deal over the last few days, according to Dow Jones Newswires.

Rest assured that ITA has taken more than a few calls from its airline customers in the weeks since the deal was announced.

ITA wouldn’t comment on any discussions which reportedly have taken place.

ITA spokeswoman Cara Kretz said: “Until the deal closes, we cannot speak for Google as to its plans for ITA post-closing, nor do we comment on private conversations between ITA and its customers. ITA and Google remain separate and independent businesses until the closing. We don’t have any further comment.”