Airfare search race shifts into overdrive

The two largest travel Web sites recently made major changes to their fare search engines, prompting industry watchers to conclude they are reacting to the threat posed by the expected debut this summer of airline-owned Orbitz.com.

Although still in beta tests, Orbitz.com's promise to deliver better technology seems to have touched off a renewed search for the perfect fare search engine. It aims to search every available flight combination for travelers, giving them the choice of cut-rate fares, fewest legs on a trip and most convenient departure times.

If it can deliver, Orbitz could radically alter an industry in which customers surf numerous sites before making a purchase.

To head off the challenge, Travelocity.com and Expedia.com, the two leading online travel Web sites, recently beefed up their fare searches, and a host of newcomers have emerged promising more expansive searches and lower fares.

"Orbitz is right -- people really do want to see more choices," said Krista Pappas, an analyst at Gomez Advisors Inc. in Waltham, Mass. "Even though Orbitz hasn't launched yet, these sites are working overtime to compete with them."

Earlier this month, Expedia increased the number of options on its airline fare searches from a maximum of six to a maximum of 30. In October, Travelocity unveiled a new search algorithm that covers a broader range of fares and checks a greater number of connections.

Josh Friedman, an analyst at IDC in Mountain View, Calif., said travel Web sites to date still fall short of what a consumer can get from a human travel consultant.

"It's great that everyone's trying so hard, but you're probably two to three years out before someone gets it right," Friedman said.

At the heart of Orbitz is a search engine created by ITA Software Inc. in Cambridge, Mass., which claimed it would build a better search tool. That threat seems to be driving innovation in the travel industry. In November, Travelbyus.com became the first company to put the ITA search engine into widespread use, making it available to 2,700 different travel agencies.

Two other companies recently emerged with the idea to search the search engines. Farechase.com combs sites such as Expedia and Travelocity in the hopes it can draw the crowd that would otherwise be surfing those sites.

Side Step Inc. in Santa Clara, Calif., offers a free browser plug-in that searches 89 airlines, hotels and car rental companies when a customer begins a search on an online travel Web site. If the customer finds a lower fare on the Side Step site, the person can then book directly with the travel supplier.

Henry Harteveldt, a senior analyst at Forrester Research Inc. in Cambridge, Mass., expressed some doubt that "parasitic" offerings like Farechase and Side Step will be able to offer real-time data, but he said they are a symptom for an industry that's fallen for "the beautiful, Nirvana-like picture Orbitz has painted."

Orbitz is due to emerge next summer, and Harteveldt predicted that Travelocity and Expedia won't give up their market share easily, even if Orbitz has wonderful and scalable technology along with the backing of the nation's largest airlines.

"Everyone's posturing to get the best possible position for when Orbitz launches," he said. "And I expect we'll see a lot more innovation from the current leaders before that date arrives."

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