London-based Cheapflights Ltd.
is the parent company of comparison-shopping sites
Cheapflights.co.uk and its Boston-based sibling, Cheapflights.com.
The latter carries ads from major U.S. travel companies but also
specializes in consolidators fares from companies like
1800FlyEurope, UK Air, Qantas Vacations, Eastern Tours
Consolidated, Airfare Planet, Japan Budget Travel International and
Ole Travel. Cheapflights Ltd.s Hugo Burge, vice chairman and head
of international business, talked with Travel Weekly technology
editor Dennis Schaal about the company and travel-search trends.
Q:
What do you think of Googles flight links test, using several
partners booking engines?
A:
Its interesting that Google has basically emulated one of the same products
that we have, a multibooking-engine product. Its not terribly
sophisticated, but it helps users shop around without repeating
their dates. It is certainly interesting that Google is dabbling in
travel. This is dipping a toe in the water to see what
happens.
There is huge awe
about Google and also a huge nervousness. Google is enormously
powerful and incredibly clever. Everybody is always worried,
whatever space you are in, that if Google comes up with a fantastic
product, then what does that mean?
I think that kind
of market paranoia is healthy. The fact that it is Google just
increases the pressure.
Q:
What about the approach that Google is apparently
taking?
A:
Its not a high-tech approach. I think it speaks to some of the
issues in the travel industry. The
travel industry is quite fragmented and has a long history of price
differentiation, and opacity is one of the tools it uses in
distribution.
Theres no silver
bullet in terms of guaranteeing the best price. I think Google
would have a problem coming up with the silver bullet for the
travel industry in the same way that everyone else has the same
issue.
Q:
How does Cheapflights.com handle these issues?
A:
We offer great diversity, and we offer consumers companies they
wouldnt find in other places. But were not able to provide that in
a live availability context because of a number of issues. If you
start to provide live availability, companies actually dont like
the transparency [in pricing], and the big online travel agencies
push back.
There are also
issues of scalability in terms of GDS and costs, and the hits it
creates for your partners. The meta-search companies have been
dealing with these issues in a very practical way, and it is
interesting to see that landscape evolve.
Q:
So how do you see Cheapflights positioned in the market?
A:
Were kind of poised in travel, but in the classified ad area. We
come from a research area, a sort of travel classifieds background
in traditional media. Our founder is John Hatt, who was a travel
editor at Harpers & Queen. Thats our heritage. If you break up
travel aggregators, there are the meta-searchers, who are the
live-availability searchers, and then there are the deals with
publishers with more of a classified advertising background like
Cheapflights, Travelzoo and SmarterTravel.com.
A third group is
the destination aggregators that come from a guide book heritage.
Lonely Planet is very good at that, and TripAdvisor personifies a
new guide book thats interactive with consumer reviews rather than
[reviews] just from journalists.
Q:
What is your approach to the trademark issue when you buy ads on
the search engines?
A:
We perceive ourselves as friends of the travel industry. We work
very closely with our partners, and they like our model. So we dont
like to bid on other peoples terms. We dont use other peoples
trademarks without permission.
The reason for
launching in the U.S. was because we felt that a sector of the
travel industry had been overlooked in the U.S. Were able to
provide a platform for smaller consolidators.
Q:
What are some of the key issues you face to get to the next
level?
A:
For a company like Cheapflights, which entered the U.S. market on a
limited budget, people said it would be impossible to succeed in
the U.S. market. Youre going to need at least $20 million to $30
million worth of advertising to make noise in this market, people
said. So we kind of rode the wave in a quiet way as an
aggregator.
I think it seemed
to be the year of the aggregator in 2005. There was a lot of noise
around it, and I think that helped to create awareness of
Cheapflights and other meta-search companies. Weve got past the
original launch, and we have critical mass.
Q:
What do you make of Travelzoos entry into the U.K. market? Is that
sort of a Cheapflights in reverse in that its a U.S. company
entering the U.K.?
A:
They do have a different shade of product, and we watch them
carefully. I think theyll find it is a challenge to enter the U.K.
People are already used to shopping around for deals and are used
to places where you can find deals. We have a huge amount of
traction and years of a lead on them in the U.K. market. I do not
think that Travelzoo really offers anything incredibly different in
the U.K.
To contact
reporter Dennis Schaal, send e-mail to [email protected].