Going After Online Plane-Ticket Buyers

Websites such as Priceline.com (PCLN), Orbitz Worldwide (OWW), and Expedia (EXPE) disrupted the airfare booking business and became multibillion-dollar companies by serving as self-help travel agencies for the digital era. Now their industry is entering a patch of turbulence. With Google's (GOOG) $700 million purchase of ITA Software receiving regulatory approval in April, the search giant has gained control of a company that produces much of the flight data other sites rely on. Google is now developing "exciting new flight search tools for all our users," according to a company blog. Meanwhile, carriers such as American Airlines (AMR) and Delta Air Lines (DAL), eager for more control over customers and pricing, have pulled their flight listings from some third-party travel aggregators.

"There's gonna be a change as to who the middlemen are," says Adam Goldstein, co-founder of Hipmunk, one of a number of startups launching themselves into the choppy skies of online travel booking. While Hipmunk hopes to set itself apart by better predicting which flights users will book, others are linking up with social networks like Facebook or tools like Google Earth to give travelers more information—and more personalized information—than they can find on top travel sites. They're vying for a slice of the online consumer airfare market, worth $45 billion last year in the U.S. and set to grow 14 percent over the next two years, according to Forrester Research (FORR). "The companies that were once the pioneers and innovators are lagging behind a new generation of creativity," says Henry H. Harteveldt, a travel analyst at Forrester. Brian Hoyt, a spokesman for Orbitz, says "we are constantly innovating," pointing to the company's iPhone (AAPL) and Android apps, among other features.