Google Flights Teaches The Value of Competition

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While online retailers in any industry might hate the idea of diverting their traffic away from their websites in search results, it turns out that it’s not always a negative.

The travel industry is among the most competitive, and not just among competing carriers, hotel chains and rental agencies. Online travel agencies (OTAs), metasearch sites like Tripadvisor and publishers also vie for top search results against direct brand websites websites, either organically or through their own paid advertising. And Google has staked its own claim in the travel space by integrating its own hotel search functionality into its primary search engine and Google Maps, and by launching the highly successful Google Flights tool.

Type a query into Google like “San Diego to San Antonio,” and you’re presented with a flights search box like the one below, right on the results page. The same happens if you search “hotel Seattle.”

While it might seem altruistic on Google’s part (is anything?), in fact, the search monolith gets referral revenue whenever a searcher makes a flight booking that was referred by its travel tools. But is this good or bad for business?

Is Google the Travel Industry’s New Best Friend?

It turns out that Google Flights has been a boon for airlines, and to a lesser extent, hotels, surging in the number of referrals they provide to carriers in the last year. Google Flights overtook its closest competitor for referrals, Kayak, for good in referrals to United Airlines in February of 2017, and in April it overtook Kayak referrals to American Airlines.

When flight results appear on Google, a searcher is sent to the airline’s website to complete the purchase. Presumably, Google gets a referral commission on this transaction, though exactly how that works isn’t very transparent.

Interestingly, Kayak, Google Flight’s biggest competitor, includes flight results from OTAs as well as airline sites.

About 85-90% of top referral traffic from Google Flights goes to airlines, while only 1/3 of top referral traffic from Kayak goes to airlines.  About 2/3 of the referral traffic from Kayak goes to OTAs, since the site has a sidebar inviting travelers to compare prices on sites like Orbitz, Priceline, and FlightHub against its own.

Naturally, Kayak encourages visitors to book their flights directly on Kayak, since that likely generates extra revenue for them.

Either way, both Google and Kayak are helping airlines book more flights than they could on their own.

The Southwest Exception

Unless, of course, you don’t want to bother with this expense. Take a look at our  Travel Dashboard. Southwest Airlines consistently drives way more traffic than the other major carriers. And they do it without driving a lot of conversions through Google flights. We’ve written before about this phenomenon. Southwest declines to post prices on metasearch providers like Google Flights, and they withhold seat inventory from the global distribution systems that online travel agencies like Expedia rely on for customers make bookings. If you book through an OTA, the airline will make less money on your ticket because they pay a much higher commission.

You cannot book a Southwest ticket on an OTA. Instead, Soutwest puts more effort and money into their marketing and keep other costs low by driving bookings entirely through their own system. Southwest can do that because, as the data shows, they generate a ton of their own traffic.

Google Is Everywhere You Want to Be

It should be no surprise that Google is stepping up its efforts in the travel game. In the last few months, the brand has launched its Google Trips app, which allows travelers to explore attractions and even house their travel documents digitally.

Because people already rely so heavily on Google’s many products and services, this is just one more way the brand is providing value.

In its flights booking tool, travelers get access to more detailed features than even airline sites offer, like whether checked bags are included in the price, tips to save money on a ticket by flying out of a different airport or on a different day, and the “best” flights, based on travel time and layover.

Reframe “Competition”

The fact is: if Google can help airlines sell more seats, then it’s helping more than hurting, though there have been complaints about Google intercepting searches for specific airlines to put its own Flights box up top rather than the airline’s website.

It’s not always a bad thing for the “competition” to get traffic for your brand . . . if you can still compete on price and value and appear on that channel. Just think of all the retailers who sell more products on sites like Amazon. They’re reaching consumers they wouldn’t have otherwise connected with.

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