Given the volume and passion of feedback and questions following my intentionally provocative Travel Metasearch is dead post and collaboration with Dennis Schaal on a similar story, here’s a summary of the feedback and clarification of my hypothesis.

First, I believe “traditional” price-focused flight metasearch in the U.S. is in for a rough time. The price arbitrage opportunities were largely negotiated away during the last few years and online agencies ability to pay the metasearch guys is much lower without booking fees. Not much argument about this.

Second, travel metasearch is going to be much more than about price-based flight metasearch. Or even more then ‘just’ flight metasearch. But there are a number of “traditional” flight metasearch fans who don’t believe that the definition of “travel metasearch” should include products like hotels or hotel reviews.

Third, while price-focused flight metasearch is done, there is room for LOADS of opportunities in flight metasearch – they just aren’t about price arbitrage in the U.S.:

1. Better shopping experiences. Metasearch that delivers a better search experience than supplier sites and agencies, e.g. Kayak will continue to do very well (given the feedback I got to our posts directly and indirectly, I would say that there is pretty strong agreement that – to quote one executive “most of the folks who love Kayak seem to defend them on the basis of UI (user interface), not the actual utility of the results – e.g. getting a better price -which I think bolsters your argument” – Kayak’s search paradigm and singular focus on air – as opposed to cross-selling etc on agency sites – has clearly helped them win share. The initial UIs at TripAdvisor and Fly.com suggest that they understand this well.Better search and shopping experiences will be especially powerful given the complexity of delivering #2.

Fly.com offers three different view and sorting by cabin type

Fly.com offers three different view and sorting by cabin type

2. Including a la carte options. Clearly one of the biggest trends coming in flight metasearch is that airlines will offer ‘value-added’ options for a fee. Bag check-in, Ryanair’s designed-for-PR charge-for-the-loo, booze, economy plus etc. are the tip of the iceberg but there are more coming – fees for window seats, reserving the seat beside you, extra reward miles etc.  ITA’s new reservation system for Air Canada will accelerate this trend.  Flight metasearch sites who can integrate these options in and still deliver an uncluttered, intuitive search experience will win share as online agencies have older technology and confuse the user interface by cross-selling hotels and packages.  Rick Seaney of FareCompare, “Ala Carte is where air travel purchasing is heading and it will be a challenge for all of us to figure out how to…provide an interface that will allow consumers to shop and compare apples to apples” and Susan Black “As the GDS’s morph into GMSs (Global Merchandising Systems), and can show unbundled product (checked bags, selected preferred coach seating, etc…) it will be interesting to see how this affects metasearch.”

Estimate your fees

Estimate your fees before you fly

Note: TripAdvisor already has a rudimentary “fees estimator” option

3.International flights. Still a lot of price arbitrage there!

Are there price-based opportunities in the U.S.? Yes, some for the companies that invest in the deep technology to go into the airline reservations systems and dig into itinerary-based, multi-carrier options to find real price differences (e.g. ITA, FareCompare), there will be arbitrage around more complex origin-destination flights (e.g. no matter how deep their technology goes, on direct flights like SFO-LAX or JFK-BOS, there isn’t much to uncover).

Fourth, let’s separate price arbitrage from the search for better value and lower prices. Clearly this frightful global economic meltdown is driving consumers to search for more deals, discounts and value. So consumer price searching will undoubtedly grow even as our overall travel sector declines – after all “only” 18% of consumers currently use travel metasearch engines. So the search for value should be good for the price metasearch engines and deal aggregators like DealBase, ShermansTravel, SmarterTravel, Travelzoo, Voyij etc.

But those who want to survive and thrive are going to need capital – and one or more differentiators beyond lowest price – to stay in the game and to win. Don’t count some of the smaller players out; some of them have nontraditional investor profiles – like Mobissimo and FareCompare – have flexible capital structures, strong organic growth and are profitable.

Finally, travel metasearch is in its infancy and will evolve past being just about flights. Its future will include “cracking the code” on price opacity on packages, deals and complex products; sorting through the parameters and choices on hotels; and deciphering the folksonomy used in the explosion of reviews and blogs – especially around hotels.

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