So google is buying ITA Software. What does it mean for you, air traveler?

First of all, what is ITA Software? Briefly, it’s a technology company based in Cambridge, MA that provides the airfare search software behind such sites as Orbitz, Kayak and many airline web sites. Its claim to fame is that it digs deeper into airline reservation systems than some other technologies, and usually finds fares that are only available via the airlines’ own websites. And it allows users to do an easy flexible date search over any 30-day period.

But: It does not provide searches on Southwest AIrlines, Allegiant Airlines, Ryanair, and a few other smaller carriers. Similarly, low-cost leader Spirit Airlines keeps its best fares for Spiritair.com.

Nor can ITA calculate promo code or some other special airfares that the airlines reserve for their own web sites.

Recently, for example, US Airways tweeted fares from Philadelphia to Tel Aviv for $99 each way plus tax, summer travel. JetBlue tweets frequently as well, with $10 fares. United recently tweeted 20% off discount codes. These deals were not picked up by ITA Software. If airlines increasingly market their best deals through narrow channels, and keep them from ITA, it will further change the fare finding game. My thinking is that if airlines can figure out how to eliminate all third parties, such as profitable Southwest has done, they’ll do it.ITA also doesn’t include the “name your own price” fares you can find on sites like Priceline.com, which are often quite good if you don’t have a sufficiently large advance purchase window. And it doesn’t include consolidator airfares. In fact, no airfare search site includes all of these things.

So will the Google acquisition change airfare search for the better? Online airfare search “is ultimately not a very good user experience,” Google CEO Eric Schmidt said on a conference call. “There’s clearly room for more competition there.”

That’s an interesting statement. More competition? Compared to other categories, airfare search is anything but devoid of competition. Recently, TripAdvisor got into the game, as did Travelzoo with its fly.com site. That’s in addition to sites like Expedia, Travelocity, Orbitz, Cheaptickets, Hotwire, Booking Buddy, Farecompare, Yapta, Cheapair, and about a dozen others. ITA Software powers many of these sites already.

ITA does not sell airfares directly. It only shows what it believes the lowest fare to be on any given route, and then you need to conduct a separate search on the site of your choice to find the fare. Most people go directly to airline web sites to complete purchases, although sometimes the cheapest fare will be outbound on one airline and a return on a second airline, which is where the online travel agencies (OTAs such as Travelocity and Expedia) have an advantage, since they show fares on more than one airline. Will Google turn ITA into a fare-selling engine, in competition with its paying customers? Who can say?

Of course, Google is already in the fare search business. If you Google a term like “Boston to New York depart Dec 13 return Dec 15 2010″ (try it), the top unadvertised search result will be a google-generated search box allowing you to click on many major OTA’s and meta-search sites.

But it will not actually return fares without further clicking. Perhaps at some point an ITA-generated fare result will pop up, showing the lowest price your Google search, instead of sending you to an OTA’s link.

Airfare search is such a crowded, ever-changing business, fraught with uncertainty and risks that it’s interesting that Google wants in. But I’ll have to assume they know what they’re doing.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

[Flickr image: tortuga767]