Could Google be the Airlines' newest best friend?

Google quietly slips in checkout for free in 2007.

· We just found out that Google Checkout is free through 2007 compared to the original campaign of through 2006, https://checkout.google.com/seller/freetransactions.html. This is a big deal in our opinion. Google is spending aggressively on gaining traction with its Checkout product and we think the offering has the possibility of disrupting eBay's off-platform PayPal business as well as the general ecommerce market. Google is now effectively paying all credit card fees for partners for a full year. We think Checkout is becoming Google's Internet Explorer, if you will, and we think it is time to start paying close attention. · A knee-jerk reaction would be to trade Google lower because this IE-like initiative will cost them in processing fees and in terms of consumer incentives, $10 off $30, etc. All else being equal, we would be aggressive buyers of Google into any ST weakness around what is going on at Checkout. We think, if it works, it is potentially very disruptive to competition and materially beneficial to Google's core Adwords business.

What does this mean for airlines?

This is ABSOLUTLEY something that we should all pay attention to. For airlines this would represent the biggest cost reduction in their current hit list of controllable distribution cost targets. This is a BIG DEAL. I can only imagine that at least ONE airline will sign up for this early and get the benefit of the deal extended beyond 2007 and beyond. The airline have to do something to show they are attacking their costs. Doing this deal could cut 2-3 % off the cost of processing. IF the airlines are smart. Are they?

Only time will tell