ITA Software Inc. has reportedly closed on a $100 million infusion of venture capital. The development is being termed as “the biggest New England software venture deal in five years”.

Published: 22 Jan 2006

ITA Software Inc. has reportedly closed on a $100 million infusion of venture capital. The development is being termed as “the biggest New England software venture deal in five years”.

According to boston.com, the deal comes as the $5 billion US market for computerised airline ticket-booking systems used by travel agents and corporate travel buyers is poised for an epic shakeout in the coming year. “ITA backers are betting heavily that the company can make deep inroads against existing suppliers like Sabre Travel Network and Cendant Corp.’s Galileo service, whose typical fees of $12 or more per ticket are pushing financially strapped airlines to look aggressively for less expensive alternatives,” adds the report.

It is being said that ITA’s funding, the first venture money it has taken after funding its growth solely from operating profits, is coming from a syndicate of investors led by Battery Ventures of Wellesley, a $2 billion firm.

Battery Ventures general partner Scott Tobin reportedly said the size of the round reflects the magnitude of the aviation industry information technology markets, which easily total $10 billion a year globally.

“Boston needs more and more great, large technology companies, and this is a unique opportunity to build a very significant technology company based here,” Tobin reportedly said.

Further, the report acknowledges that even as airlines continue “to rely heavily on so-called global distribution systems”, most of the major airline deals with these vendors expire this year, and airlines are hammering the global distribution systems operators to slash costs and are considering deals with cheaper upstarts like ITA and G2 SwitchWorks Corp.

While the report suggests that ITA poses challenges to existing ticket-booking-system vendors in the manner in which low-fare carriers to traditional or old ones, Hugh Jones, Sabre senior vice president reportedly said, “We build new technology every day because it's an important enabler, but in this business the hard part is building and maintaining an efficient marketplace that works for the travel industry and travelers.”

In the same report, Jones adds, “We’ve spent decades building deep relationships with travel agents, millions of consumers, and with travel companies beyond just airlines. We think it's going to be hard to replicate the value our marketplace brings.”

The report, quoting Michael Moritz, a partner at Sequoia Capital, a Silicon Valley venture firm also participating in the $100 million round, adds that the “only airlines that will prosper in the future are those that embrace fresher technology and the Internet [to] strip cost from the industry.”