What is the big deal about personalization of airfares?

Sociomantics
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Most of this story was written last year, after I returned from the annual PhocusWright conference where the top dogs in the Internet travel world congregate to discuss trends and networking. One of the “marketing” demonstrations from Sociomantics made my blood run cold.

As a member of the Advisory Committee for Aviation Consumer Protections, I brought this subject up at a meeting earlier this year about personalization and customization of airfares. The committee even got to see this video. It begs a privacy solution as well.

As the current Department of Transportation (DOT) rulemaking comment period ends later this month, these issues are coming into focus again while DOT decides how to handle these new technologies. Will we have published airfares and fees or will the prices we see as consumers be created on the fly by algorithms operating behind the scenes in IT systems?

Basically, the system allows for realtime personalization in the background where consumers can’t even imagine what is going on. If this system comes to airline tickets, it will destroy the ability to comparison shop for airfares. Plus, as airlines begin to disclose ancillary fee data, it will make comparisons even more difficult.

Recently, the International Air Transport Association (IATA) has asked DOT to approve a resolution that they concocted at a recent meeting of the world’s airlines. It is one of the most dramatic examples of the airlines’ view of personalization.

Airlines see personalization or customization of air travel costs as a system where they collect data about individuals and then create a price that is “personalized” for the consumer. That personalization will take into account personal information gleaned from frequent flier programs, prior purchases, credit card records from airline affiliated cards and data purchased from data brokers.

Consumers and travel agents see “personalization” or “customized pricing” as something that consumers create through the ability to purchase services the customer wants from a menu of ancillary services provided by the airlines.

In one system, the airlines — through a deus ex machina fiat, based on collected data — would do the “personalization.”

The other system would allow the customer to “customize” the flight by picking and choosing what services the passenger desires.

TU_Ad_350-350The airlines have the shoe on the wrong foot. Plus, airlines still refuse to disclose ancillary fees at the time of booking on any site, nor do they allow travel agents (who sell more than half of all airline tickets) to display these ancillary fees or sell them.

Plus, airlines have not addressed the massive privacy liabilities that could come into play with such a system. Consumers would need a way to guarantee that the data used to “personalize” airfares was accurate.

Taking data from realtime shopping for airfares is one thing and is immediate and leaves a trail that can be followed in the future. But, combining that data with erroneous data collected from third-party sources may corrupt this entire behind-the-scenes marketing scheme.

Consumers beware. Don’t let the airlines have free rein over personalization. You should be able to customize airfares yourself and be allowed to compare pricing across airlines.

  • dcta

    Very interesting. First just a note on “ancillary fees” – as a professional Travel Agent, I do disclose these to the consumer before they purchase a ticket – I am not able to find these fees in my DRS (other than baggage rules, which I do see when I fare the quote), but I have other ways to find them and do.

    So….when I pull from availability in the DRS, the “airline” has no data about the consumer – I don’t put in name, dob, address, phone, email, FF number, etc. until after the client has agreed to have me actually “book” the reservation. The consumer has already received the fare quote – it is not personalized for him/her. Seems to me that the answer is to go straight to an actual Travel Agent for your air rather than going on line for the do it yourself booking!?

  • Mike313

    Great article, but a little late – personalization is already here. For example, when I try to use the internet to rent a car, if I try to rent a car in say Paris France, the rental companies show rates depending on the country that I am accessing the internet from. I have found differences of up to 30% in the rates quoted. Using a VPN I can pretend to access the car rental web site from Australia, Canada, Germany, etc. i am sure that hotels, and perhaps airlines are already doing this.

  • Josh Josh

    The worst offenders are sites like ONETRAVEL. which advertise “cheap” and “discount” fares, but their best fare is a bit higher than buying direct from the airlines. $20 “promo codes” merely partially offset their $24 in extra booking fees. And since most LEGITIMATE travel sites build their fee into the price of the fare, except for opaque sites which have a small fee not disclosed, this ONETRAVEL is operating a bait and switch.