Airlines want to tell you the price of travel after knowing who you are


If the airlines have their way, they would not even be advertising fares for flights between here and there. They would only tell passengers the price after passengers told them who they were — rich, business traveler, older, married, student, etc.

This article might seem like a fantasy, but it is prompted by a filing that the International Air Transportation Association (IATA) submitted to the Department of Transportation (DOT) a couple of months ago. May 1st is the deadline for comments.

The Consumer Travel Alliance, together with hundreds of other airline passenger groups, travel agent organizations and business travelers, has responded to the IATA filing that asks for changes to how airline tickets are sold, which, quite frankly, are anti-consumer and anti-competition.

This article’s headline should be enough to scare air travel consumers. But, having airfares customized for you by airlines is only part of the story. Here are other problems:

Different prices for different folk. Delta Air Lines, though they deny it, got caught testing a system that provided one set of prices for a member of their frequent flier program and another for the general public. The surprise in this instance was that the frequent flier received the higher price as a reward for loyalty.

Now, airlines want to lock that kind of system in place. While they claim that their personalization will only serve to provide what customers want and will provide better value, past experiments have shown that customized pricing is another way to extract extra money from customers rather than a system to help passengers save a bit of change.

The end of easy comparison shopping. Passengers may have to give up easy comparison shopping that consumers have become used to with online travel agencies that present prices across airlines.

When airlines only serve up their pricing airline-by-airline and force consumers to go to each airline website to fetch pricing, write it down and do the same for the next airline, consumers lose. A fully functioning comparison shopping engine would allow passengers to compare prices across airlines without figuring out airfare + baggage + seat reservations for a family on a full across-airline basis.

Let’s say a prospective passenger inputs something like, “I’m traveling with my wife and two kids from Chicago to Orlando, with four carry-on bags and two checked bags, and we want to sit together in the same row.” The search engine would then provide comparison prices on every airline serving that route, including the airfare and extra baggage and seat-reservation fees.

That would be easy and customer-friendly. Airlines want to make it more difficult if not impossible.

Privacy issues. Privacy issues have not raised their ugly heads when it comes to air travel. So far, only TSA and Homeland Security want any personal information. It used to be airlines would only ask for personal information when it came to payment with a credit card and that information is protected by credit bureau rules.

Personal information like birth date, marriage status, frequent flier status and so on means that airlines will be collecting more and more information about passengers and using it to shape their pricing. Currently, airlines do not have a system of voluntary best practices program under which collection of such personal data would be handled. There is a lot more work to be done here before DOT lets the airlines loose with personal data and freedom to shape ticket prices with their own private formulas.

The proposal will stunt tech innovation. Within the proposal floated by IATA is the definition of XML as the single IT language for now and the future. Anyone who knows anything about the speed with which the Web has changed over the past decade understands the folly in specifying a particular IT language. Releasing data and standardizing it will allow software developers to work without restrictions and hopefully create a program or multiple competing programs that can tame the wild world of today’s airline fares and fees.

Airlines admit they are misleading us. Perhaps the most amazing admission in the IATA application is made regarding the need to reveal ancillary fees and products so that consumers can understand the full cost of what they are purchasing.

Price transparency alone is no longer enough to make an informed choice – true transparency means disclosing price along with the corresponding product information. (From the IATA filing of Docket OST-2013-0048 with DOT)

This is tantamount to saying that the airlines know they have been misleading consumers for the past half a decade by withholding dynamic pricing of seat reservations and checking baggage, among other charges.

The bottom line — Passengers should beware airlines presenting them presents such as personalized pricing. Rather than having the airlines prepare what they believe passengers want based on Big Data, the airlines should allow consumers to pick and choose what they want from an airline’s offerings, just like diners select items from a restaurant menu with full knowledge of what it costs.

Hopefully, the DOT will send IATA back home to do more homework and more carefully create a ticketing system that allows consumers the ability to comparison shop across airlines as they decide on what airline to fly when planning travel.

  • BWilliams

    Thank you for addressing this topic. Pricing transparency does not need to based on personal information or the reason for traveling.

  • Lisa Simeone

    The system is set up to benefit corporations at the expense of rest of us. Government + Corporations = Citizens Get Screwed. It’s that simple.

    I won’t comment on all the worthy things you address in this excellent post, Charlie, I’ll just bring up something that Keith Devlin, “The Math Guy” on NPR, said several years ago — which thing is only more true today. Keep in mind that this is a man who calculates problems and analyzes statistics for a living: he said, years ago, that there is simply no way a person can find and choose The Least Expensive Airfare. It’s impossible. There are simply too many variables.

    As someone who thinks some of those variables are a whole lot more important than “cheapest price,” I’ll leave it to others to hunt and peck for what works for them. Just thought I’d pass on Devlin’s assessment.

  • DCTA

    Charlie – you have to re-read this and perhaps do a little work. You make a lot of statements about what’s in the IATA filing but then you don’t explain them. It’s kind of a confusing article to read. For instance (though it’s in all sections of this piece) in “Airlines Admit…”, you state they’ve made this admission, but you don’t really say what it is… just state your conclusion. It’s not your usual level of reporting here….

  • Charlie Leocha

    I added the specific sentence with the airlines’ admission under the section “Airlines admit they are misleading us.” Otherwise, this is an overview of the issue and hopefully will get those interested in the issue to dig deeper into for more information if they want to do the research.

  • DCTA

    Yes, I saw! Makes more sense. I came back from Europe on the weekend and of course managed to get a really bad cold as I always do. Was reading the article and had to go back over and over again – wasn’t certain whether it was my light-headedness or something else but it wasn’t making sense…..