Dynamic airfare pricing, an emerging methodology in which airlines tailor ticket offers based upon who is making the inquiry, has sparked concern from Senate minority leader Chuck Schumer (D-N.Y.) as well as ASTA (The American Society of Travel Agents).
Schumer is calling for a federal investigation into airlines mining personal data in order to charge higher fares to certain customers.
“This is ‘Big Brother’ meets ‘Big Business’ and it is a frightening combo for already-price badgered airline travelers,” said Schumer.
In a letter sent Monday, Schumer asked Federal Trade Commission (FTC) chairwoman Maureen Ohlhausen to investigate the person-specific pricing technology in use and under consideration by airlines. His concern is that airlines will collect information on customers’ purchasing behavior, web search history and even their incomes, and then use it to charge them higher airfares.
“The airlines have already monetized every single inch of the plane: smaller seats, less food, charges for carry-ons, and so the thought that they or others within the travel industry are looking to nickel and dime consumers based on their mobile phone or computer’s browser history is a sad state of affairs that just might violate consumer protections,” Schumer said. “Your ticket price to fly shouldn’t take off because of who you are.”
The new technology attempts to predict how much a customer is willing to pay for a flight based on their personal data.
For instance, someone whose search history suggests they’re traveling for business might get a higher fare, whereas a tourist browsing for vacation spots might get a lower offer. Someone who looks up an obituary and then searches for a flight to the same state might get charged more because the software assumes they’re traveling to a funeral and have little choice about whether to make the trip.
Schumer said that if airlines are allowed to get away with the tactic, it may expand to many other industries.
“When it comes to finding ways to monetize every atom of the traveling experience, few industries are better than the airlines,” he said. “So, we must take the very real concern for the use of this latest version of traveler tracking straight to the FTC before it inches mainstream.”
Dynamic pricing is mostly still a nascent technology in the airline industry, but as Travel Weekly detailed last month, at least 11 airlines have begun generating individually tailored dynamic price quotes on portions of their route networks for inquiries made through direct distribution channels, including their own websites.
In addition, ATPCO, the airline-owned corporation that collects and distributes fare data, is spearheading an effort to enable the generation of dynamic fare offerings by the GDSs through the use IATA’s New Distribution Capability (NDC) — the XML messaging standard designed to enable airlines to personalize offers and sell ancillary products through travel agencies.
While industry experts acknowledge that airlines, in theory, could use dynamic pricing to offer a higher ticket price to someone who is likely to be undeterred by an upcharge, they say the technology is more likely to be used to offer discounts to customers with loyalty status and to generate bundled fare offerings that fit a customer’s profile.
Still, ASTA was quick to join Schumer in expressing concern.
“According to our consumer research, Americans are seven times more likely to say that government favors airlines over passengers,” the Society said in a statement sent to the media Tuesday. “As such, we support Senator Schumer’s efforts and think it is entirely appropriate that both the [FTC] and the Department of Transportation keep a close eye on airline ‘dynamic pricing’ initiatives and the potential for widespread price discrimination.”
ASTA also said it would fight to make sure airlines adhere to privacy safeguards put in place when the DOT gave regulatory approval to NDC in 2014.
In that approval, the DOT said that consumers’ ability to shop anonymously “must not be undermined by new data transmission standards for communications and marketing practices.”