Robert Silk
More than seven years ago, I wrote an article for Travel Weekly about early strides airlines were taking with dynamic pricing and personalized offers.
"Imagine if airlines could tailor fare offers based on who was making the ticket inquiry rather than strictly on the search criteria," the article began, before explaining that some airlines had begun experimenting with such technology on their own sales channels, though not yet at that time within GDSs.
The story also said that airlines' stated goal was to use personalized data to generate offers that benefit flyers, such as discounts for customers with loyalty status and bundled fare offerings that fit the customer's profile. Tailored offers, the theory went then and goes now, can improve airline revenue and also benefit shoppers.
Nevertheless, the article generated a furor.
Within weeks, it had spawned coverage in several media outlets, in turn leading then-Senate minority leader Chuck Schumer to pen a letter to the Federal Trade Commission expressing concerns about the potential for price discrimination by airlines.
Fast-forward to now, and not much appears to have changed in terms of public sentiment, though there have been significant changes on the ground. Many airlines around the world now deploy real-time, continuous pricing to some extent, including via GDSs, rather than having to rely solely on the more limited filed fares long-used in the industry.
A number of global carries have also begun at least limited deployment of personalized pricing. The United for Business website, for example, boasts of the airline's ability to offer "tailored deals" and "personalized shopping with loyalty status recognition."
Nevertheless, Delta's public discussions during recent investor calls about its deployment of an AI pricing tool led to an even bigger furor than that one in 2018. By the end of this year, Delta hopes to be deploying fares generated with the assistance of the pricing tool on 20% of its domestic network, airline president Glen Hauenstein said in July.
Critics coupled that goal with a remark by Hauenstein last November that by using the software, Delta "will have a price that's available on that flight, on that time to the individual."
Letters of rebuke from three Senate Democrats followed. DOT secretary Sean Duffy also joined the chorus, though he said he'd take Delta at its word. By then, the airline had responded to the senators, saying that its pricing tool uses only aggregated data and that the airline has not targeted customers with individualized prices based on personal data and would not do it going forward.
Such similar public reactions eight years apart are telling. Airlines, if they are to be taken at their word, merely want to model their merchandising capabilities after sophisticated e-commerce retailers like Amazon, which have long relied on individuals' shopping histories to generate tailored offers. But as a rule, consumers don't trust airlines, making them an easy target for politicians. And while I don't think airlines, generally, intend to price discriminate, the potential for such behavior can't be dismissed.
Doubtlessly, airlines will have to communicate clearly for many years to come about what their dynamic and personalized pricing deployments actually mean for consumers. And even so, they best steel themselves for public scrutiny. By its very nature, airline pricing is opaque. Tickets prices are always changing. And no one really know how any fare is generated at any time.
Expect more flare-ups. Maybe many more.