.jpg "Arnie Weissmann")
In business, as in life, we presumably act in our own self-interest. Laws and regulations set parameters, and within those parameters, we can do anything we believe helps us reach our goals.
Yet, while our goals are usually clear, the way to reach them isn't. If we choose a strategy that doesn't pan out, we might unwittingly be acting against our own self-interest. Too often, we don't discover that until we've already spent valuable time and money. With luck, we'll have enough of both left over to explore new directions.
If approved by the Department of Transportation (DOT), IATA's Conference Resolution 787 and the proposed New Distribution Capability (NDC) could open new strategic opportunities to airline marketers. These marketers are very clear about their goals, but whether they would choose to pursue a strategic path that is ultimately in their self-interest is perhaps less clear. Success would depend not only on their ability to exploit Big Data but on their clarity regarding customer sentiment about the use of personal data.
The question is whether airlines will use information that consumers or travel agents provide them on a voluntary basis -- name, address, nationality, marital status, gender and other details -- to shape offers that successfully balance airline and passenger interests.
Should they get the DOT's approval, airlines could, for instance, see that a healthy percentage of 55-year-old married men in a certain ZIP code tends to buy full-fare, refundable tickets. Consequently, if someone who fits that profile queries a city pair, he could get a return display that biases in favor of those fares. The carrier could further tempt a purchase of a high fare class by offering perks these travelers tend to like -- exit row seating, free drinks, extra loyalty points, etc. The airlines can already manipulate offers in this way with those who buy tickets directly from a carrier's website. NDC would enable them to do it with travel retailers' clients, as well.
Such a query display, NDC opponents argue, means the passenger, based on his demographic profile or past behavior, could be denied the choice to purchase existing lower fares for that same seat because the customer incorrectly assumes that the first offer is the best price available.
Other passengers who received the same offer and would have purchased a full-fare, refundable ticket in any case now get additional perks when they do so.
IATA has explicitly said, "The new data specification will continue to support anonymous fare quotes," but airlines have also explicitly said they want to customize offerings based on passenger data. The question is how fares will be displayed and whether customers believe the new capabilities bring value-added choices.
If customers feel they are being tricked into paying more, they will not be happy; if they feel they are getting great deals based on pitches that speak to their preferences, they will give more business to the carriers who create the most appealing offers.
Opponents express concern that airlines will choose a strategy that lacks appreciation of consumer privacy concerns and will, at least de facto, limit choice.
Though it's important to point out that businesses are not typically mandated to understand customer sentiment nor offer choice, the concerns are not without basis. Airlines have in the past devised grand strategies that backfired. Their initial approach to online distribution, for example, simply accelerated commoditization of air pricing.
Some carriers have also embraced a rather cynical use of the word "choice," stating, for example, that ancillary baggage fees enable consumer "choice," when in reality the choice is: Pay or don't fly.
Opponents of NDC have been careful to base their criticism in terms of consumer protection, though in fact they might have more to lose if consumers embrace an anticipated airline-direct, Big Data model.
But should the DOT approve NDC and airlines miscalculate passenger privacy concerns or their ability to see through biased displays, it could be a boon for NDC's loudest critics, travel agents among them. Should consumers believe that airline-direct offers are not in their interest, they have yet one more reason to turn to an intermediary who can evaluate trip options with their interests in mind.
In the end, it reminds me of something ASTA CEO Zane Kerby told me last week: "Customers respond to value. If you bring value, you'll be rewarded."
And ultimately, only strategies rooted at the intersection of self-interest and customer interest provide that value and reach their goal.
Email Arnie Weissmann at [email protected] and follow him on Twitter @awtravelweekly.