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.
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.
"I believe it is never too early for the [FTC] to ask
poignant and purposeful questions that can help protect and inform consumers
from unfair practices -- especially when this particular type of data mining
could be so easily replicated," Schumer wrote.
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.
Incremental revenue, they say, would come from increased
conversion rates and by tailoring bundled fare offerings that cost more than a
typical ticket, but also come with perks that a specific type of customer might
want.
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 make sure airlines adhere to
privacy safeguards put in place when it gave regulatory to 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."