Despite growing concerns about data privacy and
discriminatory fare pricing, a recent survey conducted by Travelport reveals
that business travelers are open to receiving personalized ads based upon their
previous travel purchases and their online browsing history.
The finding could bode well for airlines that have begun to
implement, or are considering implementing, personalized dynamic pricing.
The Travelport 2018 U.S. Business Traveler Survey, published
last month, found that 75% of business travelers would like to receive personalized
ads based on their travel history when booking business travel online.
Similarly, 72% of respondents said they would like to receive personalized ads
based on their online browsing history.
The findings are the result of a survey of 850 U.S. residents
who traveled by air for business at least twice over the 12-month period that
ended in early July.
Airline industry analyst Bob Mann of the R.W. Mann and Co.
consultancy said he finds it surprising that business travelers would be so
receptive to personalized advertising based upon data mining.
Airlines that have implemented or are considering
implementing personalized pricing should take note of the Travelport survey,
"If I was responsible for distribution at an airline, I
would view this as a green light to go ahead and start testing it," Mann
said. "So yeah, it's fair game."
OTAs, Mann said, should also take note of the Travelport
"If I was the OTA distribution guy," Mann said, "I'm
going to go to the airline and say, 'We are going to sell people way up in the
inventory structure. I'm not going to be selling only basic economy. So you
better be doing business with me.'"
Airlines that are deploying personalized dynamic pricing
tailor fare offers to the individual doing a ticket search. Such offers are
enabled through improvements in data mining software and revenue management
platforms. 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 of IATA's New Distribution Capability, or
NDC, the XML-based messaging standard designed to enable airlines to personalize
offers and sell ancillary products through travel agencies.
Industry experts, as well as airlines, say carriers will use
personalized pricing to offer bundled packages tailored to the unique shopper,
but not to charge customers different prices for the same product.
Nevertheless, concerns that airlines will stray into price discrimination led
Senate minority leader Chuck Schumer (D-N.Y.) in March to call for a Federal
Trade Commission investigation into the practice.
Personalized dynamic pricing is still in its early days, and
it's unclear how many airlines have begun employing the methodology, or to what
extent. At the International Aviation Forecast Summit in Denver last month,
United president Scott Kirby said his airline is among those that have begun making
personalized offers. Kirby declined to elaborate, however, citing competitive
Also at the conference, Thomas Dionisius, Lufthansa's
director of sales, steering and business development, said Lufthansa Group
airlines are working to implement personalized fare bundling.
"I am pretty sure a lot of airlines are working on it,"
he said. "For us, this is a big trend. Bundles and packages are not static
Like Mann, Ohio State University aviation studies professor
Nawal Taneja, who specializes in distribution issues, said he was surprised by
how many business travelers told researchers they are open to receiving
But Taneja said airlines still have plenty of hurdles to
overcome before they can effectively implement personalized pricing. For one
thing, he said, predictive models still aren't good at determining customers'
willingness to pay, a key element of effective revenue management.
Taneja also asserted that the EU's newly implemented General
Data Protection Regulation privacy laws make personalized dynamic pricing more
complex to implement.
"This data privacy issue is going to be a big issue,"