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, Mann said. 

"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 survey.

"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 concerns. 

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 anymore."

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 personalized ads. 

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," Taneja said.

 

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