Travelers are annoyed by the very real possibility that they’ll sit down on a plane next to someone who paid much less for the same flight. Potential changes to how flights are priced in the future could be even more annoying.
Consumers like the idea of an even playing field: Everyone gets the same opportunity to snag a good price on a product or service. Getting a deal is generally a matter of perseverance and timing. The price is the price, and the dollar figure one sees has nothing to do with who you are or your history of purchases.
A system that functions otherwise—with “personalized” prices, causing some to pay more and others less for the same item, purchased at the same exact time—strikes many as unfair. Consumers have had reactions ranging from outrage to mild “they’re-screwing-us-again” aggravation when news has broken of such “personalized” or “customized” pricing. Three recent examples: Delta was apparently overcharging frequent fliers last year; Orbitz showed higher-priced hotels to Mac users; and the Wall Street Journal reported that Staples’ website varied in-store and online prices based on how close the shopper was to an Office Depot or OfficeMax.
Now, according to a New York Times’ editorial, most of the world’s big airlines have OK’d a new pricing system, and the result is that passengers could be offered different fares depending on “how regularly they fly, where they live and the kind of trip they are taking.” Instead of fares rising or falling based on when the ticket is being purchased or whether the seat is in coach or business class, other more “personalized” factors will be incorporated, so that the results of your flight search could be much different than your business traveler neighbor.
Such “personalized” shopping options are always presented merely as a way to give consumers what they want. The Times notes that industry officials say the system is “simply a way for airlines to better tailor their services to the needs of their customers.” And yet:
It seems clear that the standard, as described by the group, could also be used to present higher fares to, say, a business traveler who airlines determine could pay more because she travels between New York and Dallas every week. Airlines will also have a big incentive to present much higher basic prices when customers shop anonymously to encourage them to provide more information about themselves in order to see “special deals.”
The Business Travel Coalition (BTN), a consumer advocacy group, stated in a release that the new system, called “Resolution 787,” would “negatively and significantly impact airline competition and would drive up airline prices for consumers.” It also raises serious privacy concerns; before getting the price of a flight, you might be asked to provide personal info including but not limited to your name, marital status, nationality, and frequent flier status. The airlines will probably also be able to access your travel and purchase history, all of which may be used to justify offering you a higher fare than someone else, according to the BTN:
Many of these items of sensitive personal information can be used very effectively to pinpoint, and extract higher prices from, those travelers who are likely to be less price elastic — such as business travelers and travelers whose shopping and travel history demonstrate they do not regard connecting services as viable substitutes for non-stop services on particular routes or do not consider alternate airports serving the same area as substitutes for one another.
The onslaught of fees has been the dominant story in the airline business over the past several years. Now that carriers are running out of fees to charge passengers, it seems as if they’ve come up with a concept that travelers will likely find even more aggravating and unfair—a pricing system that’s biased by design.