How Airlines Might Gouge You in the Future: Personalized Pricing

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Imagine a time in the distant future when you and two of your friends are invited to a wedding in Myrtle Beach, S.C. You log on to your frequent flier account with AnyJet Airlines, and seeing that you have a Greenwich, Conn., zip code, the airline assumes that you’re wealthy and charges you $398 for your fare (unfortunately, despite your tony zip code, you’re actually a modestly paid schoolteacher). At the same time, your friend and fellow wedding invitee who lives in a nearby, less-affluent zip code is also booking the same flight to the same wedding; she’s quoted a lower fare of $310. And when the third member of your trio logs on to purchase his ticket, the airline sees that he’s a frequent business traveler who’s already taken 15 flights this year. It assumes that he’s an easy sale and socks him with a $410 fare.

Welcome to the world of “personalized airfares” or “personalized pricing,” whereby the amount you pay for a flight is no longer just a number based on impersonal factors such as when and where you’re flying or when you booked your ticket. In this possible future, your airfare could be based on who you are, and each fare would be different for everyone — even people booking the same flight at the same time.

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How would personalized pricing work?

Last year, the U.S. Department of Transportation granted approval for the airline industry to update its computer reservation system through an initiative known as New Distribution Capability (NDC). According to the IATA, a big backer of NDC, the new program will allow airlines and travel agencies to communicate with each other more effectively. As Travel Pulse noted, booking flights will be easier because consumers will be able to do things like select their seats and pay their baggage fees directly through online travel agents such as Orbitz (currently, such sites allow you only to book your flight; if you want additional services like seat selection, you have to be routed to the airline’s website).

But with that convenience comes a cost, say critics. They fear NDC could allow airlines to gather and share personal information about you — like, say, your birthday, seat preferences, frequent flier status, and zip code — and use that data to tailor a price just for you. The airlines’ goal under this scenario would be simple: find out which passengers are willing and able to pay more for a ticket, and charge them more than others.

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