Could airlines start charging you more money for seats based on who you are? Airlines may be about to adopt the practice of implementing dynamic pricing for customers. Dynamic pricing uses technology to issue person-specific fares. Those fares are determined by criteria like a person's loyalty status, travel habits and more. Most travelers are already pretty comfortable with the fact that some people pay more for tickets than others. Passengers who book at the last minute generally pay more than passengers who
hunt for deals far in advance. That concept doesn't bother a lot of people. However, dynamic pricing takes things to a new level by using technology to acquire personal details and charge people based on who they are. Airlines like Southwest, Aeromexico, Lufthansa and Emirates are already using dynamic technology in one form or another.
A Closer Look at Dynamic Pricing
How would dynamic pricing play out in the real world for the average airline customer? Airlines would work platforms into their booking websites that identify each customer and create a personal profile.
The technology that is used would be capable of identifying customers based on their IP addresses. In addition, that same technology can often be used to identify customers across multiple devices. Data would then be mined to look for patterns and habits regarding a customer's flying history. A person-specific fare would then be created before ticket prices were displayed for each customer.
Who Would Win With Dynamic Pricing?
Some passengers have a lot of positive things to gain from the use of dynamic pricing. Customers who are members of an airline's loyalty program would likely pay less than other travelers looking for tickets. Leisure travelers would also benefit quite a bit from dynamic pricing. People who travel infrequently are typically looking for the lowest fares they can find. Airlines could use this to their advantage by drawing leisure travelers in with low fares as a way to build relationships with those travelers and encourage future bookings.
Who Would Lose With Dynamic Pricing?
Business travelers have the most to lose when it comes to dynamic pricing. This is unfortunate because business travelers actually make up a large chunk of an airline's revenue base. Airlines will be more likely to present higher fares to business travelers using company-issued credit cards because those travelers typically have very little choice when it comes to the travel dates and times they need. What's more, business travelers often don't have the time to search for low fares and comparison shop between airlines. Business travelers are simply focused on booking tickets as quickly as possible to ensure that they can get to their destinations to do what they need to do.
The Big Downside of Dynamic Pricing
The big downside to dynamic pricing is that it could make the process of booking a flight more confusing than ever. Customers could become frustrated by scenarios where they are presented with dramatically different fares than their travel companions. Airline customers won't be the only ones dealing with headaches if dynamic pricing does become a mainstream trend. Airlines will undoubtedly have to pour resources into attempting to prevent travelers from outsmarting pricing technology to artificially attain