What’s Next? Dynamic Pricing!
According to the trade publications, the airlines are at it again with something called “Dynamic Pricing”. It’s a high-tech tactic to get more money out of us but, unlike the taxes and fees, we won’t be aware that they’ve done it. As I understand it, here’s how it works, with me as a hypothetical example.
I’ve been a member of the American Airlines frequent flyer program for 26 years. I have no idea how many flights I’ve taken on American from here to the West Coast, usually to Los Angeles, but it’s a lot . . . more than enough for them to do a computer analysis of all those flights–when do I travel, do I book on line, how far in advance do I book, and (this is key) over all those years, how much did I pay for each of those tickets?
With all that information, their computer goes to work and start analyzing all that data. Based on 25 years of experience and adjusting for inflation and other factors, in my case American Airlines now has a little nugget of information: they know what is the most I’ve been willing to pay for one of their flights to the West Coast.
And so, when I go on line the next time to book American’s flight 254 to L.A., I could find that a ticket for that flight will be priced at—take it or leave it— $385. Based on my individual history, that’s the highest dollar amount their computer says I’m likely to pay.
But here’s what irritates me: my $385 bought me a seat in the same row on the same flight on the same day as a gent who’s computer showed the cost of his ticket as—take it or leave it—$320, because that was the highest dollar amount their computer said he was most likely to pay.
Truthfully, I see how it could be rationalized that such a system is fair. But it seems to me, rather, that the airlines have figured out how to get the most possible revenue from people who are their most loyal customers. And that does not make me feel all warm and fuzzy. Especially when I remember that Amtrak’s new boss comes to us from Delta Airlines.
Not quite the same thing, but still a source of anger. When I worked at Hickam AFB in Honolulu my ‘Y’ ticket (read Government paid ) was regularly $2200 round trip MNSTP to HON non-stop on Northwest. That was “cattle class”, not First as the Government doesn’t buy 1st class tickets fearing how it would appear. Yet the airlines knew what the Government would pay and charged accordingly. It was also another way the Feds could subsidies the airlines. Now I (rather the Air Force – SATO ) was paying more than First class and I was usually sitting next to a tourist paying $300. Welcome to the club Jim. Oh, President Trump just got Boeing to cut it’s price on a new AF1 by 1.2 Billion. Do you think Boeing was pricing based on what the Government would bear? I wonder to what extent manufacturers of rail cars are doing the same.