Airlines Start One-to-One Pricing

A reader sent in a link to this NYTimes article on airlines beaming personalized travel deals to desktop applications. Southwest’s application is called Ding, and it sends personalized travel deals to hundreds of thousands of users every day. Currently, it provides last-minute travel deals based on personalized information. There is no reason it couldn’t be used to send higher prices to individuals whose profiles or behaviors suggest they are not price sensitive.

However, this is unlikely to be an effective way to raise prices. The internet makes comparison shopping too easy. So if Southwest sent higher-than-usual fares to some travelers, word would get out. People could then check their fares against

The airline industry is desparate for better pricing power, with fares still low, and rising oil prices approaching labor as the primary cost driver. The personalized fare systems can provide valuable information on customer behavior and segmentation (within the segment of people who sign up for the system). To justify a price premium, however, you need to offer something of value. Perhaps the system could reserve seats for Ding users, at a slight fare premium, for a period of an hour or more before releasing them to the general public.

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