Is Personalization Good for the Traveler or the Airlines?
Posted by Mike Atherton on 22 November, 2023
Revolutionizing The Airline Industry: New Distribution Capability
The International Air Transport Association developed the New Distribution Capability (NDC) program. It's a unique model that encourages airlines to shift towards direct channels. American Airlines is a prime example, with plans to move 40% of its fares to NDC-enabled channels.
NDC is more than just a technical upgrade. It's a paradigm shift, creating a richer, more personalized experience for travelers. How does this happen? The answer lies in the power of data.
Instead of generic suggestions, airlines can now offer services based on a customer's entire travel history and preferences. Imagine not receiving offers for something you already get as a loyalty program member.
Instead, airlines can upsell comfort, bag checks, entertainment, lounge access, food and beverage, and partner deals. But this advancement also raises a pertinent question - what about data privacy?
Navigating The Tightrope Of Personalization And Privacy
Data privacy is not a concern that the industry takes lightly. After all, no traveler should feel compelled to share personal information to receive an airfare offer.
The industry has pledged to uphold this standard. The NDC program remains voluntary, with regulatory oversight to ensure a fair balance between airlines and privacy advocates.
While personalization opens up opportunities for airlines, it's not about exploiting customer data for price discrimination.
A clear example comes from Air Canada's stance. They assert that the price for a product is the price for a product.
Personalization does not influence it. Instead, it uses inputs like the frequent flyer number and corporate ID to tailor offers for the customer.
Advanced Personalization In Airline Retailing
The world of personalization is ripe for evolution. The NDC schema allows for the integration of social media accounts and other data types. It doesn't even require airlines to adhere strictly to the NDC standard. Airlines can add required or optional fields according to their needs.
Furthermore, airlines understand the value of trust. Travelers willingly share data expecting something they like in return. Airlines are cautious not to violate this trust. For instance, the perception of higher spenders being presented with higher fares is unlikely. Such an approach would jeopardize the trust of the customer community.
The industry is also exploring the role of Artificial Intelligence (AI) in personalization. AI can revolutionize the way online booking tools and Global Distribution Systems (GDSs) operate. They could transition into 'consumption engines', using market data, localized data, and AI insights to fetch the best offer for the customer.
The Future Is Personal
Personalization in airline retailing is a complex topic with multiple dimensions. However, it's safe to conclude that it benefits both travelers and airlines. Travelers can enjoy more relevant, customized offers, while airlines can enhance customer loyalty and potentially boost sales.
Yet, it's essential to remember that this field is still evolving. As airlines navigate the initial stages of personalization, there may be some missteps. But, as the industry learns and improves, there's a good chance that personalization will become an integral part of the travel experience.
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