Data Mining technology or Hadoop is becoming an in-thing within the software companies today. Little do the software companies actually realize how the big data generated by them will backfire on their own life. As the airline systems and air travel companies prepare to get into ‘personalized pricing mode’, the big data will only do more harm than good to the travelers in the coming days. Here’s how
The Dynamics of Dynamic Pricing in Air Travel
Ever wondered why it is happening that every half an hour you try to check flight rates, it seems to scale higher and higher. While dynamic pricing might have become old-school in the West, people in India are still not aware of this. They know something happens when they try to book flights, but what happens, that they are not aware of.
I recently did a project for a client and also shared results on my blog; for all the obvious reasons, he chose to ask me out to hide the post later on, and I understand his obligations completely. So for those who do not know what it is-
Dynamic pricing is a way the online air booking websites and services offer competitive prices to its customers based on his ability to pay
This means that if tomorrow, you go to a medicine shop in your local area looking for an emergency medicine and somehow, the shopkeeper knows that you are in dire emergency and also, his is the only medicine shop around, he will escalate the prices, no matter what consequences you have to pay for it. Shockingly, this is where the airline websites are aiming to do – price you based on how much you earn at your office. So, if you are a rich patient, and if you damn want your family member to live, you have to pay more, or let your dear one die! its that straight and simple.
How’s Big Data Helping
Here’s the question. How’s the Big Data coming into picture here? Big Data or Data Mining or Business Intelligence companies collect information that are helping other businesses to gather sensitive customer information such as- market tastes, average per capita income of families, spending and purchasing habits, travel tastes, leisure expenditures, treatment and insurance expenses etc.
With online customer surveys and other intelligence gathering tools, such information actually gets extended to businesses of Products and Services, and in the context of this post – air travel. When extended to an email marketing campaign, air travel companies can actually target every customer individually – and extract information such as earnings per month, expenditures, online and purchases made over specific periods of time.
Think like this – how is it that you often get telemarketing calls that you have not subscribed to. Or emails you do not know from where they land into your inbox. These websites are the sources of information:-
- Job portals
- Matrimonial websites
- Property websites
- Postpaid mobile bills – (they always tell you they don’t share your personal information, but they always do it)
Most of these websites include highly personalized information about an individual such as email addresses, physical addresses, current salary, place of work, name, designations and information that can help a company decide about one’s status symbol.
As more and more users switch to online buying today, such information when in the hands of air travel companies can wreak a havoc by charging customers with ‘customized prices’ based on ones earning capacity. You would not like to pay 1000 bucks for a pencil just because you are the Director of a company and your neighbor is not.
Big Data or Data Mining Companies let out such information as a part of projects at hand, without realizing the consequences – they forget their own employees’ names and family information might accidentally get included.
How Air Travel Will Get Affected?
On March 01 2016, Apple Inc. filed an appeal against a weird imposition FBI made on them. To allow them to access the backend soft-wares of the Apple iPhones so they can prevent crime long before it is even planned – they seem to be too influenced by Minority Report I guess. Hat’s off to FBI’s smart intentions, but what lies in the hands of the businesses is shockingly disturbing.
How the critical information such as names, addresses and earnings can impact the consumer at large, apart from overpricing on flight tickets. Airline companies are now necessitating the customer to update his or her personal information through a secret alliance within the airline companies and IATA called the Resolution 787 in which the customer will have to give away his vital information such as earnings, to book his flights. The Business Travel Coalition, however blatantly turned off this application, indicating this part of the technology has no control over the customers.
Every day – trillions of calculations are being number crunched to transform this goldmine of data opportunity into real, tangible high revenue opportunities for the airlines and their frequent flyer programs.
– Source: Innovation Enterprise
When working with cookies, the idea is to clandestinely extract user information that can then be used against them. Presently, the online booking engines have adopted and working on customers to dynamically price them on their tickets; the more direct approach though is not too far.
“The more you search on an online booking engine, the more desperation you are showing to book a flight, and the more the website algorithms are escalating prices”
Even the incognito mode cannot help much as the algorithms have been redesigned to capture IP addresses narrowed down to geotargeting levels. This means the website can actually locate your position the moment you accept cookie policies and identify from where the booking is actually taking place.
What’s In For Big Data Miners
In such a scenario, how far the Big Data Companies prepare to protect their own interests is questionable, as sooner or later, the boomerang will hit them back with equal force. After all, how long and how much data are they willing to scan to separate their own selves from large information databases they sell out to businesses.
Eventually, the Corporates especially the IT Companies themselves have a price to pay, as they too form a huge chunk of the market cash-cow and it is not eventually from the individual ticket online buyers, but the Corporates that the airlines earn on bulk bookings. The question is – how many data mining individuals can the airline companies afford to under-price, out of a sense of obligation?
Update-1: 26 Nov 2017: Follow the question on Quora
What’s ahead for Indian Consumers
The ways in which the Big Data companies can use personal information in the name of market research and micro-statistics can be alarming. Did you ever think why that email suddenly pops into your mailbox soliciting in a way as if you were the one who actually showed interest than the sender of the email?
Your personal information such as where you live, how much you earn, what car you own, is going to affect the ways in which the companies are going to view you as consumers. That is the basis behind that erratic fluctuation in prices which is actually not erratic but well designated to your system through several layers of meticulous algorithms whose only purpose is to charge you as per your ‘ability to spend‘.
Dynamic Pricing is the next big reality and though the picture is becoming more and more prominent with more online travel agencies pitching in their websites, there are definitely ways to avoid such sleazy tricks. Unfortunately, it only calls for the responsibility of the Big Data Companies with what responsibility they share information to their prospective clientele – including airline companies.