The Dirty Secret Behind the Airline Industry’s Record Revenue: How They’re Ripping You Off
Get ready to have your wallet drained as the airline industry is projected to rake in a whopping $996 billion in revenue this year. But don’t be fooled, the profit margins are razor-thin, and the airlines are making up for it by exploiting you with dynamic pricing tech.
The Insidious Rise of Dynamic Pricing
258 airlines have jumped on the dynamic pricing bandwagon, up from 220 in 2022. This means that prices for flights and amenities are being constantly adjusted based on your willingness to pay. And don’t even get me started on the vendors providing infrastructure for these systems, like Fetcherr, which is raking in cash with its AI-powered pricing models.
The AI-Driven Scam
Fetcherr’s CEO, Roy Cohen, claims that their AI models are based on public data and customer private data, stored on a private cloud for each customer. But what’s really going on is that they’re using your personal data to predict your willingness to pay and charge you accordingly. And if you’re unlucky enough to need to fly during peak times, be prepared for prices to skyrocket.
The Dark Side of Dynamic Pricing
Not only does dynamic pricing benefit the airlines, but it also leads to "implicit collusion" between firms, where they instantly match each other’s price cuts. This means that carriers that aren’t using dynamic pricing have little incentive to lower fares. And in some countries, dynamic pricing might even be outlawed or curtailed under tariff requirements.
The Unintended Consequences
One Yale study found that dynamic pricing systems can result in airlines selling too many tickets too quickly, leading to lower profits in the long run. And in some cases, dynamic pricing might even be illegal under antitrust laws.
The Cash Cow
Fetcherr has just closed a $90 million Series B funding round, bringing its total raised to $114.5 million. And with plans to expand into other markets, it’s clear that they’re here to stay. But don’t expect them to use their newfound cash to lower prices or improve service – they’re too busy making bank off of your willingness to pay.
The Bottom Line
The airline industry’s record revenue is built on the backs of consumers who are being exploited by dynamic pricing tech. It’s time to wake up and smell the coffee – or in this case, the overpriced latte.
