A press release this week from Priceline.com had the following:

“Automatic Pricedrop Protection for airline tickets. This feature guarantees that customers will get the best priceline.com price for their flights. It also provides important peace of mind for customers who want to book their tickets early and still be protected if ticket prices fall later. Priceline.com’s automatic Pricedrop Protection applies to published-price and Name Your Own Price® airline tickets. Here’s how it works: If you book a priceline.com airline ticket and another customer subsequently books the same ticket at a lower published fare, priceline.com will automatically send you a check for the difference, from $1 up to a maximum of $300 per ticket. Checks will be processed within 30 days of the completion of your trip.”

And then I saw the following in an email from PhoCusWright today:

“Travelocity anted up to Expedia’s no fees and substituted the free nights with “PriceGuardian” for packages. PriceGuardian refunds consumers the difference if someone books the same package on Travelocity for less. The exact same package-same city pair, same dates, same flights, same hotel-which is a creative offer (though Orbitz introduced the underlying concept), but with a rare occurrence. Priceline didn’t give up anything new for the ante (it was the first to start it and had already made the change permanent). So it matched Travelocity’s PriceGuardian on packages and raised the stakes to take on Orbitz’s “Price Assurance” (no doubt the inspiration for PriceGuardian) with “Pricedrop Protection.” Price Assurance refunds consumers the difference if someone books the same flight on Orbitz for less, and was introduced last year as a permanent program. Priceline’s “Pricedrop Protection” takes it one step further by offering it on opaque airfares, but the catch is that the refund only kicks in if someone purchases a lower published price for the ticket. “

This all reminds me to an idea I mentioned maybe 12 months ago to one airline executive who heads e-commerce at a major airline. As with all good ideas, implementation is much more important than the generation of the idea, so it is rare I hold back on something like this, as I have no ability to implement it anyway – this is an airline task much more than an IT task, although there is obviously a role for IT once the airline has made the bold decision to proceed. The airline website sales data I have seen is very clear in showing that the lower priced domestic travel sells much better online than higher priced international travel.  If an airline really wants to go after this higher value business (even if it is leisure travellers) why not offer for a small additional fee some protection (most jurisdictions won’t let you use the term “insurance”) against the price of the fare dropping after the passenger has purchased his tickets online.

This should be high margin ancillary revenue for the airline, because (depending on your website technology) you could dynamically alter the price of this protection based on the likelhood of a payout, and then when looking at launching a special fare the Revenue Management or Pricing & Yield department could see ahead of time how many passengers would be liable for a payout. They could then factor this into the decision on whether or not to go ahead with the sale. There are few areas where airlines hold almost all the cards, but on this one they do. So is there an airline already doing this that I have not heard about? If so, I’ll take my hat off to them if it already exists, as this should be one of the most sustainable types of ancillary revenue out there; not to mention the benefits accruing to the airline by significantly increasing online penetration on long haul routes.

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