WASHINGTON – Airlines may price seats based on your ZIP code, your travel habits or your marital status — a practice Sen. Al Franken on Tuesday urged the U.S. Department of Transportation to further regulate.
The federal agency last year gave the airlines permission to use “personalized pricing,” which allows the industry to charge one consumer more than another for the same seat on the same flight based on collected personal information.
The rule, supported by the airline industry and business travel groups, prohibits companies from using consumer-provided information to discriminate against consumers based on “race, creed, color, sex, religious or political affiliation, disability or national origin,” according to the federal agency.
But, it is technically legal for airlines to use other types of information to tailor prices — or in Franken’s word, discriminate — based on consumers’ income level, marital status and trip purpose.
Franken noted in his letter, signed by four other Democratic senators, that business travelers with the same flying routine could be charged more based on habit. Likewise, Franken said, people living in high-income ZIP codes may get better fares to entice them to book more tickets, over consumers living in low-income neighborhoods.
“I’m concerned that this practice … may be anti-consumer, discriminatory and harmful to Minnesotans who are already struggling to afford the high cost of travel,” said Franken, the top Democrat on the subcommittee on privacy, technology and the law for the Senate Judiciary Committee. “I’m sort of in an information-obtaining mode. This may make it harder for people to do comparison shopping, if you have your own personal price they’re setting for you. Based on your information, that might mean fewer choices for consumers.”
Franken, along with Sens. Maria Cantwell, Ed Markey, Cory Booker and Richard Blumenthal, pushed the Department of Transportation to clarify why the rule excludes income level, marital status and trip purpose from its list of prohibited discriminatory behavior.
The senators also asked the department to describe safeguards in place to protect consumers from discriminatory practices.
Franken, who has in the past few years lashed out at car-sharing programs and dating websites for not adequately protecting customers’ private information, said he was also worried about airlines selling consumers’ personal information to other vendors.
DOT officials had no comment on the letter Tuesday, saying only that Transportation Secretary Anthony Foxx will respond to the senators soon. The group asked for a response by May 19.
Personalized pricing has been around for far longer than the advent of the Internet.
Hotels often still charge customers more in high seasons and beverage companies have been known to inch up prices in hotter weather, according to a trio of Seattle University professors who have written extensively on the topic.
But the Internet has created a glut of consumer data — usually offered up by consumers themselves — that companies routinely mine. This means personalized pricing is more intense and targeted than ever.
Kevin Mitchell, founder of the Business Travel Coalition, said if the airline industry follows the rules negotiated with the Department of Transportation, this rule will help the consumer.
He said the efficiencies created by understanding consumer habits ultimately will save money and that airlines are required to abide by privacy policies.
“Let’s say twice a year I go to Disney or Orlando, the airlines that I go on will know that, so there may be a soft period in their schedule where demand doesn’t materialize and they can customize an offer for me and make me go for a third time,” Mitchell said. “Hey, that’s relevant to me, because now I get to go three times.”
Airlines for America (A4A), the lobbying group for the airline industry, urged consumers to shop anonymously if they don’t feel comfortable giving up information to airline companies.
“Airlines, like many other companies, such as Amazon or Pandora, have the ability today to customize offers based on previous shopping habits,” said Melanie Hinton, a managing director at the A4A, in an e-mail. Still, she said, “all carriers enable customers to shop online anonymously and there’s no reason for that to change.”
Neither Delta nor American Airlines responded to questions about how they employ personalized pricing.
Franken said he wants the airline industry to be transparent about what they know about consumers.
“What if you live in a more affluent suburb or something and they charge you more than they charge someone else, or they use your frequent flier thing and they charge you more?” he said. “There are all kinds of questions here.”
Staff writer Jim Spencer contributed to this report.
Allison Sherry • 202-383-6120
Good morning. Wild advance and three weeks until the 2015 legislative session ends, assuming the House and Senate can come to an agreement and Gov. Mark Dayton signs on.
Senate Taxes Chairman Rod Skoe introduces his omnibus tax bill today. It will contrast sharply with the House plan. Senate in session at noon. House at 3:30. Full schedule.
Dayton and Lt. Gov. Tina Smith meet with Canadian Governor General (?) David Johnston. Dayton has an emergency meeting of the Executive Council at 3:00 for bird flu that’s open press. Then he makes remarks at 6:30 for the opening of the Olympus Brooklyn Park (Olympus, 9600 Louisiana Ave North, Brooklyn Park.)
An oft-quoted statistic that by 2018 70 percent of Minnesota jobs will require post-secondary education is flat wrong, Adam Belz reports. It’s way too high. It’s a number that gets thrown around the Capitol a lot.
Schools scrambling to get ready for new mandatory ACT. On April 28, 64,000 juniors will sit for the exam, Erin Adler reports.
Former Minneapolis City Council policy aide recording the stories of the transgendered, Erin Golden reports.
House GOP passed their education budget Saturday, and Ricardo Lopez was there.
Over the weekend, Pat Condon looked at the much touted Republican rural agenda and finds gaps in the budget plan.
RSB and Montgomery mention the unmentionable: A possible shutdown.
Washington and beyond
AP: Clinton Foundation acknowledges missteps in donor disclosure.
Roll Call: Comcast failed acquisition a win for Franken.
WASHINGTON -- Sen. Al Franken said Thursday he was relieved to hear that Comcast was dropping its bid to buy Time Warner Cable.
Franken, a Democrat on the Judiciary Committee, has been angry about the bid since the beginning, saying it will only make service more expensive and competition worse for consumers. He pushed federal regulators and the Department of Justice and the Federal Communications Commission to oppose the deal.
Just last week, Franken led a letter with five other senators asking federal regulators to halt it.
"I'm glad that over the last 15 months, more and more people have come to see it the way I do" he said, in a statement. "This transaction would create a telecom behemoth that would lead to higher prices, fewer choices and even worse service. We need more competition in this space, not less."
WASHINGTON -- Hillary Clinton's presidential campaign hired former gun safety advocate Scott Hogan to lead the grassroots organizing operation in Minnesota, officials said Thursday.
Hogan previously worked as the Minnesota director and campaign manager for Everytown for Gun Safety, which advocates for local and federal gun laws to promote gun safety, according to its website.
Hogan is an alum of Indiana University and speaks Spanish, according to his LinkedIn profile.
From the campaign:
"Working with Hillary supporters will coordinate local grassroots organizing meetings, volunteer trainings, house parties and days of action. By engaging supporters and training volunteers, the Clinton campaign is building local grassroots volunteer infrastructure that will be ready to compete and win the primary or caucus in that state."
The campaign also says that in May, these teams will organize people together at house parties to watch as she "lays out the vision for her campaign."
The Minnesota hire is apart of a 50-state grassroots organizing network the Brooklyn-based team is building now.
WASHINGTON -- To illustrate how much the United States -- the Midwest, really -- stands to benefit from lifting the Cuban trade embargo, Minnesota farmer Ralph Kaehler likes to talk about powdered milk.
Last year, the tiny island off the coast of Florida imported roughly $80 million in powdered milk. United States farmers, a lot of them in Minnesota and other midwestern states, furnished about 25 percent of that order.
Kaehler, who testified Tuesday in front of the Senate Ag Committee, said American farmers could easily compete with China and Vietnam because it would be cheaper to ship to Cuba and the supplies are fresher. The hearing was meant to talk about the potential the United States has with a formal trade relationship with Cuba.
(One ding against the United States, the strong dollar which is making it less competitive for exports than other countries.)
Sen. Amy Klobuchar, on the Ag Commitee, is an original sponsor of a proposal to lift the Cuba trade embargo. She pointed out Tuesday that there is strong progress: President Barack Obama recently met with Raul Castro and said he wants to take Cuba off the United States' enemies list.
"The bill (lifting the Cuban embargo) won't pass this week, but it will pass someday," she said.
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