How Airlines Mine Personal Data In-Flight: Flight Attendants Are Likely to Know What Fliers Will Buy on Board

The Wall Street Journal

By  Jack Nicas

Updated Nov. 7, 2013 8:23 p.m. ET

One day soon, frequent fliers should expect flight attendants to know their birthdays, how they like their coffee, and what they're likely to buy on board.

After years of dithering, airlines are learning to use the wealth of customer data they collect. Greater stability in an industry long roiled by bankruptcies is enabling carriers to invest in technology to personalize the flying experience and better target promotions. But the airlines sometimes struggle to do all that without making customers uncomfortable.

On some airlines, flight attendants armed with tablet computers will soon have far more data on fliers at their fingertips, including their allergies, seat preferences and whether the carrier lost both their bags last trip. Airlines' marketing pitches are also becoming more relevant, in part based on customers' online-browsing history, their likes on Facebook and their income.

"Data is key to almost everything we're doing," says Maya Leibman, chief technology and information officer at AMR Corp.'s  American Airlines. But with the push into data, she says, the carrier is learning to walk the line "between providing excellent customer service and suddenly becoming creepy."

Big Data is already a big deal in many industries, from retail to health care to banking. But few companies possess both voluminous customer information and the marketing opportunities—and risks—that come with unfettered access to customers in close quarters for long stretches.

American, for example, has prohibited its attendants from saving most data about fliers, such as what they ordered for breakfast, because of "a gut reaction" that it would violate fliers' privacy, Ms. Leibman says. As airlines use customers' data more, "there's a whole host of... social questions that need to be answered," she said.

Airlines have largely been stuck in the 1990s when it comes to knowing their customers, saddled with older technology systems structured to keep different sets of information—loyalty programs, operations, bookings—in separate silos. That has made it difficult, for instance, for an airline to notice and react if it habitually delays the flights of a particularly lucrative customer.

Some carriers, including American; British Airways; United Continental Holdings Inc.  and JetBlue Airways Corp., are now pouring the disparate data into unified digital warehouses and stitching together customers' information using unique identifiers, including frequent-flier numbers, email addresses and phone numbers.

The resulting customer profiles can be accessed by cabin crews on their new tablet computers or smartphones, which show seat maps with details on most fliers. That is a far cry from the paper flight manifests most airlines still use. Suddenly, flight attendants can know that the flier in seat 23B is a vegetarian and the couple behind him are on their honeymoon.

"We have a system that can tell you who the top five customers are in the cabin," says Dave O'Flanagan, chief executive of Boxever, which analyzes data for three airlines.

Thomas Davenport, a Babson College professor who has studied how airlines use data, says such systems will help carriers make strides in onboard revenue, an area where they have long missed the opportunity presented by bored, typically affluent buyers trapped in one place for several hours. "And the best they can do is SkyMall," he says, the kitschy catalog found on most U.S. passenger flights.

But not everyone is convinced investing in data is worth it. Jay Sorenson, president of airline-consulting firm IdeaWorks Co., said frequent fliers are more interested in seat upgrades than a flight attendant remembering their favorite cocktail. "It's more sizzle than meat," he said.

United is working on connecting its 3.5 petabytes of data—about the same amount as 45 years of high-definition video—while rebuilding its website, kiosks and mobile app to better use that data and capture more, said Jeffrey Foland, executive vice president of marketing, technology and strategy. Sales of United's economy-plus seats have surged since it started using data to target fliers who are more likely to buy them, he said. "The more we know about someone, the better."

Some sense of the potential for targeted in-flight sales is evident at Allegiant Travel Co., a small Las Vegas-based carrier that sells products on board based on a flight's destination. En route to Vegas, attendants pitch show tickets and helicopter tours over the public-address system. In the 2013 first half, Allegiant sold $21 million of third-party products, including almost 500,000 rental-car days.

JetBlue said it plans to provide Apple iPad minis to its cabin crews next year to increase onboard sales, in part by ensuring its planes are stocked with the products that fliers on a specific flight have a history of buying.

But some airlines have found that more data can result in a backlash.

Delta Air Lines Inc.  upset some customers this year when they discovered their personal information in obscure computer code on Delta's website, including their ages, estimated annual incomes and home values. While individuals had to be logged into their accounts to see their data, some were disturbed to learn the airline was collecting it. "I felt a little bit creeped out," said Nathan Eggen, a Seattle software executive who discussed the data on a frequent-flier forum. The information "was very accurate overall."

Delta said that "like other companies," it uses customers' demographic data to improve "how we communicate with them and design offers customized to their interests."

British Airways, , a unit of International Consolidated Airlines Group PLC, was criticized recently in a U.K. newspaper after it said its employees were searching the Internet for images of frequent fliers in order to recognize and greet them personally. The airline, which has one of the most advanced data programs in the industry, said its employees no longer do that.

Airlines generally don't allow customers to opt out of the data programs. Several carriers said they have strict rules on how they use and protect customers' data internally. British Airways, for instance, said that if passengers ask a flight attendant not to personalize their service, notes would be added to their customer profiles to leave them alone, but the carrier would continue to collect their data.

In Australia, Qantas Airways Ltd.  asked a panel of frequent fliers what they thought of the carrier's efforts to use data to personalize customer service.

"Their overarching comment was 'I want you to know enough about me to make it useful, but I don't want you in my backyard,'" said Alison Webster, Qantas's head of international customer experience. "I do want you to know I like cappuccino," she quoted the fliers as telling Qantas, but "I don't want you to know that my dog's name is Sally."

Source:  http://online.wsj.com