Data Wars: A mini-case study of Southwest Airlines vs. TripIt and Orbitz

As a regular flyer, I’m an enormous fan of TripIt. It’s a simple service in which you forward almost any reservation – airline, hotel, car rental, etc… to plans@tripit.com and their service will scan it, grab the relevant data, and create a calendar of events for you. While it’s a blessing not to have to manually enter my travel plans into my calendar, what’s particularly fantastic is that I give my partner access to the calendar – so she knows when I’m flying out and when I return. With 135,000 miles of travel last year alone, there was a lot of that.

TripIt Pro users, however, have added benefits: they can use TripIt to track how many loyalty points they are gathering. That is, unless you travel on Southwest Airlines. Apparently Southwest sent a legal warning to any company that tracks their members’ loyalty benefits and ordered them to stop doing so. (Award Wallet is another example of an app I use that was affected). In a similar vein, veteran travelers know that Southwest does not appear on many travel search sites like Orbitz.

These are great examples of a data wars – places where a company are fighting over who gets access to customers data. In this case Southwest is using its user license to forbids another company from displaying data Southwest generates, but that its customers might wish to share with others because it is helpful to them. It’s not just that Southwest wants to control its relationship with its customers when it comes to loyalty points, or that it wants to sell them hotels and rental cars though its site. It’s that it wants the data about how you behave, about what choices you make and how you make them. Use another site to access loyalty points and they can’t track or sell to you. Ditto if you use another site to buy airfare for their flights.

Southwest isn’t nuts. But it’s a strategy that won’t work for all companies (and may not work for them) and it has real consequences.

To begin with, they are making it hard for their customers to engage their service. When traveling in the US, I regularly use Kayak and/or other types of airline aggregators – it means I never see Southwest as an option. Nor do I go to their website. The bigger irony of course is that while I frequently find fares on aggregator sites, I often book them on the airline’s site. But again, I don’t go to Southwest because they never appear in any searches I do. Maybe they don’t care about business travelers, but they are making a big trade-off – they get more data about their users and have unique opportunities to sell to them, but I suspect they get far fewer users.

In addition, they may be alienating their customers. I’m not so sure customers will feel like loyalty point data belongs to Southwest. After all, it was their dollars and flying that paid to create the data… why shouldn’t they be able to access a copy of it via an application they find useful?

This was all confirmed by an email from a friend and colleague Gary R., who recently wrote me to say:

While we love Southwest Airlines for its low prices, generous affinity programs and flexibility in changing business trips at the last moment with little consequence, their closed data sharing policy drives up our overall cost of managing travel. Entering flight information manually into TripIt is a pain, yet the service is incredible at keeping one informed during a trip, presenting a palette of options seemingly the instant things go wrong. We have chosen other carriers over Southwest on occasion because they play nicely with Orbitz and TripIt.

I can’t tell if Southwest’s tradeoffs are worth it or not. But any business person must at least recognize there is a tradeoff. That’s the real lesson. You need to find a way to value the data you collect and be able to compare it against the opportunity of a) happier clients and b) potentially accessing more clients. This is particularly true since many customers probably (and rightly) will feel that is data is as much theirs as it is yours. They did co-create it.

Ultimately if you increase the transaction costs of the experience – because you want to shut other actors out – you will lose customers.  Southwest already has.

Definitely expect more of these types of legal battles in the future. Your data is now as important as the service you use. This makes it both powerful, and dangerous in the hands of the wrong people.

One thought on “Data Wars: A mini-case study of Southwest Airlines vs. TripIt and Orbitz

  1. beltzner

    I wonder if SouthWest might do well to enter into some sort of reciprocal agreement with TripIt whereby they allow TripIt to have access to the reward data in return to insight into SouthWest customers. A potential revenue loss for TripIt (AIUI, that’s their business model) but if they filter it down to just SouthWest customers, it’s nothing lost, nothing gained for either party. SouthWest can go to TripIt with cash in hand for insight about ALL customers, and everyone can win.

    Reply

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