Airline data protection: BA fine sends uncertain messages

Premium Analysis

One of the biggest challenges facing airlines - and many other companies - is the digital revolution. For those rising to the challenge, technological change provides unprecedented opportunities. It can transform sales, distribution and payment and generate new ancillary revenue streams, with the potential for a significantly improved customer experience.

The rewards for airlines can be lucrative. Globally, ancillaries have grown from 4.8% of airline revenue in 2010 to 10.7% in 2018, according to IdeaWorksCompany/CarTrawler.

The raw material at the heart of the digital revolution is data. Customers freely provide airlines with huge amounts of data about themselves and their preferences, which airlines can use to sell enhanced services to those customers.

However, the GBP183 million fine on British Airways on 8-Jul-2018 proposed by the UK Information Commissioner’s Office (ICO) for infringements of the EU's General Data Protection Regulation (GDPR) alters the balance between the challenge and opportunity of data. Whether the magnitude of the fine is appropriate, or whether it will achieve effective goals  are fundamental issues.

The decision dispels any lingering misapprehension among airlines that data is a costless asset. An increasingly vital aspect of brand and reputation, it is used to generate revenue and inherently has a value. There are material costs associated with protecting it.

The scale of the fine raises broader issues; for example, is the UK is sending a negative message to foreign investors at a time when Brexit may require the opposite? And at a practical level, it may discourage companies from being as transparent as they have in the past.

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