Delta's AI-Powered Ticket Pricing Sparks Controversy and Scrutiny

US senators raise alarm about Delta plans to use AI to set ticket prices

WASHINGTON, July 22 (Reuters) - Three Democratic senators pressed Delta Air Lines (DAL.N), opens new tab CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The airline said in a statement, "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." Reporting by David Shepardson; Editing by Leslie Adler Our Standards: The Thomson Reuters Trust Principles., opens new tab

Delta plans to use AI in ticket pricing draws fire from US lawmakers

WASHINGTON, July 22 (Reuters) - Three Democratic senators have pressed Delta Air Lines (DAL.N), opens new tab CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The senators cited recent comments from Delta that the airline plans to deploy AI-based revenue management technology across 20% of its domestic network by the end of 2025 in partnership with Fetcherr, an AI pricing company. They said a Delta executive had earlier told investors the technology is capable of setting fares based on a prediction of "the amount people are willing to pay for the premium products related to the base fares." The airline said in a statement: "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." Delta added that dynamic pricing has been used for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand but not a specific consumer's personal information. Delta said AI technology for dynamic pricing is being tested to eliminate manual processes while accelerating analysis and adjustments and it emphasized all customers see the same exact fares and offers in all retail channels. Delta said it was testing AI for use in forecasting demand for specific routes and flights, adapting to market conditions in real-time, factoring thousands of variables simultaneously and learning from each pricing decision to improve future outcomes. In January, Blumenthal along with Senators Maggie Hassan and Josh Hawley asked Frontier Airlines (ULCC.O), opens new tab and Spirit Airlines to disclose whether they were manipulating seat fees by using customers' personal information to charge different fees to passengers on the same flight. The senators said the airlines were apparently "using customers' personal information to charge different seat fees to passengers on the same flight" despite having the same fare. Frontier and Spirit did not immediately respond to requests for comment on their current practices on Tuesday. Reporting by David Shepardson; Editing by Leslie Adler and Jamie Freed Our Standards: The Thomson Reuters Trust Principles., opens new tab

Senators want answers from Delta over AI fares plan they say will likely lead to price rises

Three Democratic senators wrote to Delta Air Lines CEO Ed Bastian Monday to raise concerns about company plans to use AI to set individualized fares, which the airline maintains won't target customers with offers based on personal details. Why it matters: Sens. Ruben Gallego (D-Ariz.), Mark Warner (D-Va.) and Richard Blumenthal (D-Conn.) wrote that Delta's personalized "current and planned individualized pricing practices" would present data privacy concerns and "likely mean" fare price rises "up to each individual consumer's personal 'pain point'" at a time when many families were struggling.

How Delta's AI Pricing Could Impact the Cost of Flying

Nominal airfares -- not adjusted for inflation -- are 12% lower than they were in February 2020. Meanwhile, the price of all items in the consumer price index has gone up 24% during that time -- a gap of 36 percentage points. Plus, inflation-adjusted airfares are 41% cheaper than 10 years ago. And June 2025 was the second-cheapest month ever for inflation-adjusted airfares. It's against this backdrop that we learned Delta Air Lines has been using AI to help set the price of some tickets. "A super analyst" working "24 hours a day, 7 days a week" to optimize airfares is how Delta president Glen Hauenstein described its AI initiative to investors. In late 2024, Delta was using AI on about 1% of fares; by the end of 2025 it's aiming for 20%. The most common reaction has been outrage. Democratic Arizona Senator Ruben Gallego -- a potential 2028 presidential contender -- encapsulated this view, calling it "predatory pricing" and vowing he "won't let them get away with this." Dynamic airfare pricing isn't new. It's as old as the modern aviation industry. And though dynamic pricing super-powered by AI could introduce new confusion and complications, it could help lower flight costs further. Prior to the late 1970s, airfare had a mandated price: typically 6 cents per mile flown. But after deregulation, airlines were permitted to charge whatever they wanted, and flight prices plummeted. Today, airfare costs half of what it did in the 1970s, making travel a reality for much of society -- over half of Americans now fly every year -- rather than a hobby exclusively for the wealthy.

American calls out Delta's 'bait-and-switch' AI move

Is American Airlines policing the pricing war -- or just playing catch‑up? On an earnings call this week, American Airlines CEO Robert Isom took aim at Delta's recent AI-powered fare strategy, saying that opaque AI tactics risk alienating consumers who expect honest, transparent pricing. "Consumers need to know that they can trust American," Isom said. "This is not about bait and switch. This is not about tricking. Others that talk about using AI in that way -- I don't think it's appropriate. And certainly, [at] American, it's not something we will do." Isom doubled down, emphasizing that while American Airlines would attempt to leverage AI for operational efficiency -- such as improving customer service and optimizing flight schedules -- it would never use the technology to exploit customers or make them pay more. He added that "some of the things I've heard [about AI use] are just not good." On a recent earnings call, Delta's president, Glen Hauenstein, said the company has rolled out its AI-powered pricing on a small portion (about 3%) of its domestic routes and is aiming to expand its AI use to 20% of its network by the end of the year. The technology, designed to adjust ticket prices based on demand and customer profiles, has been praised by the company for its potential to maximize revenue. However, the technology has also raised eyebrows -- especially among competitors and lawmakers. U.S. Senators Ruben Gallego, Mark Warner, and Richard Blumenthal have demanded answers from Delta. In a letter made public on Tuesday, the three wrote, "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs." Delta has since tried to walk back some of Bastian's comments, saying the company is just experimenting with AI to refine its dynamic pricing model -- a tactic airlines have relied on for years to adjust fares depending on demand, timing, and other factors. The airline stressed that the technology isn't being used to tailor prices based on customer data, maintaining that all passengers see the same fares across all platforms. "There is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized offers based on personal information," the airline said in a statement. "A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process."

Delta is just the beginning: How AI is going to put dynamic pricing into everything you buy

Summer vacation season is here, but it may be the last time Americans can travel affordably by plane -- especially if Delta has its way. As the world's largest airline by annual revenue and the second-largest by passengers carried, Delta is a leader in the industry. That's what makes its plans to use AI for ticket pricing so concerning. According to Delta President Glen Hauenstein, about one in five tickets the airline sells by year's end will be priced by AI, up from just 3% today. Delta's long-term goal is to price all tickets this way. "This is a full reengineering of how we price and how we will be pricing in the future," Hauenstein told investors in November 2024. While this may spell "amazingly favorable unit revenues" for the airline, it's bad news for passengers -- many of whom worry that price gouging will soon eclipse any notion of price personalization. "The practice of dynamic pricing is certainly not new in the airline industry," says Kerry Tan, professor of economics at Loyola University Maryland. But with better data and evolving tech, he says, "the increase in the usage of AI to price their flights" raises important questions. "Certainly Delta, as with any other company, is profit-driven, and stands to gain from this by better matching consumers' willingness to pay to the price they pay for a flight."

Delta uses AI to set airfares. Some senators are worried

For more than a year, Delta Air Lines has been exploring how artificial intelligence might revolutionize the way it sets airfares. Several Democratic senators say they're concerned about what it might mean for consumer privacy and fairness. Expanding the use of AI to set individualized fares, the senators wrote in a letter, will "likely mean fare price increases up to each individual customer's personal 'pain point' at a time when American families are already struggling with rising costs." Sens. Ruben Gallego, Richard Blumenthal and Mark Warner wrote they are worried airlines like Delta could use AI to track individuals and exploit them -- including in times of need like traveling for a funeral. But Atlanta-based Delta says that's not what the technology is doing. "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise," a spokesperson said. Instead, the technology is using demand for specific routes and flights, flight time and date, customer demand, the price of jet fuel and other information. Israeli startup Fetcherr manages pricing for about 3% of Delta's domestic schedule, company President Glen Hauenstein told investors last week. That's up from 1% last November, and it hopes to reach 20% by the end of the year. "We're in heavy testing phase," he said. "We like what we see. We like it a lot, and we're continuing to roll it out. "But we're going to take our time and make sure that the rollout is successful, as opposed to trying to rush it and risk that there are unwanted answers in there," he said. The company is already seeing improved "unit revenues" from it, Hauenstein noted. In a statement Fetcherr reiterated that its technology "does not allow for individualized or personalized pricing." The AI system "does not and will not use, collect or receive any Personally Identifiable Information" and the company "remains steadfast in our commitment to transparency and to our compliance with applicable regulations." 'Everyone is doing it' Delta is not alone in its search for ways to revolutionize an airfare pricing model that dates back decades, said Laurie Garrow, director of the Air Transportation Lab at Georgia Tech. The lab conducts airline revenue management research with input and funding from corporate airline members -- including Delta -- and will be increasing its focus on AI. Fetcherr, for example, is already working with several other airlines, including Delta partners WestJet and Virgin Atlantic. "Everyone is doing it," Garrow told the AJC. And when it comes to an impact on jobs, Fetcherr argues its technology"isn't replacing revenue management professionals -- it's empowering them." As Delta and other airlines continue expanding their range of fares and cabin classes, it's "very difficult" to match that with a range of prices, Garrow said. AI is needed to handle that scale, she argued. Traditional airline pricing involves buckets, or "steps," of fares, she explained. When one is sold out, the next up is offered. But AI allows for far more variety in the airline's decision about what the next higher fare might be, she explained. The algorithm might recognize that a jump from $100 to $300 is usually too much for someone who appears to be traveling on a vacation -- and instead will offer a discount down from $300, in an effort to close the sale. "If you're doing a Saturday night stay and you're going to a leisure destination, we know you're more price sensitive, so you're more likely to see a discount," she said. So far, she said, the technology doesn't seem to be "using gender, using age, using ZIP code, using IP (address)." It's more the time of day or how far out one is booking that can determine a customer's price sensitivity. International privacy laws and the threat of public backlash for something like hypothetical price gouging for a funeral attendee, she said, will likely keep it that way. At this point, when the technology isn't implemented across platforms, a traveler might notice it only if they compare prices on a carrier's website versus a travel agency, she explained. 'Making more money' "Pricing based on AI algorithms will no doubt increase revenues for Delta," the senators wrote. "However, with respect to the interests of Delta's passengers, there is a danger that this approach will result in higher fares and diminish incentives to improve service." Arlines are "going to be making more money," Garrow confirmed. But that could be because they have gained passengers that might have otherwise looked to a competitor, she argued. Or a price increase might happen for premium travelers who can afford it. And "the more revenue I can get out of the premium class, then the more discount fares I'm able to offer for families or the more price sensitive," Garrow added.

US Senators Raise Alarm About Delta Plans to Use AI to Set Ticket Prices

WASHINGTON (Reuters) -Three Democratic senators pressed Delta Air Lines CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The airline said in a statement, "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." (Reporting by David Shepardson; Editing by Leslie Adler)

Delta's AI Pricing Faces Turbulence on Capitol Hill

Delta Air Lines plans to increasingly use artificial intelligence to help set the price you pay for flights, making fares even more individualized and potentially boosting profits. Some senators are calling that potentially "dangerous" and "predatory." In a letter to Delta CEO Ed Bastian, Democratic Sens. Ruben Gallego, Mark Warner and Richard Blumenthal sought answers to several questions, including what kind of data the airline has decided to use, or not use, in its AI-driven pricing, and what safeguards it is imposing to ensure it follows federal non-discrimination laws. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," they wrote. The lawmakers have yet to receive a reply, says Gallego's deputy press secretary, Jane Garza. A Delta spokeswoman, Lisa Hanna, says the airline "will be responding to the Senators' letter." In a lengthy statement, the airline told U.S. News that AI "is NOT used to target customers by using their personal data." But it also acknowledged that one factor influencing price-setting is "customer demand and purchasing behavior." And Hanna says: "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." Personalized pricing isn't entirely new. My supermarket receipt comes with coupons for products I have purchased in the past - presumably a way to get me back in the store. Nor is dynamic pricing, in which prices can change based on factors like current demand (sometimes up to the minute), supply changes and competitor pricing. On an earnings call earlier this month, Delta President Glen Hauenstein said the company was using AI for 3% of domestic flight purchases and hoped to get to 20% by the end of the year. It has partnered with Fetcherr, a company specializing in generative AI pricing and inventory. "We're in (a) heavy testing phase. We like what we see. We like it a lot and we're continuing to roll it out," Hauenstein said. "But we're going to take our time and make sure that the rollout is successful, as opposed to trying to rush it and risk that there are unwanted answers in there. So, the more data it has and the more cases we give it, the more it learns." Taken broadly, the net effect of this technology may be that your price isn't determined by the market's supply and demand, but by your own personal supply and demand. (In their letter, the senators alluded to a hypothetical scenario in which an airline charges more for a passenger because the company knows they just had a death in the family and need to fly cross-country.) Airline prices are already highly individualized, notably depending on the timing of your purchase. The back and forth illustrates a debate that rapid AI development is foisting on the United States: When it comes to corporations using personal information, how much is too much? When does individualized pricing based on searching the Internet for information about a consumer shift from personalized into predatory? What if you and a friend went out for a drink, ordered the exact same beverage, and ended up paying different prices because the bar knew that you owned a Mercedes while your friend drove a Toyota? A Yale study found individualized pricing increases airline revenues up to 5%. And the nonprofit Consumer Watchdog found that deals tend to go to wealthier clients, who have more choices than less-well-off customers. There's an irony here: AI-driven pricing could make airfare more expensive, but not necessarily, and not for everyone. Airlines still need to fill their seats. And competition will tend to lower prices. If Airline A's AI model decides you should pay $500 to fly from D.C. to Boston, but Airline B charges you $400, you'll probably still pick B. But there's another reason. Airfare is just part of the rich tapestry of airline revenues. Wanna pick your seat? Upgrade to a better seat? Check a bag? Boost the frequent flyer miles you're getting? Soothe your fear of flying with a couple cocktails? Those all cost you money. If an airline can confidently predict based on your past flights that you'll pay hundreds to upgrade your seat and quaff $45 worth of gin and tonics while you're on board, they can afford to sell you the base ticket for less than they might otherwise. Before you book a trip, you are *a* customer. Once you've booked it, you are *their* customer. They're going to work hard to make that happen.

American's CEO Says The Airline Won't Use AI to 'Bait and Switch' Ticket Shoppers

Both airlines are focusing on serving those who buy premium tickets amid sluggish main cabin sales. American Airlines wants you to know they aren't using AI in ways they say amount to "tricking" customers who are searching for tickets. CEO Robert Isom on a conference call Thursday said American Airlines Group (AAL) will use artificial intelligence to operate more efficiently and showcase amenities to customers. But "some of the things I've heard are just not good," he said in response to a question about using AI to help determine ticket pricing. "Consumers need to know that they can trust American, okay? This is not about bait and switch. This is not about tricking," Isom said, according to a transcript made available by AlphaSense. "Others that talk about using AI in that way -- I don't think it's appropriate." Neither Isom nor the reporter who raised the question named Delta Air Lines (DAL), but the comparison seemed inescapable. Delta has said it would increasingly use AI to identify the highest prices it can charge without losing sales, according to President Glen Hauenstein, citing "amazingly favorable" results. The carrier plans to deploy technology offered by Israeli company Fetcherr on 20% of domestic flights by the end of the year, Hauenstein said this month. "There is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized offers based on personal information or otherwise.," Delta spokesman Andrew Post told Investopedia. "A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process." AI aside, the airlines are adopting similar strategies. American, like Delta, is prioritizing the higher income customers who tend to buy premium tickets amid sluggish main cabin sales. American plans to increase its premium capacity by 50% over the next five years and expand its international service, Isom said. Meanwhile, the carrier is reducing domestic capacity. American shares were recently down 8%, and have lost about one-third of their value so far this year.

Delta plans to use AI in ticket pricing draws fire from US lawmakers

Democratic senators are questioning Delta Air Lines' use of AI for ticket pricing, expressing concerns about potential fare increases based on individual willingness to pay. The senators cited Delta's partnership with Fetcherr to deploy AI-based revenue management technology. Three Democratic senators have pressed Delta Air Lines CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The senators cited recent comments from Delta that the airline plans to deploy AI-based revenue management technology across 20% of its domestic network by the end of 2025 in partnership with Fetcherr, an AI pricing company. They said a Delta executive had earlier told investors the technology is capable of setting fares based on a prediction of "the amount people are willing to pay for the premium products related to the base fares." The airline said in a statement: "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." Delta added that dynamic pricing has been used for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand but not a specific consumer's personal information. Delta said AI technology for dynamic pricing is being tested to eliminate manual processes while accelerating analysis and adjustments and it emphasized all customers see the same exact fares and offers in all retail channels. Delta said it was testing AI for use in forecasting demand for specific routes and flights, adapting to market conditions in real-time, factoring thousands of variables simultaneously and learning from each pricing decision to improve future outcomes. In January, Blumenthal along with Senators Maggie Hassan and Josh Hawley asked Frontier Airlines and Spirit Airlines to disclose whether they were manipulating seat fees by using customers' personal information to charge different fees to passengers on the same flight. The senators said the airlines were apparently "using customers' personal information to charge different seat fees to passengers on the same flight" despite having the same fare. Frontier and Spirit did not immediately respond to requests for comment on their current practices on Tuesday.

US Lawmakers Demand Answers From Delta Air Lines' AI Ticket Pricing Strategy Amid Concerns Of Fare Price Increase - Delta Air Lines (NYSE:DAL)

Delta Air Lines Inc. DAL is facing scrutiny from U.S. lawmakers over its plans to use artificial intelligence (AI) for setting ticket prices. What Happened: Sen. Ruben Gallego (D-AZ), Sen. Mark Warner (D-VA) and Sen. Richard Blumenthal (D-CT), have raised concerns about Delta's AI-based pricing strategy. The senators are worried that this approach could lead to personalized fare increases, potentially impacting travelers. Check out the current price of DAL stock here. The senators highlighted Delta's intention to roll out AI-powered revenue management technology, developed in partnership with AI pricing firm Fetcherr, across 20% of its domestic network by the end of 2025. They raised concerns that the system could potentially use personal data to determine fares based on each consumer's perceived willingness to pay for premium services. "Consumers have no way of knowing what data and personal information your company and Fetcherr plan to collect or how the AI algorithm will be trained," stated the Senators in the letter. They also added, "Prices could be dictated not by supply and demand, but by individual need. While Delta has stated that the airline will 'maintain strict safeguards to ensure compliance with federal law,' your company has not shared what those safeguards are or how you plan to protect American families against pricing discrimination in the evolving AI landscape," Delta has denied employing any fare system that targets customers with personalized offers based on individual data. The airline clarified that its dynamic pricing model, in place for over 30 years, relies on broader factors like overall customer demand rather than specific consumer information, Reuters reported. The airline further explained that it is experimenting with AI technology to simplify fare adjustments based on demand for specific routes and flights, as well as to enhance future pricing strategies. See Also: 'Within 4 Years, This XRP Will Buy Me A Lambo,' Trader Said In 2019 -- Now He's Up $176,000 - Benzinga Why It Matters: Delta's AI pricing strategy comes on the heels of a recent $8.1 million settlement with the U.S. Department of Justice over alleged misuse of pandemic relief funds. This controversy adds to the challenges the airline is facing amidst a turbulent economic climate. Earlier this month, Delta reported a 1% year-over-year increase in June-quarter revenue, driven by a rise in premium cabin sales and loyalty revenue. The airline's confidence in its financial future was reflected in its decision to reinstate its full-year 2025 guidance. Delta posted stronger-than-expected second-quarter results, with operating revenue of $16.65 billion, above the consensus estimate. The airline's decision to test AI technology for fare adjustments could be a strategic move to further improve its financial performance, despite the controversy it has sparked. Benzinga Edge Stock Rankings shows that Delta Airways stock had a strong price trend over the short, medium and long term as per Benzinga's Proprietary Edge Rankings. READ MORE: Kevin O'Leary Calls Trump's No Tax On Home Sales Plan 'Common Sense': Shark Says, 'Families Can Grow Without Getting Punished' Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. DALDelta Air Lines Inc$56.000.59%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum55.10Growth73.42QualityN/AValue42.69Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Delta's AI Now Sets Unique Prices For Each Passenger -- Here's What We Know - Delta Air Lines (NYSE:DAL)

Artificial intelligence is quietly reshaping airfare -- and Delta Air Lines DAL is leading the charge. Delta President Glen Hauenstein said during the carrier's Q2 earnings call this month that the airline has begun using AI to determine personalized ticket prices, setting about 3% of its fares today, with plans to scale that to 20% by the end of the year. Hauenstein described the shift as a full reengineering of fare pricing, with the AI system working to find "the right price at the right time to the right customer." Don't Miss: 7,000+ investors have joined Timeplast's mission to eliminate microplastics -- now it's your turn to invest in the future of sustainable plastic before time runs out. $100k+ in investable assets? Match with a fiduciary advisor for free to learn how you can maximize your retirement and save on taxes - no cost, no obligation. Trending Investment OpportunitiesAdvertisementFundriseBuy shares of homes and vacation rentals for as little as $10. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get StartedAI Pricing Rolls Out -- But Cautiously The AI pricing initiative remains in early testing. "We're letting the machine go ahead and price in a very controlled environment," Hauenstein said. "We're going to take our time and make sure that the rollout is successful as opposed to trying to rush it and risk that there are unwanted answers in there." The pilot began with about 1% of fares and now manages 3% of domestic ticket prices. Hauenstein said the system is a part of a "multi-year, multi-step process," describing it as a model that improves with exposure. "You have to train these models," he said on the call. The pricing system was developed in partnership with Israeli AI startup Fetcherr, which also works with airlines like Azul, WestJet, and Virgin Atlantic, according to Fortune. Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation -- You Can Become an Investor for Just $500.25 Consumer Pushback and Privacy Concerns Delta's use of artificial intelligence for personalized pricing has drawn criticism from privacy advocates and lawmakers. "They are trying to see into people's heads to see how much they're willing to pay. They are basically hacking our brains," Justin Kloczko, who analyzes dynamic pricing for California nonprofit Consumer Watchdog, told Fortune. Sen. Ruben Gallego, an Arizona Democrat, called the strategy 'predatory pricing' in a post on X, writing, "Delta's CEO just got caught bragging about using AI to find your pain point -- meaning they'll squeeze you for every penny." However, the 'pain point' remark was made by Hauenstein and not Delta CEO Ed Bastian during the earnings call. Airlines and the AI Race "Delta is the first major airline to speak so publicly about its use of AI pricing," a travel industry analyst, Gary Leff, who first talked about Delta's AI strategy on his View From The Wing website, told Fortune. Several carriers are turning to different tech vendors. "Fetcherr isn't the only one in this space. JetBlue partnered with FLYR. Virgin Atlantic also reported a 10% increase in seat fees, which were priced dynamically. flydubai is using PROS, and Lufthansa announced a partnership with them as well," Leff wrote on his website. See Also: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can earn passive income with just $10. What It Means for Passengers AI-driven ticket pricing pushes airlines into a legal gray zone, according to Fortune. While fare customization is not illegal, federal law prohibits pricing based on protected characteristics such as race or gender. However, identifiers like ZIP codes -- sometimes used in algorithms -- can lead to disparate impacts on marginalized groups, Fortune reported. A Delta spokesperson told Fortune that the company has "zero tolerance for discrimination. Our fares are publicly filed and based solely on trip-related factors like advance purchase and cabin class, and we maintain strict safeguards to ensure compliance with federal law." The company did not elaborate on whether the safeguards are human or automated. "The era of 'fair' pricing is over," Generation AI Author Matt Britton told Fortune. "The price you see is the price the algorithm thinks you'll accept, not a universal rate." Leff told Fortune that AI might offer upfront discounts when airlines need to fill seats and that shoppers may still gain leverage by browsing in incognito mode or using a VPN to mask their data. However, he warned that airlines could eventually require travelers to log in to access perks like elite status or seat upgrades. That shift could make opting out of personalized pricing more difficult over time. Read Next: Are you rich? Here's what Americans think you need to be considered wealthy. Image: Shutterstock DALDelta Air Lines Inc$54.45-0.48%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum49.09Growth73.73QualityN/AValue43.81Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Delta Air Lines Tests AI-Powered Personalized Pricing | PYMNTS.com

The system, developed in partnership with Israeli startup Fetcherr, is already being used on 3% of Delta's flights, with plans to expand it to 20% by the end of the year, according to the company. "While we're still in the test phase, results are encouraging," said Delta CEO Ed Bastian during the company's second-quarter earnings call. Personalized pricing -- or surveillance pricing as the Federal Trade Commission (FTC) calls it -- is pricing tailored to the individual based on the personal data collected. For example, two people shopping for airfares at the same time might see different prices if one is a business traveler and the other is a budget-conscious consumer, based on things like income estimates, browsing behavior, purchase history or type of device used. The price is driven by who the buyer is and what the AI algorithm believes he or she will pay. That's different from dynamic pricing, which is determined by market factors such as real-time supply and demand and pricing by competitors. While the price changes, everyone sees the same price at a given time. Airlines, ride-sharing and other companies already use dynamic pricing. In a nutshell, dynamic pricing changes based on when a consumer buys. Personalized pricing changes based on who the consumer is. Delta President Glen Hauenstein explained it this way during the airline's "investor day" analyst briefing last November: "We will have a price that's available on that flight, on that time, to you, the individual. Not a machine that's doing an accept reject and a static price grid," Hauenstein said. He called the AI a "super analyst" and results have been "amazingly favorable unit revenues." Delta seeks to gain a "first-mover advantage," Hauenstein added. "We do believe that we are ahead of our competitors in terms of implementing this and in changing our business processes and rules around it." Ultimately, this is "a full reengineering of how we price -- and how we will be pricing in the future," Hauenstein said. More here: JetBlue and United Link Loyalty Programs Under 'Blue Sky' Banner There's already rising outrage about the practice. "Delta's CEO just got caught bragging about using AI to find your pain point -- meaning they'll squeeze you for every penny," wrote U.S. Sen. Ruben Gallego, D-Ariz., in a post on X. "This isn't fair pricing or competitive pricing. It's predatory pricing. I won't let them get away with this." A Delta spokesperson told PYMNTS: "There is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized offers based on personal information or otherwise." "A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process. Delta always complies with regulations around pricing and disclosures," the spokesperson added. In January, the FTC issued a study on "surveillance pricing," noting that it has been going on in retail. According to the FTC, some retailers track consumer behaviors -- ranging from how shoppers move the mouse on a webpage to the products they abandon in an online shopping cart -- to customize pricing. At least 250 companies from grocers to clothing retailers are using surveillance pricing, the FTC found, but did not name names. Consumer Watchdog's December 2024 report said Target charged people $100 more for a TV when they're in a Target parking lot versus another location. According to the same report, travel booking platform Orbitz found that Mac users were willing to spend more money to stay at hotels and charged them more. "It's price gouging based on predictive behavior," wrote Justin Kloczko, author of the report. "A lot is not known because of corporate secrecy, but what we do know now is companies are experimenting with surveillance pricing as a way for businesses to weaponize personal data against you in order to charge more." PYMNTS reached out to Target and Orbitz for comment, but has yet to receive replies. Peter Fader, a marketing professor at The Wharton School of the University of Pennsylvania who specializes in customer lifetime value modeling, said in a LinkedIn post that "there's going to be plenty of public outcry over Delta Air Lines' new personalized pricing initiative." "Concerns about ethics, privacy, price-gouging and 'brain-hacking'" are "valid" but "that's not what worries me most," he wrote. Fader said Delta may be overestimating its ability to accurately assess individual price sensitivity. "There's just too much noise, too much volatility, too much model risk" to do personalized pricing well, he said. The smarter approach would be to group customers based on behavioral traits like recency, frequency and monetary value. "Within these segments, individual errors cancel out, and decisions become more stable, more defensible, and more profitable," Fader added. See also: European Airlines Report Uncertainty Drives Decline in Bookings to US Delta faces a host of business risks, one of which is erosion of customer trust, said Philip Carls, who serves on the board of Priceagent. "This will likely dent customer trust since, unlike traditional pricing, passengers won't know if they're getting a fair deal or being targeted," Carls told PYMNTS, adding that privacy issues could also be raised. "It is unclear exactly what factors are being used to target set prices," Carls said. "It's also unclear how this will play out with aggregators, travel agencies, partner or alliance airlines and other channels. It's also unclear how effective this will be if competitors adopt similar algorithmic pricing -- there is only so much upside Delta can charge before someone switches and flies a different airline." There's regulatory risks as well. While such pricing strategies may be legal in the U.S., they face more restrictions in the EU and U.K. "In Europe, GDPR limits data usage, and airlines must justify personalized pricing under 'legitimate interest,'" Carls said, adding that there could be antitrust concerns as well if pricing algorithms lead to collusion. What's more is that consumers will sue if they feel unfairly targeted. "If pricing seems discriminatory, there will be lawsuits," he said. Tom Randklev, head of product at payment orchestration firm CellPoint Digital, which serves the airline and other industries, noted that Delta's move could lead other carriers to follow suit. "The benefits highlighted from Delta's pilot will generate significant interest and imitation from the other carriers," Randklev told PYMNTS. He added that other major airlines, such as United and American, already use AI in revenue management, while noting that Delta's partner, Fetcherr, also works with Virgin Atlantic, WestJet, Azul and Viva airlines. But Delta's Hauenstein said the airline will proceed with care. "We're all in on this," he said. "We're very excited about it, but we want to be really smart about it because it could also be very dangerous, if it's not controlled and it's not done correctly."

American Airlines CEO Slams AI Fare Setting as Trickery | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. "Consumers need to know that they can trust American," said Robert Isom, whose comments on an earnings call Thursday (July 24) were reported by Bloomberg News. "This is not about bait and switch. This is not about tricking." The report noted that Isom's criticism is in line with several U.S. lawmakers, who want answers from Delta Air Lines about its plans to use AI for setting prices. Delta CEO Ed Bastian said earlier this week on his company's earnings call that the airline was testing an AI system that tailors fares to individual customers, something that could reshape how airline tickets are sold and priced. The system, created in partnership with Israeli startup Fetcherr, is now being used on 3% of Delta's flights, with plans to expand it to 20% by the year's end. "While we're still in the test phase, results are encouraging," said Bastian. As PYMNTS wrote at the time, personalized pricing -- or surveillance pricing as the Federal Trade Commission (FTC) calls it -- is pricing tailored to the customer based on the personal data collected. "For example, two people shopping for airfares at the same time might see different prices if one is a business traveler and the other is a budget-conscious consumer, based on things like income estimates, browsing behavior, purchase history or type of device used," PYMNTS wrote. "The price is driven by who the buyer is and what the AI algorithm believes he or she will pay." The Bloomberg report includes comments from Delta saying the company is testing AI to eliminate manual processes and speed analysis for dynamic pricing, a strategy long used in the air travel industry and other sectors to set fares based on demand, timing and other factors. "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise," according to the statement from the airline. "A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process." American Airlines said earlier this month it is deepening its AI deployment to make travel more comfortable, including by predicting if they'll miss a flight. Chief Digital and Information Officer Ganesh Jayaram described on a company podcast the airline's use of AI to transform its consumer self-service capabilities and employee productivity efforts, after establishing a governance framework to support its AI efforts. "We spent quite a bit of time over the last year to set up a governance framework ... ensuring that we put all the privacy controls and other protections in place to leverage these technologies responsibly," Jayaram said.

Delta Quizzed on Plan To Use AI in Ticket Pricing

A group of senators say the airline could use technology to find each customer's 'pain point' for ticket pricing. A group of Democratic senators is accusing Delta Air Lines of using artificial intelligence to find the "pain point" for individualized customers buying airline tickets to make as much money as they can off of them. Senators Gallego, Warner, and Blumenthal are concerned the technology could lead to discriminatory pricing. In a letter to Delta's chief executive, Ed Bastian, the senators asked him to explain the airline's use of so-called "surveillance-based" fares. "Delta's current and planned individualized pricing practices not only present data privacy concerns but will also likely mean fare price increases up to each individual consumer's personal 'pain point'," the letter states. The senators cite recent reports that Delta plans to deploy AI-based revenue management technology across 20 percent of its domestic network by the end of the year in partnership with Fetcherr, a company that specializes in using artificial intelligence to set prices to maximize company profit for large airlines. The letter cites a testimonial by the president of the airline, Glen Hauenstein, on Fetcherr's website that "the initial results show amazingly favorable units revenue versus the beta, so we are all in on this." Mr. Hauenstein touted the airline's move into using artificial intelligence at last year's Delta investor's day. He cited the ability for "granular pricing and responsiveness to customer signals." The chairwoman of the Federal Trade Commission under President Biden, Lina Khan, previously warned that dynamic pricing using AI could discriminate against some consumers. At a tech conference last year, Ms. Khan saw a future in which customers could be "charged more for an airplane ticket because the company knows that they just had a death in the family and need to fly across the country." Delta says there is nothing nefarious with its use of artificial intelligence and it is not creating unique prices for specific individuals. "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise," the company says in a statement to the New York Sun. "A variety of market forces drive the dynamic pricing model that's been used in the global industry for decades, with new tech simply streamlining this process. Delta always complies with regulations around pricing and disclosures." A spokeswoman says the AI technology for dynamic pricing is being tested to eliminate manual processes while accelerating analysis and adjustments and not to target customers by using their personal data. The airline claims all customers see the exact same fares and offers at the same time. It adds that the technology is being used to forecast demand for specific routes, learn from pricing decisions to improve future outcomes, and adapt to new market conditions in real-time. Delta says a number of factors influence prices, including the time and date of flights, the routes, customer demand, and the price of jet fuel. But, the senators say Delta has not shared what safeguards it is using to protect customers from pricing discrimination. They want answers by August 4 on the data inputs Delta uses to train its revenue management system algorithm, what sources it uses to obtain data for setting customized prices for fares or other products, and how many passengers per day are currently purchasing tickets or other services using the customized pricing model.

US senators raise alarm about Delta plans to use AI to set ticket prices

WASHINGTON (Reuters) -Three Democratic senators pressed Delta Air Lines CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The airline said in a statement, "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." (Reporting by David Shepardson; Editing by Leslie Adler)