Delta Air Lines Refutes Claims of AI-Driven Personalized Pricing Amid Lawmaker Concerns

Delta Air Lines assures U.S. lawmakers it will not personalize fares using AI

WASHINGTON - Delta Air Lines said on Friday it will not use artificial intelligence to set personalized ticket prices for passengers after facing sharp criticism from U.S. lawmakers and broad public concern. Last week, Democratic Senators Ruben Gallego, Mark Warner and Richard Blumenthal said they believed the Atlanta-based airline would use AI to set individual prices, which would "likely mean fare price increases up to each individual consumer's personal 'pain point.'" Delta said it has not used AI to set personalized prices but previously said it 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. "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized prices based on personal data," Delta told the senators in a letter on Friday, seen by Reuters. "Our ticket pricing never takes into account personal data." Senators praised Delta's commitment not to use AI for personal pricing but expressed many questions and want more details about what data Delta is collecting to set prices. "Delta is telling their investors one thing, and then turning around and telling the public another," Gallego said. "If Delta is in fact using aggregated instead of individualized data, that is welcome news." Delta declined comment on Gallego's statement. The senators cited a comment in December by Delta President Glen Hauenstein that the carrier's AI price-setting 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." Last week, American Airlines CEO Robert Isom said using AI to set ticket prices could hurt consumer trust. "This is not about bait and switch. This is not about tricking," Isom said on an earnings call, adding "talk about using AI in that way, I don't think it's appropriate. And certainly from American, it's not something we will do." Democratic lawmakers Greg Casar and Rashida Tlaib last week introduced legislation to bar companies from using AI to set prices or wages based on Americans' personal data and would specifically ban airlines raising individual prices after seeing a search for a family obituary. They cited a Federal Trade Commission staff report in January that found "retailers frequently use people's personal information to set targeted, tailored prices for goods and services -- from a person's location and demographics, down to their mouse movements on a webpage." The FTC cited a hypothetical example of a consumer profiled as a new parent who could intentionally be shown higher-priced baby thermometers and collect behavioral details to forecast a customer's state of mind. Delta said airlines have used dynamic pricing for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand, fuel prices and competition, but not a specific consumer's personal information. "Given the tens of millions of fares and hundreds of thousands of routes for sale at any given time, the use of new technology like AI promises to streamline the process by which we analyze existing data and the speed and scale at which we can respond to changing market dynamics," Delta's letter said.

Delta Air assures US lawmakers it will not personalise fares using AI - The Economic Times

Delta Air Lines said on Friday it will not use artificial intelligence to set personalised ticket prices for passengers after facing sharp criticism from US lawmakers and broad public concern. Last week, Democratic Senators Ruben Gallego, Mark Warner and Richard Blumenthal said they believed the Atlanta-based airline would use AI to set individual prices, which would "likely mean fare price increases up to each individual consumer's personal 'pain point.'" Delta said it has not used AI to set personalised prices but previously said it 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. "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized prices based on personal data," Delta told the senators in a letter on Friday, seen by Reuters. "Our ticket pricing never takes into account personal data." Senators praised Delta's commitment not to use AI for personal pricing but expressed many questions and want more details about what data Delta is collecting to set prices. "Delta is telling their investors one thing, and then turning around and telling the public another," Gallego said. "If Delta is in fact using aggregated instead of individualized data, that is welcome news." Delta declined comment on Gallego's statement. The senators cited a comment in December by Delta President Glen Hauenstein that the carrier's AI price-setting 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." Last week, American Airlines CEO Robert Isom said using AI to set ticket prices could hurt consumer trust. "This is not about bait and switch. This is not about tricking," Isom said on an earnings call, adding "talk about using AI in that way, I don't think it's appropriate. And certainly from American, it's not something we will do." Democratic lawmakers Greg Casar and Rashida Tlaib last week introduced legislation to bar companies from using AI to set prices or wages based on Americans' personal data and would specifically ban airlines raising individual prices after seeing a search for a family obituary. They cited a Federal Trade Commission staff report in January that found "retailers frequently use people's personal information to set targeted, tailored prices for goods and services -- from a person's location and demographics, down to their mouse movements on a webpage." The FTC cited a hypothetical example of a consumer profiled as a new parent who could intentionally be shown higher-priced baby thermometers and collect behavioral details to forecast a customer's state of mind. Delta said airlines have used dynamic pricing for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand, fuel prices and competition, but not a specific consumer's personal information. "Given the tens of millions of fares and hundreds of thousands of routes for sale at any given time, the use of new technology like AI promises to streamline the process by which we analyse existing data and the speed and scale at which we can respond to changing market dynamics," Delta's letter said.

Delta Defends AI in Ticket System, Refuting Suggestions of 'Surveillance' Pricing

Senators had warned the airline could be setting individualized prices for each customer. Delta Air Lines is telling a group of Democratic senators that they are off base with suggestions the airline is using artificial intelligence to find the "pain point" at which they can charge individual customers the most they will pay. Senators Gallego, Warner, and Blumenthal sent a letter to Delta chief executive Ed Bastian last month asking the airline to explain its use of so-called "surveillance-based" fares. They want to know whether the airline is leveraging consumer-specific personal data - such as sensitive personal circumstances or prior purchasing activity - to set individualized prices. They gave the airline an August 4 deadline to explain its customized pricing system and tell it how many passengers per day are purchasing tickets or other services using the customized pricing model. In a letter Friday which it shared with the New York Sun, the airline told the senators that their assumptions are incorrect and have "created confusion and misinformation in the public discourse." The airline's chief external affairs officer, Peter Carter, said in the response that there is no fare product that Delta is using or testing that targets customers with individualized prices based on personal data. "Furthermore, we have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing and advertising," Mr. Carter said. "Our AI-powered pricing functionality is designed to enhance our existing fare pricing processes using aggregated data. This technology is a decision-support tool that simply provides informed insights for our analysts, who oversee and fine-tune the recommendations to ensure they are consistent with our business strategy," he went on to say. He says the AI also works to lower prices when demand drops for flights. Delta previously announced 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 help airlines set prices in a way that maximizes profits. The senators cited a testimonial by the president of the airline, Glen Hauenstein, on Fetcherr's website saying "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 the use of artificial intelligence at last year's Delta Investor Day. He said AI provides an opportunity for more "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 warned of 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 about its use of artificial intelligence and it is not creating unique prices for specific individuals. The airline says all customers see the exact same fares and offers at the same time and notes that customers don't have to log in with an identifiable profile to scan prices. Delta says 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.