Delta Air Lines Under Scrutiny for AI-Powered Pricing Strategy

US criticizes use of AI to personalize airline ticket prices, would investigate

Aug 5 (Reuters) - U.S. Transportation Secretary Sean Duffy said Tuesday the department has concerns about the use of AI to set personalized airline ticket prices and will investigate if anyone does so. Last week, Delta Air Lines (DAL.N), opens new tab told lawmakers it will not and has not used AI to set prices for individual consumers. "To try to individualize pricing on seats based on how much you make or don't make or who you are, I can guarantee you that we will investigate if anyone does that," Duffy said. "We would engage very strongly if any company tries to use AI to individually price their seating." Duffy noted Delta clarified that it would not use AI for pricing individual tickets, "and I'll take them at face value." Late last month, 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 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. Fetcherr on its website says its technology is "trusted by the world's leading airlines," and lists Delta, Westjet, Virgin Atlantic, Viva and Azul. American Airlines (AAL.O), opens new tab CEO Robert Isom said last month using AI to set ticket prices could hurt consumer trust. Democratic lawmakers Greg Casar and Rashida Tlaib have 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. 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. Reporting by David Shepardson, Editing by Nick Zieminski Our Standards: The Thomson Reuters Trust Principles., opens new tab

US criticizes use of AI to set personalized airline tickets, would investigate

Aug 5 (Reuters) - U.S. Transportation Secretary Sean Duffy said Tuesday the department has concerns about the use of AI to set personalized airline ticket prices and will investigate if anyone does so. Last week, Delta Air Lines (DAL.N), opens new tab told lawmakers it will not use AI to set prices for individual consumers. "To try to individualize pricing on seats based on how much you make or don't make or who you are, I can guarantee you that we will investigate if anyone does that," Duffy said. "We would engage very strongly if any company tries to use AI to individually price their seating." Reporting by David Shepardson Our Standards: The Thomson Reuters Trust Principles., opens new tab

Delta denies using AI to set personalized ticket prices

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? Delta Air Lines has categorically denied using artificial intelligence to set ticket prices based on individual customer data, responding to concerns raised by several members of the US Senate. The airline issued its statement following criticism from lawmakers who alleged that Delta was exploring advanced pricing models designed to tailor fares to the maximum amount each customer might be willing to pay - a practice sometimes referred to as surveillance pricing. The controversy erupted after Senators Ruben Gallego, Mark Warner, and Richard Blumenthal sent a letter questioning Delta's intentions regarding AI-driven pricing. They argued that such technology could expose travelers to higher fares based on their individual "pain points," especially as household expenses continue to rise nationwide. In a written response to lawmakers, Delta CEO Ed Bastian stated that the criticisms were based on misinterpretations. He affirmed that Delta does not - and has no plans to - set fares for individual customers based on personal data. According to Bastian, ticket prices are determined by traditional market forces such as competition, route demand, and advance purchase timing, not by leveraging unique customer information. Delta emphasized that all customers are presented with the same fares for a given route and class, with price variations depending on factors like trip timing, destination, and seat availability. While Delta acknowledged testing AI tools in partnership with technology firm Fetcherr, the company described these systems as analytical enhancements to support human fare analysts. Rather than targeting individuals, Delta says its AI aggregates large-scale market data to generate real-time pricing recommendations, which can result in either fare increases or decreases, depending on demand. Currently, the technology is used across a limited portion (about three percent) of Delta's domestic network, with plans to expand AI-assisted pricing to 20 percent of routes by the end of the year. Despite these assurances, some lawmakers remain skeptical, citing past remarks from Delta executives that suggest a long-term goal of deploying AI is to deliver more personalized offers to customers. Critics warn that even data labeled as "aggregated" can act as a proxy for individual targeting if pricing algorithms consider patterns such as browser type, location, or past behavior. The public debate continues as lawmakers seek greater clarity and, in some cases, propose federal regulations to prohibit the use of AI in setting prices based on personal data. Delta, for its part, insists that nothing is changing in how it employs AI: fare offers will remain broadly available and based solely on trip-specific - not personal - information.

Who gets cheap flights and hotel upgrades? AI will decide.

Delta has incorporated the technology into pricing, and Hertz has used it to assess damage. Frequent travelers are wary. When Jason Kao started traveling regularly, Delta Air Lines was the easiest option. For the past 10 years or so, Kao, 34, has often flown out of Raleigh-Durham International Airport, where Delta has plenty of flight options. The rewards started piling up as he traversed the country for work as a cybersecurity adviser. But now that Delta is increasing its use of artificial intelligence in its dynamic pricing model, Kao's loyalty is wavering. "When the prices potentially may be a lot higher because of using AI to set prices, I may not be getting as good of a deal," Kao said, noting that he could start earning similar loyalty perks with other airlines. "Is there much of a reason for me to stay loyal to Delta?" Kao's doubts arrived after Delta President Glen Hauenstein said on an earnings call in July that he wants the airline to increase AI-based pricing to nearly 20 percent of domestic flights -- up from the current 3 percent -- this year. Democratic senators voiced their concerns in a letter to Delta and asked for clarity about how the AI is used; Rep. Gregorio Casar (D-Texas) introduced a bill in the Republican-led House to "prohibit certain uses of algorithmic decision systems to inform individualized prices." Delta is one of many large companies adopting artificial intelligence to change the way we travel. In April, Hertz confirmed that several of its locations are using AI-assisted scanners to assess damage and send reports to customers without employee input. As of July 14, Marriott is using AI to assign hotel rooms and decide which loyalty members get upgrades. This wave of AI implementation comes after travel agents have used chatbots and other technology to help arrange and book trips for years. For travelers, prices fluctuations and less human interaction could be more common. Dynamic pricing isn't new for Delta, but some customers and consumer advocates worry about supercharged AI pricing that could be based on personal information. Those fears were bolstered by comments that Hauenstein made at Delta's Investor Day in November, when he expressed hope "to have a price that's available on that flight, on that time, to you, the individual," using technology from Israeli start-up Fetcherr. Shortly before the collaboration with Delta, Fetcherr CEO Roy Cohen spoke to Forbes about collaborating with airlines. "We've been training our engine, using all the data we can get our hands on," Cohen said last summer. "We are very stealth about how we work." An opaque process Last week, Delta published a letter that Chief External Affairs Officer Peter Carter sent to the concerned senators denying that the airline uses personalized data in the AI-based pricing model. He said 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." Carter also said Delta is not sharing personal data with Fetcherr and does not require customers to log in to see prices. When Lina Khan heard about Delta's new pricing model, she thought it sounded like surveillance pricing, a term for companies' use of personal data to charge different rates to different customers. As the chair of the Federal Trade Commission in the Biden administration, Khan studied the practice. The FTC did not respond to The Post's questions about whether the Trump administration will continue studying it. Even if Delta isn't using people's wages or recent searches, the lack of clarity around companies like Fetcherr worries Khan, who had not studied Delta's new tactics in detail. "AI and these algorithms can turbocharge the ability to engage in surveillance pricing," Khan said. "It's very salient for that reason. A lot of technological advances that we're seeing in machine learning are happening concurrently with even more and more personal information being collected." The data opacity is part of what led Casar to introduce the Stop AI Price Gouging and Wage Fixing Act, which would ban the use of artificial intelligence to set prices based on personal data. "Delta is the first of the [U.S.] airlines to say that they're going to price a large number of their tickets using artificial intelligence and using models that are secret and not transparent to anyone," Casar told The Post. "In a disaster scenario, an airline could increase the prices on your ticket because they knew that you Googled the family obituary and that you're desperate to get to a family funeral. We cannot allow that to happen." Delta spokesperson Jessica Merrill said the airline complies with federal pricing regulations. "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," Merrill said in a statement. While many airlines have dropped bereavement fares, Delta offers "flexibility and discounted fares for SkyMiles Members needing to travel due to the death of an Immediate Family member" according to its website. Some frequent Delta fliers have considered a VPN or private browsing window in case such data is being used. Others have figured that the pricing model could help, especially if the data shows their unwillingness to pay more for a ticket. While Virgin Atlantic has used Fetcherr's AI-pricing technology since 2023, American, Southwest, Alaska and United said they do not use AI to determine costs for travelers. Z. John Zhang, a professor at the University of Pennsylvania who studies pricing strategies, said consumers might be surprised if all airlines plan to use this form of pricing. As long as airlines are competing with each other, they'll pursue customers with lower fares. "Ultimately, everybody will catch up. Everybody will go in that direction and, in the end, suffer as firms," Zhang said. "Of course, that's good for the consumers. If the airlines compete harder against each other, they don't make a lot of money and people will travel at a lower price." AI-generated charges for rental car damage At six locations across the country, Hertz car rental service detects damage on its vehicles by taking high-definition photos and comparing them through an AI program from the company UVeye. In the case of a notable ding or crack on a car, the system automatically sends a report to the traveler and asks for payment, Hertz spokesperson Emily Place said. If a customer disputes the charge, a Hertz employee reassesses the reported damage. The new scanners haven't had a seamless transition. When Adam Foley headed to Atlanta to visit his brother in late June, Foley rented a car from Hertz without thinking twice. Upon arriving back in San Antonio, he received a text message from Hertz that included photos of damage and a charge for $350. He said it was the last time he would be renting with Hertz. "You had to 5X zoom in and really look side-by-side to even maybe get what is going on there," Foley said. To Foley, who advises companies on how to integrate AI and automation, Hertz isn't thinking about the customer's satisfaction. He disputed the charges, but his protests were futile. "I tried communicating," he said. "They had a chatbot [asking], 'Do you have any questions?' on that same page. Any question you had, it looped you back to a policy page. There was no break in it to get to a human." Foley hasn't paid the charges. 'No need to fight it' In June, Marriott Chief Technology Officer Naveen Manga said at an event hosted by Skift that Marriott was working with AI technology to automate room assignments. Travel publications One Mile at a Time and View from the Wing reported that as of July 14, Marriott's Automated Complimentary Upgrade system decided through an AI model through which royalty members would receive upgrades. "This advanced system will automate the upgrade process, transforming it from a manual task into a swift operation completed in seconds," Marriott spokesperson Kelly Lavin said in a statement. "Eligible members will benefit from increased visibility into their upgrades with advanced notifications, creating more anticipation before arrival and enhancing their overall experience." When Greg Guiteras, CEO of Florida-based Lorraine Travel, heard about Marriott's new system, he knew frequent travelers might be upset. But Guiteras said the AI upgrades system could do away with the connections and tactics commonly used to get upgrades, making it easier for Marriott customers to get rewards if they've earned them. To illustrate his point, Guiteras used a hypothetical hotel guest. "Mr. Smith, who might have had a good connection with the room director at a hotel in Memphis, no longer has that connection," Guiteras said. "When Mr. Smith calls that contact and says, 'Hey, I'm going to be there like usual on Friday; can you get me that upgrade?' that other guy's probably going to say, 'Hey, AI handles this right now. I'll do my best.'" Guiteras says that by using AI, his company can compete better with larger travel services. While talking with travelers, the agents at Lorraine use a chatbot to quickly source hotel prices or pull up pictures of potential lodging. The accuracy of the bot has been strong enough that Guiteras may let his customers use it. His optimism expands to situations like Delta's or Hertz's, even if consumers are uneasy about using AI. "I'm sure that there are cases where people get surprised by it," Guiteras said, confident that consumers will still want his services. "But, hey, it's going to be around. There's no need to fight it. In fact, I'm all about embracing it."

Delta and other airlines are working with an AI startup that 'personalizes' prices

Artificial intelligence may soon play a bigger role in your travel fares. Airlines are reportedly working with AI companies to deliver "personalized" prices to customers, by using AI tools to analyze their personal information and data. Delta Air Lines is currently using AI technology from the Israeli startup Fetcherr to fix some prices for domestic flights, said President Glen Hauenstein in an earnings call last month. Hauenstein said the technology is still being tested, but told shareholders that Delta intends to expand its use of AI by the end of this year. As of now, the airline uses AI for only 3 percent of its domestic flight fares, but wants to increase this to 20 percent. And in a recent letter to members of Congress, the company denied using this technique to price gouge customers, Reuters reported last week. Fetcherr is one of the prominent suppliers of AI-powered dynamic pricing, working with several airlines including Delta, Azul, Virgin Atlantic, WestJet, and Royal Air Maroc, according to Aviation Week. Delta has said it doesn't share personal customer data with Fetcherr. But the airline has come under scrutiny for its rhetoric around using AI to to optimize some fare prices. US lawmakers, including Democratic Arizona Senator Ruben Gallego, have accused Delta of "telling their investors one thing, and then turning around and telling the public another," said Gallego, who also said he believes Delta is engaging in "predatory pricing." In a letter to Delta CEO Ed Bastian, Senators Gallego, Mark Warner, and Richard Blumenthal cited a comment made during an investor conference last December by Hauenstein, who said the company's AI price-setting technology sets fares by predicting "the amount people are willing to pay for the premium products related to the base fares." "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," reads the lawmakers' letter. The senators asked Delta to explain what data it collects and uses for its fares. Delta hasn't specified what data it relies on to set these individualized prices. In response, the airline assured US Democratic senators that their ticket pricing "never takes into account personal data" but also spoke of the merits of using AI to set prices. "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," read Delta's letter to lawmakers. While Delta insisted to US lawmakers that it's not fixing prices with AI, recent revelations about Fetcherr raise serious questions about its technology. Bloomberg reported this week on an alarming white paper by Fetcherr co-founder and chief AI officer Uri Yerushalmi. In the paper, Yerushalmi describes working with an unnamed airline to use artificial intelligence to create a pricing structure so complicated that it would "go beyond human cognitive limits," according to Bloomberg. So, even if AI isn't used to "fix prices" in the traditional sense, it could still be used to make fare pricing so complex that consumers inadvertently end up paying more. Rival airlines have also expressed concern. American Airlines CEO Robert Isom said using AI to set individualized fares could have an impact on consumer trust. He also said the strategy is not something AA would do. Dynamic pricing has long been a part of the airline industry's strategy, but the use of AI has the potential to drastically change travel bookings. As airlines look to maximize revenue by harnessing AI, many policy experts fear consumers could face much higher prices, as expressed to The Lever. Another looming concern is that AI-powered pricing schemes can lead to price collusion between companies. Some, however, believe prices could actually be lowered, like Scott Keyes of Scott's Cheap Flights. Last week, Democratic lawmakers Greg Casar and Rashida Tlaib introduced the Stop AI Price Gouging and Wage Fixing Act, a piece of legislation that would ban companies from using AI to fix prices or wages based on Americans' personal data. The lawmakers cited Delta's plans to increase their use of AI to set prices. This Tweet is currently unavailable. It might be loading or has been removed. "Giant corporations should not be allowed to jack up your prices or lower your wages using data they got spying on you," said Congressman Casar in a statement. "Whether you know it or not, you may already be getting ripped off by corporations using your personal data to charge you more. This problem is only going to get worse, and Congress should act before this becomes a full blown crisis."

The Issue With AI-Powered Pricing

Slover is senior counsel for competition policy at the Center for Democracy & Technology Last month, Delta President Glen Hauenstein announced to investors that Delta would expand its pilot program that uses artificial intelligence (AI) to maximize what individual consumers pay. This has brought new attention to the potential for sellers to adopt bespoke prices, tailored to each customer based on their personal data. Delta has subsequently insisted that it is not using AI to determine individual airfares, but merely to enhance the ways it has traditionally used dynamic pricing to adjust airfares to meet supply and demand generally. Though it is difficult to see how those traditional market pricing metrics could be so improved using AI as to warrant the accolades Hauenstein shared.

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.

Research reveals how Delta and other airlines use AI to set ticket prices

Delta recently made headlines, sparking backlash from consumer groups and concern from Congress, when president Glen Hauenstein revealed in the airline's latest earnings call it's currently using AI for 3% of domestic pricing, with the goal of about 20% by the end of the year. "So, we're in 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... the more data it has and the more cases we give it, the more it learns. And we're really excited about partnering with Fetcherr." When Fast Company reached out to Delta about how this might affect consumers, the airline referred to its letter to Senators Ruben Gallego, Richard Blumenthal and Mark Warner which stated it is not "using, and [does not] intend to use, AI for 'individualized' pricing or 'surveillance' pricing, leveraging consumer-specific personal data, such as sensitive personal circumstances or prior purchasing activity to set individualized prices... 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."

How Delta is using AI for ticket pricing and what it means for air travel

The Atlanta-based carrier said it "always" complies with regulations. Airfare prices are traditionally dynamic due to an array of variable external factors from seasonal demand and jet fuel prices to weather and competitor pricing. As companies like Delta Air Lines look to artificial intelligence to help with revenue management, consumers are wondering what this new factor could mean for the future of travel booking. On an earnings call last month, Delta President Glen Hauenstein told investors the Atlanta-based carrier currently uses generative AI technology to determine some prices of domestic flights with the goal to increase that usage from 3% of its network to "about 20% by the end of the year." The AI technology is still "in heavy testing phase," Hauenstein said, assuring investors that while they "like it a lot -- 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 model Delta is using from Fetcherr, an AI pricing company, and like most generative AI, it benefits from training, Hauenstein said. "The more data it has, and the more cases we give it, the more it learns, and we're really excited about it," he said. The Israel-based AI tech solutions company, founded in 2019, was named the Best Travel Tech Startup for the second consecutive time at the 2024 World Travel Tech Awards. The company states on its website that its technology "empowers airlines to adapt to dynamic market conditions, personalize offers, and maximize profitability while delivering a seamless and satisfying travel experience." Beyond its work with Delta, Fetcherr also lists other global airline clients on its website, including Virgin Atlantic, WestJet, Azul and Aerobus. Following Delta's investor call last month, Democratic Sens. Ruben Gallego, Mark Warner and Richard Blumenthal sent a letter to Delta CEO Ed Bastian on July 21, expressing concern about the use of AI and its potential impact on Delta customers. "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," the lawmakers stated in their letter. The senators likened the AI technology implementation to that of surge pricing on ride sharing apps like Uber or Lyft. "Surveillance pricing has been shown to utilize extensive personal information obtained through a variety of third party channels, including data about a passenger's purchase history, web browsing behavior, geolocation, social media activity, biometric data, and financial status," they wrote. "Former FTC Chair Lina Khan has cautioned against a particularly egregious but conceivable example of an airline using AI to charge a higher fare to a passenger 'because the company knows that they just had a death in the family and need to fly across the country.' The opacity surrounding Delta's new customized pricing model could aggravate these concerns." A Delta representative told ABC News that Delta is in compliance "with regulations around pricing and disclosures" in its AI technology experimentation. "There is no fare product Delta is testing that is based on individual information," the representative said in an emailed statement. "Market forces drive the dynamic pricing model that's been used in the global industry for decades." Delta responded similarly in a letter to Gallego, Warner and Blumenthal on Friday, as first reported by Reuters, stating, "Our ticket pricing never takes into account personal data." Katy Nastro, travel expert and spokesperson for Going -- formerly Scott's Cheap Flights - told ABC News in a statement Monday, "With the shock and outrage of Delta proudly broadcasting their adoption of AI pricing, we tend to forget that if consumers decide to move en masse to another carrier, Delta's pricing strategy must adapt, which can ultimately mean discounts for certain fares." Quoting Going founder Scott Keyes, she explained that like fast food competition if one chain charges "$30 for a chicken sandwich when their competitors charge a fraction of the cost, hungry consumers will go elsewhere." "People may feel more bias against this type of pricing because the transparency is only based on what Delta is sharing, which can definitely raise some skepticism coming from the U.S.'s most 'premium airline,'" Nastro said.

US Criticizes Use of AI to Set Personalized Airline Tickets, Would Investigate

(Reuters) -U.S. Transportation Secretary Sean Duffy said Tuesday the department has concerns about the use of AI to set personalized airline ticket prices and will investigate if anyone does so. Last week, Delta Air Lines told lawmakers it will not use AI to set prices for individual consumers. "To try to individualize pricing on seats based on how much you make or don't make or who you are, I can guarantee you that we will investigate if anyone does that," Duffy said. "We would engage very strongly if any company tries to use AI to individually price their seating."

Delta's AI fare strategy: Cheaper flights or high-tech price hikes?

Delta Air Lines is rolling out AI-based pricing on domestic routes, currently covering 3 per cent of tickets with plans to expand to 20 per cent by year end. Developed by Israeli startup Fetcherr, the AI adjusts fares in real time based on demand and market data. While Delta claims no personal data is used, lawmakers are raising concerns over fairness, transparency, and the potential for AI-driven "surveillance pricing." Delta Air Lines is changing how ticket prices are decided by letting artificial intelligence take the wheel. In a bold move, the airline is using AI to help determine airfare on some U.S. domestic routes. While only about 3 per cent of flights are currently covered, Delta plans to expand this AI pricing system to 20 per cent by the end of 2025. This new approach replaces traditional fare setting methods with real time pricing decisions, based on data like travel demand, competitor prices, and booking trends. Delta says the system developed by Israeli tech firm Fetcherr is already boosting revenue and efficiency. Delta's AI system, developed by Israeli startup Fetcherr, analyzes a wide range of data in real time such as demand trends, market fluctuations, booking pace, and competitor pricing. Rather than using static fare charts, the AI suggests optimal prices that can adapt instantly to changing conditions. Delta President Glen Hauenstein called it a "reengineering" of pricing science and noted early trials have led to "amazingly favorable unit revenues," a metric used to gauge profitability per seat. Despite Delta's optimism, the move has sparked concern among lawmakers and consumer advocates. Senators Mark Warner, Richard Blumenthal, and Ruben Gallego sent a letter to the airline questioning whether AI driven fare decisions could lead to "surveillance pricing." Their concern: that AI might use personal data to charge individuals based on their perceived willingness to pay. Delta has firmly denied using personal information to set prices. In a statement, the airline clarified that it does not use browsing history, financial details, or customer profiles. Instead, pricing is based on anonymized market data and traditional travel factors like origin, destination, date, seat class, and refundability. "All customers have access to the same fares," a Delta spokesperson emphasized. Industry analysts suggest this is just the beginning. As airlines compete for profitability in a volatile market, many are likely to adopt AI tools to gain an edge. While dynamic pricing isn't new, the speed and granularity offered by AI raises concerns about fairness and transparency. Consumer rights groups are keeping a close eye on the issue. A new bill in Congress, called the Stop AI Price Gouging and Wage Fixing Act, seeks to ban the use of consumer profiling in pricing and could impact how AI tools like these are used in the future. Q1. What is Delta's AI pricing system? A1. Delta is using artificial intelligence to set ticket prices based on real-time market data. The system is designed to optimize fares depending on demand, competition, and booking trends. Q2. How could AI-based pricing affect travelers? A2. Travelers may see more frequent changes in fares based on demand and timing. It might get harder to know when you're getting the best deal.

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 Says AI Speeds up Market Analysis to Price Airfares | PYMNTS.com

Delta Chief External Affairs Officer Peter Carter said that at any given time, it is selling "tens of millions of fares" for "hundreds of thousands of routes." AI helps it handle this volume faster and at scale. "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," Carter wrote in a July 31 letter sent to three U.S. senators questioning the airline's pricing practices. The letter was shared with PYMNTS. "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," Carter said. Delta underlined the statement for emphasis. Moreover, the prices could be adjusted both up and down, Carter said, adding that "all customers have access to the same fares and offers" and "prices are not targeted to individual consumers." Delta is responding to a July 21 letter from the senators that raised concerns over the airline's partnership with Israeli AI firm Fetcherr, which uses AI to set prices and "maximize company profit for large airlines." However, the airline said it does not share personal data with Fetcherr and reiterated that pricing decisions are driven by traditional market factors such as demand, route performance and competition. "Customers can view and compare prices without providing Delta any personal information whatsoever," Carter wrote. Delta said the AI tool is currently being tested in both domestic and international markets and is used to forecast demand, aggregate purchasing data, and adapt to market conditions -- not to identify specific consumers' willingness to pay. Delta clarified that it uses AI for the following: Read more: American Airlines CEO Slams AI Fare Setting as Trickery The airline said it is also evaluating using AI for the following: Delta said it has adopted a comprehensive AI governance framework and adheres to responsible AI principles, including disclosing when customers are interacting with AI and maintaining a transparent privacy policy. "We have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing and advertising," Carter wrote. Delta put on a defense after Senators Ruben Gallego (D-Ariz.), Richard Blumenthal (D-Conn.), and Mark Warner (D-Va.) wrote the airline asking for information on how it sets personalized pricing. The senators pointed to statements by Delta executives that the system can set fares after predicting "the amount people are willing to pay" based on "all the data we can get our hands on" and that this pricing system could increase the industry's profits by $4.4 trillion a year. "Prices could be dictated not by supply and demand, but by individual need," the senators wrote. In their letter, the senators argued such practices risk harming consumers by "setting fares up to each individual consumer's personal 'pain point,'" potentially using sensitive data such as browsing behavior, social media activity and financial status. They also pointed to warnings from former Federal Trade Commission Chair Lina Khan, who has cautioned that an airline using AI could hypothetically charge higher fares to someone "because the company knows that they just had a death in the family and need to fly across the country." Read more: US Senator Raises Alarm Over Delta Air Lines' Testing of 'Personalized' Pricing Delta Air Lines Tests AI-Powered Personalized Pricing

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.

US criticizes use of AI to set personalized airline tickets, would investigate

(Reuters) -U.S. Transportation Secretary Sean Duffy said Tuesday the department has concerns about the use of AI to set personalized airline ticket prices and will investigate if anyone does so. Last week, Delta Air Lines told lawmakers it will not use AI to set prices for individual consumers. "To try to individualize pricing on seats based on how much you make or don't make or who you are, I can guarantee you that we will investigate if anyone does that," Duffy said. "We would engage very strongly if any company tries to use AI to individually price their seating."