Delta Air Lines is facing scrutiny and criticism over its plans to expand the use of artificial intelligence (AI) to determine ticket prices, forcing the Atlanta-based carrier to promise that it is not developing technology to target customers with individualized offers based on personal information.

Delta Defends AI-Powered Dynamic Pricing Amid Privacy Concerns

Delta’s President Glen Hauenstein announced the airline is currently testing AI-driven pricing on 3% of domestic fares with plans to increase that to 20% by the end of 2025, with an eventual goal to eliminate static pricing entirely. Delta is partnering with Fetcherr, an Israeli tech company, to implement this new technology. Per Hauenstein:

“Gone are the days of rigid pricing rules and manual adjustments. Welcome to the era of true dynamic pricing, where artificial intelligence can process millions of data points instantly to set the perfect price every time. Welcome to the modern age of AI dynamic pricing.”

This strategy, while potentially financially beneficial for Delta, has raised alarms among consumer advocates, privacy experts, and lawmakers who fear it could lead to price-gouging and discriminatory practices.

In a letter to Delta Air Lines, Democratic Senators Ruben Gallego, Richard Blumenthal, and Mark Warner, shared concerns:

“Individualized pricing, or surveillance-based price setting, eliminates a fixed or static price in favor of prices that are tailored to an individual consumer’s willingness to pay. 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…

“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.”

You can read the full letter here (.pdf).

But Delta has pushed back, dismissing the very premise of their concern:

“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.”

In any case, the introduction of AI-powered dynamic pricing has the capacity reshape the way in which we purchase airline tickets by leading ot pricing changes even more than we currently see today.

CONCLUSION

Three U.S. senators are demanding answers from Delta concerning its plans to introduce more AI-powered pricing. But from Delta’s response, it seems rather than tailor offers based on the specific IP address or SkyMiles number of the passenger, Delta will instead offer a pricing model that will be even more dynamic than it is now.

image: Delta Air Lines