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
Anything involving AI is dumb .
Can’t wait for the parade of commenters explaining why paying more for airfare is actually a good thing
Tough to see any consumer benefit from this. It’s not like Delta is spending vast sums of money to lower the cost of flying for passengers.
Oh say it isn’t so ! ..,.,. I thought the airlines primary concern was the pax welFARE !
… lol
As a small business owner I view my customers as valuable assets because they choose to spend money with me. Delta feels that due to over consolidation in the airline industry they can screw over the people handing them money. I don’t begrudge them making an honest buck but squeezing every possible dime out of your customers just because you can rather than enticing more business through quality, value, better loyalty program, or better product for the same money is a sleazy way to make money.
I wonder about a different take. Airlines have been dynamically pricing for a long time, producing a massive number of changes each day. How many humans are employed in this process? Could AI eliminate those positions and more than pay for itself in the long-term?
DL isn’t better off charging more for each fare, per se; they are better off maximizing revenue per flight (once they are scheduled). Smarter dynamic pricing through AI might mean that I get more additional premiums than discounts, maybe not. But, I suspect there will be less unsold seats, as AI offers some nice discounts to lure the “on the margin” travelers. I also suspect the nearly non-existent F upgrades will disappear as AI will exacerbate the “sell the upgrade, don’t give it away” approach. (As a pax who pays for F, I’m really happy sitting next to the guy who’s enjoying his first time in F with a $35 upgrade over the super entitled double uranium FF p-o-ed pilots get upgrades.)
I doubt doscounts will be the priority of any AI led pricing.
I disagree. Filling up unsold seats is always a priority fir airlines: it’s (essentially) free money. I do doubt we (the kind of pax who comes here) will see much in the way of discounts
Ok but UA and AA something something worse something something DL leads in profits something something getting new planes something something.
+1
+1
With consumer used computers, everything is tracible, nothing is absolutely secret. The IP may change but computer devices can still be tracked. With that, AI can conceivably trace every fare request with a personal identity. Frequent flyer numbers offer additional confirmatory data.
If that capability is developed, fares can be made higher. If you are a very loyal customer, Delta could always increase the fare slightly compared to other airlines and know that you will still buy it. If they know there is a funeral or a major annual conference that you attend, it could charge more. If it concludes that you are traveling for business, such as a Monday departure and Thursday return, it could price it accordingly. If they suckered you into paying a lot and you bought the ticket anyway, it could raise fares for you next time.
100%. The new Dark Ages will be one of access to too much information; more information that humans are possibly capable of interpreting.
This is why many don’t trust the use of AI being forced on us.
Delta’s response to the senators directly contradicts what their own President Glen Hauenstein said on the Q2 earnings call. You can’t claim you’re using AI to “process millions of data points instantly to set the perfect price every time” for individual customers and then tell Congress you’re not doing individualized pricing based on personal information. Either they’re lying to investors about their AI capabilities or lying to senators about not targeting individuals. Which is it, Delta?
Depending on definition, we might disagree. People seem to think that DL AI will know they are dealing with Eric Cartman and have all the known data on Cartman to diabolically determine a price for him. In extreme, they know his aunt is sick, and he’s trying to get there. And, of course, if Cartman uses the DL app or signs in on the web, they know it’s him. However, what if AI has observed that “some user” has searched XXX to multiple cities across multiple dates? “Anothey guy” has searched XXX to only one city across multiple flights on multiple days. “This bloke” has only searched XXX to one city on one day at certain times. AI has “personal” information on each and may price differently. That is way different than the Cartman thing.
Like always….. How would one ‘trust’ that the airlines (or any {criminal} corporation) isn’t already doing/planning this ?
It’s stinking more and more, on a slippery slope towards ‘extortion as the destination while the value/meaning of the word ‘trust’ diminishes and the AI pandora is already outta the box ….
Welcome to the ‘Brave New World’ …
As humanity rapidly develops the intellectual ability to create anything it wants, very serious discussion needs to take place over what we do, and more importantly what we do NOT wish to create. The 21st Century could easily be a new Dark Ages of horrific human creation if we’re not extremely careful. With AI we are creating the tools for a tyranny the likes of which we’ve not seen before. The nouveau riche Tech Dilletante class has done an amazing job at cultivating a fun hipster image of cool nerds in jeans playing ping pong at the office who just like to help bring the world together. But make no mistake: these are some of the most amoral and aggressive capitalists the world has ever seen. Resist the machines!
It sounds like this will run head first into AI-powered web scrapes and booking platforms though, no? I know delta loyalists have a cult-like obsession with connecting flights, but this seems like it has the potential to break the loyalty link with an artificially inflated or “perfect price every time” fare for the individual buying that they can see happening in front of them. Interesting stuff.
Dear Delta AI: Here is all you will ever need to know about me to set your “perfect price”:
Go fuck yourselves. I will NEVER spend a dime flying your shitty airline. Fuck you and the horse you rode in on. I’d rather walk or stay home.
Sure Jan…