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Delta tests AI-based ticket pricing amid fairness concerns

Delta tests AI-based ticket pricing amid fairness concerns
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Glen Hauenstein, President of Delta Air Lines | Official Website

Delta Air Lines is exploring the use of artificial intelligence (AI) to determine ticket prices, moving beyond traditional methods based on timing and demand. The airline is testing a system that uses AI to set fares according to what it predicts individual passengers are willing to pay. Currently, this approach is applied to about 3% of domestic fares, with plans to increase that figure to 20% by the end of the year.

Glen Hauenstein, President of Delta Air Lines, commented during an investor call on July 10: "We like what we see. But we’re going to take our time and make sure that the rollout is successful…It's all about giving people more choice, more pricing options, and more products and services in every cabin."

The AI pricing system was developed in collaboration with Israeli tech company Fetcherr. It processes large volumes of real-time data, considering factors such as previous purchases and browsing patterns for each search.

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However, this new method has raised concerns about fairness and transparency. Arizona Senator Ruben Gallego described the practice as "predatory," suggesting it could lead airlines to charge the highest fare a passenger might accept. Consumer advocates worry that algorithm-driven pricing may not be transparent when two passengers receive different prices for the same flight without explanation.

Matt Britton, author of Generation AI, told Fortune: “For consumers, this means the era of ‘fair’ pricing is over. The price you see is the price the algorithm thinks you’ll accept, not a universal rate.”

While AI pricing could offer discounts when Delta needs to fill seats quickly or stimulate demand, its long-term success depends on traveler perception. Other industries have faced criticism for similar AI-based pricing strategies.

As Delta continues its test phase, it remains uncertain whether this approach will become standard in the industry or face resistance from consumers concerned about fairness.

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