Delta Air Lines assures legislators about maintaining human intervention in pricing tactics, eschewing the use of artificial intelligence.
Delta Air Lines has announced its plans to incorporate AI-based revenue management technology into its operations, aiming to streamline the process of analyzing data and responding to market dynamics. This move comes after sharp criticism from Democratic Senators Ruben Gallego, Mark Warner, and Richard Blumenthal, who expressed concerns about the potential for unfair pricing practices due to AI-based personalized ticket pricing.
However, Delta has clarified that it has never used, tested, or plans to use a fare product that targets customers with individualized prices based on personal data. The senators' concerns were based on a comment 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."
Delta has emphasized that its AI technology will not be used to target customers with individualized prices based on personal data. Instead, the AI pricing models do not target consumers based on personal profiles or personal information. Prices are publicly filed, transparent, influenced by aggregated market data, competitive factors, demand, and fare rules such as origin, destination, advance purchase, and refundability. Customers can shop and compare prices without signing in or providing personal data.
The senators' letter to Delta regarding the use of AI for personalized ticket pricing was seen by Reuters. In response, Delta Air Lines has stated that airlines have been using dynamic pricing for over three decades, with pricing fluctuating based on factors like overall customer demand, fuel prices, and competition, but not a specific consumer's personal information.
Delta 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. The use of AI by Delta aims to reduce manual processes, accelerate analysis, and improve the speed of pricing adjustments.
American Airlines CEO Robert Isom has also expressed concerns about using AI to set ticket prices, stating that it could harm consumer trust. American Airlines has not expressed any plans to use AI to set individualized ticket prices based on personal data.
In summary, Delta’s AI pricing shifts away from static fares to dynamically optimized prices for flights, increasing from 3% to around 20% of tickets priced via AI by late 2025. The AI pricing does not use individual personal data to set personalized prices; prices are fair, publicly posted, and influenced by market-level factors, not customer personal information. Delta Air Lines describes AI as a "super analyst" working 24/7 to optimize prices by flight/time, not by individual consumer profile. This clarifies that while AI is used advancedly for ticket pricing at Delta, it is not applied for individualized price discrimination based on personal data as some Democratic Senators had suggested or feared. Instead, it is a sophisticated market-based dynamic pricing tool applied fairly across customers.
Technology plays a significant role in Delta Air Lines' aim to streamline revenue management through AI-based technology. This new approach to pricing is a shift from static fares to dynamically optimized prices for flights, set by a 'super analyst' working 24/7. The pricing technology does not rely on individual personal data for setting personalized prices; instead, it takes cues from market-level factors like demand, competition, and fare rules. Notably, American Airlines, like Delta, has shown hesitation towards using AI for individualized ticket pricing based on personal data. Despite initial senatorial concerns, it is now clear that Delta's AI pricing tool is not designed for personalized price discrimination based on individual users' personal data.
