Delta’s AI-based personalized ticket pricing grounded after Senate pressure

Delta Air Lines assured U.S. lawmakers on Friday that it will not use artificial intelligence to set personalized ticket prices for individual passengers, following sharp criticism from Democratic senators who feared the technology would exploit consumers. The airline’s commitment comes as the aviation industry faces growing scrutiny over AI-driven pricing strategies that could potentially charge customers based on their willingness to pay.

What you should know: Delta explicitly denied plans to use personal data for individualized pricing in a letter to concerned senators.
• “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 stated in the Friday letter seen by Reuters.
• The airline emphasized that “our ticket pricing never takes into account personal data.”

The controversy: Three Democratic senators raised concerns last week about Delta’s AI pricing plans, warning of potential consumer exploitation.
• Senators Ruben Gallego, Mark Warner, and Richard Blumenthal expressed fears that Delta would use AI to set individual prices “likely mean fare price increases up to each individual consumer’s personal ‘pain point.'”
• Their concerns were sparked by December comments from Delta President Glen Hauenstein about the carrier’s AI technology being capable of setting fares based on predictions of “the amount people are willing to pay for the premium products related to the base fares.”

Delta’s AI plans: The airline is moving forward with AI-powered revenue management across a significant portion of its network.
• 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 technology will “assist our analysts with pricing by reducing manual processes, accelerating analysis and improving time to market for pricing adjustments,” according to the airline’s letter.

Industry context: Delta’s reassurance follows similar commitments from competitors amid growing concerns about AI pricing transparency.
• American Airlines CEO Robert Isom said last week that using AI to set ticket prices could hurt consumer trust, stating: “This is not about bait and switch. This is not about tricking.”
• “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,” Isom added on an earnings call.

How dynamic pricing works: Delta defended its existing pricing model as fundamentally different from personalized targeting.
• Airlines have used dynamic pricing for more than three decades, with prices fluctuating based on factors like overall customer demand, fuel prices, and competition—but not specific consumer 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 explained.