Delta Air Lines Promises Not to Use AI to Hike Fares—Is That Enough for Regulators?

As artificial intelligence rapidly reshapes global industries, Delta Air Lines has issued a bold assurance: it will not use AI to raise airfares based on personal data. The announcement comes amid growing concerns from US lawmakers and consumer watchdogs who fear AI could be used to exploit passengers' financial pain thresholds.

Responding to intense political pressure and widespread public unease, Delta Air Lines has confirmed it has no plans to personalise airfare pricing using artificial intelligence technology.

Lawmakers' Concerns About AI Pricing

Last week, Democratic Senators Ruben Gallego, Mark Warner, and Richard Blumenthal expressed concern that the Atlanta-based airline would use AI to set individual prices. They stated this would 'likely mean fare price increases up to each consumer's personal "pain point."'

Delta argues it hasn't used AI to set individual prices. However, the airline previously indicated its intention to implement AI-powered revenue management technology across a fifth of its domestic network by the end of next year. This is a collaboration with Fetcherr, an AI pricing specialist.

Delta's Assurance to Senators

'There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualised prices based on personal data,' Delta told the senators in a letter on Friday, with Reuters. 'Our ticket pricing never takes into account personal data.'

Senators commended Delta's pledge not to use AI for individual pricing, but they still have many questions. They want more details about the data Delta collects to set its prices.

'Delta is telling their investors one thing, and then turning around and telling the public another,' Gallego said. 'If Delta is using aggregated instead of individualised data, that is welcome news.' Delta chose not to comment on Gallego's statement.

Senators and Other Airlines Weigh In

The senators referenced a comment made by Delta President Glen Hauenstein in December. He had stated the carrier's AI price-setting technology can set fares by predicting 'the amount people are willing to pay for the premium products related to the base fares.'

Last week, American Airlines CEO Robert Isom commented that using AI to set ticket prices could damage consumer trust. 'This is not about bait and switch. This is not about tricking,' Isom said on an earnings call, adding, 'talk about using AI in that way, I don't think it's appropriate. And certainly from America, it's not something we will do.'

Proposed AI Legislation

Last week, Democratic lawmakers Greg Casar and Rashida Tlaib introduced legislation aimed at preventing companies from using AI to set prices or wages based on Americans' data. This proposed law would specifically prohibit airlines from increasing individual prices after someone searches for a family obituary.

They referred to a Federal Trade Commission (FTC) staff report from January. This report found that 'retailers frequently use people's personal information to set targeted, tailored prices for goods and services -- from a person's location and demographics, down to their mouse movements on a webpage.'

The FTC provided a hypothetical example: a consumer identified as a new parent could deliberately be shown more expensive baby thermometers. Retailers might then gather behavioural details to predict that customer's state of mind.

Delta on Dynamic Pricing

Delta pointed out that airlines have used dynamic pricing for over thirty years. This approach involves prices changing based on various factors, such as overall customer demand, fuel costs, and competition, but not an individual consumer's 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 analyse existing data and the speed and scale at which we can respond to changing market dynamics,' Delta's letter said.

For now, Delta insists it will not cross the line into targeting individual consumers, but regulators and lawmakers are unlikely to take the airline's word alone. As AI's influence on pricing grows, the demand for transparency and legal safeguards is expected to escalate.