Delta Air Lines is integrating artificial intelligence into its ticket pricing strategy, raising questions about the future of airfare for consumers. Traditionally, airfare prices fluctuate based on various factors, including seasonal demand, jet fuel costs, weather conditions, and competitor pricing. Delta aims to enhance its revenue management by utilizing AI technology.

During a recent earnings call, Delta President Glen Hauenstein announced that the airline currently employs generative AI to set prices for some domestic flights. The company plans to increase the use of this technology from 3% of its network to approximately 20% by the end of the year. Hauenstein emphasized that the AI system is still in a testing phase. "We like it a lot -- we're going to take our time and make sure that the rollout is successful, as opposed to trying to rush it and risk that there are unwanted answers in there," he said.

Delta is collaborating with Fetcherr, an AI pricing company based in Israel. Fetcherr, founded in 2019, was recently recognized as the Best Travel Tech Startup at the 2024 World Travel Tech Awards. The company claims its technology helps airlines adapt to changing market conditions, personalize offers, and maximize profitability while ensuring a smooth travel experience.

In response to Delta's announcement, some lawmakers have expressed concerns regarding the implications of AI-driven pricing. Senators Ruben Gallego, Mark Warner, and Richard Blumenthal sent a letter to Delta CEO Ed Bastian on July 21, highlighting potential data privacy issues and the risk of fare increases tailored to individual consumers' financial situations. They compared Delta's approach to surge pricing used by ride-sharing services like Uber and Lyft.

The senators noted that AI pricing could exploit personal data from various sources, including purchase history, web browsing habits, and social media activity. They cited a warning from former FTC Chair Lina Khan about the possibility of airlines charging higher fares based on sensitive personal circumstances.

In defense of its practices, a Delta representative stated that the airline complies with all regulations regarding pricing and disclosures. "There is no fare product Delta is testing that is based on individual information," the representative said. "Market forces drive the dynamic pricing model that's been used in the global industry for decades."

Delta reiterated this stance in a letter to the concerned senators, asserting that its ticket pricing does not consider personal data. Travel expert Katy Nastro, a spokesperson for Going, commented on the situation, noting that consumer behavior could influence Delta's pricing strategy. "If consumers decide to move en masse to another carrier, Delta's pricing strategy must adapt, which can ultimately mean discounts for certain fares," she said.

Nastro also pointed out that the lack of transparency surrounding Delta's AI pricing could lead to skepticism among consumers. She compared the situation to fast food competition, where customers will choose lower-priced options if one chain charges significantly more for similar products.