American Airlines CEO Slams AI Fare Setting as Trickery

American Airlines’ CEO is not a fan of using artificial intelligence (AI) to set air fares.

“Consumers need to know that they can trust American,” said Robert Isom, whose comments on an earnings call Thursday (July 24) were reported by Bloomberg News. “This is not about bait and switch. This is not about tricking.”

The report noted that Isom’s criticism is in line with several U.S. lawmakers, who want answers from Delta Air Lines about its plans to use AI for setting prices.

Delta CEO Ed Bastian said earlier this week on his company’s earnings call that the airline was testing an AI system that tailors fares to individual customers, something that could reshape how airline tickets are sold and priced.

The system, created in partnership with Israeli startup Fetcherr, is now being used on 3% of Delta’s flights, with plans to expand it to 20% by the year’s end.

“While we’re still in the test phase, results are encouraging,” said Bastian.

As PYMNTS wrote at the time, personalized pricing — or surveillance pricing as the Federal Trade Commission (FTC) calls it — is pricing tailored to the customer based on the personal data collected.

“For example, two people shopping for airfares at the same time might see different prices if one is a business traveler and the other is a budget-conscious consumer, based on things like income estimates, browsing behavior, purchase history or type of device used,” PYMNTS wrote. “The price is driven by who the buyer is and what the AI algorithm believes he or she will pay.”

The Bloomberg report includes comments from Delta saying the company is testing AI to eliminate manual processes and speed analysis for dynamic pricing, a strategy long used in the air travel industry and other sectors to set fares based on demand, timing and other factors.

“There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise,” according to the statement from the airline. “A variety of market forces drive the dynamic pricing model that’s been used in the global industry for decades, with new tech simply streamlining this process.”

American Airlines said earlier this month it is deepening its AI deployment to make travel more comfortable, including by predicting if they’ll miss a flight.

Chief Digital and Information Officer Ganesh Jayaram described on a company podcast the airline’s use of AI to transform its consumer self-service capabilities and employee productivity efforts, after establishing a governance framework to support its AI efforts.

“We spent quite a bit of time over the last year to set up a governance framework … ensuring that we put all the privacy controls and other protections in place to leverage these technologies responsibly,” Jayaram said.