Delta Says AI Speeds up Market Analysis to Price Airfares

Delta Air Lines said it is not using artificial intelligence (AI) to set airfares based on an individual passenger’s data, as it seeks to quell growing concerns about how it institutes “personalized pricing.”

Delta Chief External Affairs Officer Peter Carter said that at any given time, it is selling “tens of millions of fares” for “hundreds of thousands of routes.” AI helps it handle this volume faster and at scale.

“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,” Carter wrote in a July 31 letter sent to three U.S. senators questioning the airline’s pricing practices. The letter was shared with PYMNTS.

“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,” Carter said. Delta underlined the statement for emphasis.

Moreover, the prices could be adjusted both up and down, Carter said, adding that “all customers have access to the same fares and offers” and “prices are not targeted to individual consumers.”

Delta is responding to a July 21 letter from the senators that raised concerns over the airline’s partnership with Israeli AI firm Fetcherr, which uses AI to set prices and “maximize company profit for large airlines.”

However, the airline said it does not share personal data with Fetcherr and reiterated that pricing decisions are driven by traditional market factors such as demand, route performance and competition. “Customers can view and compare prices without providing Delta any personal information whatsoever,” Carter wrote.

Delta said the AI tool is currently being tested in both domestic and international markets and is used to forecast demand, aggregate purchasing data, and adapt to market conditions — not to identify specific consumers’ willingness to pay.

Delta clarified that it uses AI for the following:

Aggregate purchasing data for specific routes and flights

Forecasting demand for specific routes and flights

Adapting to new market conditions

Factoring in thousands of variables simultaneously

Read more: American Airlines CEO Slams AI Fare Setting as Trickery

Delta on the Defensive

The airline said it is also evaluating using AI for the following:

Reservations specialists use an AI-integrated knowledge management tool to help source answers to complex questions more quickly and accurately.

Tech ops planners use an AI-enabled tool to better predict maintenance needs to improve aircraft availability and schedule reliability.

Assisting crew scheduling to anticipate in advance where crew replacements may be needed.

Delta said it has adopted a comprehensive AI governance framework and adheres to responsible AI principles, including disclosing when customers are interacting with AI and maintaining a transparent privacy policy.

“We have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing and advertising,” Carter wrote.

Delta put on a defense after Senators Ruben Gallego (D-Ariz.), Richard Blumenthal (D-Conn.), and Mark Warner (D-Va.) wrote the airline asking for information on how it sets personalized pricing.

The senators pointed to statements by Delta executives that the system can set fares after predicting “the amount people are willing to pay” based on “all the data we can get our hands on” and that this pricing system could increase the industry’s profits by $4.4 trillion a year.

“Prices could be dictated not by supply and demand, but by individual need,” the senators wrote.

In their letter, the senators argued such practices risk harming consumers by “setting fares up to each individual consumer’s personal ‘pain point,’” potentially using sensitive data such as browsing behavior, social media activity and financial status.

They also pointed to warnings from former Federal Trade Commission Chair Lina Khan, who has cautioned that an airline using AI could hypothetically charge higher fares to someone “because the company knows that they just had a death in the family and need to fly across the country.”

Read more:

US Senator Raises Alarm Over Delta Air Lines’ Testing of ‘Personalized’ Pricing

Delta Air Lines Tests AI-Powered Personalized Pricing

Delta Reports Record Revenue as Demand for Air Travel Stabilizes

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