Delta is just the beginning: How AI is going to put dynamic pricing into everything you buy
As the world's largest airline by annual revenue and the second-largest by passengers carried, Delta is a leader in the industry. That's what makes its plans to use AI for ticket pricing so concerning.
According to Delta President Glen Hauenstein, about one in five tickets the airline sells by year's end will be priced by AI, up from just 3% today. Delta's long-term goal is to price all tickets this way. 'This is a full reengineering of how we price and how we will be pricing in the future,' Hauenstein told investors in November 2024. While this may spell 'amazingly favorable unit revenues' for the airline, it's bad news for passengers—many of whom worry that price gouging will soon eclipse any notion of price personalization.
'The practice of dynamic pricing is certainly not new in the airline industry,' says Kerry Tan, professor of economics at Loyola University Maryland. But with better data and evolving tech, he says, 'the increase in the usage of AI to price their flights' raises important questions. 'Certainly Delta, as with any other company, is profit-driven, and stands to gain from this by better matching consumers' willingness to pay to the price they pay for a flight.'
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