Fury as Delta rolls out sinister new tool to ensure it gets away with the highest possible fares
America's second-largest US airline by daily flights says it's expanding a pilot program that uses computers to help set fares.
By the end of the year, 20 percent of all fares will be set AI in partnership with Fetcherr, a pricing company.
Democratic senators Ruben Gallego, Mark Warner and Richard Blumenthal fired off a letter to Delta CEO Ed Bastian demanding to know if its AI tools are designed to hike fares up to each passenger's personal 'pain point.'
A Delta exec previously boasted the system can predict 'the amount people are willing to pay for the premium products related to the base fares,' sparking fears of a digital price squeeze.
Delta insists it isn't using personal data to target individual passengers, saying dynamic pricing has been standard for decades and that 'all customers see the same fares and offers in all retail channels.'
The airline says AI is only being tested to forecast demand, factor in thousands of market variables in real time, and speed up manual pricing adjustments.
It's not the first AI pricing storm to hit the airline industry. Back in January, Blumenthal and other lawmakers grilled Frontier and Spirit over alleged seat fee manipulation, but the low-cost carriers never answered.
Delta said it is using AI tools to figure out how much each customer is willing to pay to get on their flights
'This is a full reengineering of how we price and how we will be pricing in the future,' Glen Hauenstein, Delta's president, said during a June 10 earnings call. 'We like it a lot, and we're continuing to roll it out.'
Consumer advocates are warning that the program could be 'predatory' for consumers and could spell the end of 'fair' pricing.
If the tech lands smoothly, Delta says it could eventually hand over nearly all pricing decisions to its new digital co-pilot.
Hauenstein said the AI is still in a 'heavy testing phase,' and reiterated the company will not rush the program out to its customers if issues arise.
Airlines have long offered different prices for consumers, even for the same journey, based off factors including how far in advance they buy the ticket and whether they shop directly or with a comparison-shopping site. But AI is now supercharging changes to pricing models.
'AI isn't just optimizing business operations, but fundamentally rewriting the rules of commerce and consumer experience,' Matt Britton, author of Generation AI, told Fortune.
'For consumers, this means the era of 'fair' pricing is over. The price you see is the price the algorithm thinks you'll accept, not a universal rate.'
The AI announcement comes as Delta made some major news about its profits forecast.
Delta's CEO, Ed Bastian, said customers cut back on domestic economy seats amid economic uncertainty
In April, the company pulled its financial guidance, saying the American economy was going through too much turmoil to determine how much money the company would make.
Ed Bastian, the company's CEO, said consumer confidence 'certainly took a big dip in the early part of the year and then again in April, after the Liberation Day announcements were made.'
But now the company has reinstated its profit guidance after it beat Wall Street's expectations for the second quarter of the year.
Still, the company is facing some customer headwinds.
Delta said that domestic economy seat sales fell 5 percent in the previous quarter.
It will cut some domestic flights from the schedule in August.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
2 hours ago
- The Independent
Why value investing has worked better outside the US
I recently interviewed investor and author Daniel Rasmussen for The Long View podcast, where he commented that 'value hasn't worked in the U.S., but it's worked fine internationally.' I was intrigued by this observation. So, I looked at Morningstar's indexes. Sure enough, value investing has prospered beyond American shores—this year, as well as over the past three-, five-, and 10-year periods. 'Magnificent Seven' vs. 'Granolas' US stocks of all styles have beaten international stocks for years, due to a strengthening dollar, superior returns on invested capital, and expanding price multiples. Morningstar's US growth index is dominated by the ' Magnificent Seven.' But internationally, the scale is far smaller. There is not a single public company outside the US currently worth $1 trillion. There was a time when the ' Granolas ' stocks were being promoted as Europe's answer to the Magnificent Seven (names like GSK, Roche, Nestle, L'Oreal and AstraZeneca). But don't blame yourself if you haven't heard of the Granolas. They never really rivaled the Magnificent Seven from a performance perspective. So, what has boosted value investing internationally? Largely, the financial-services sector (which was lifted by higher interest rates) and energy stocks. Looking beyond Europe with style While value has outperformed growth in Europe over the past five years, Europe now represents less than half of equity market capitalization outside the US. Rather, value stocks in emerging markets (like China, India, and Brazil) and developed Asia have outperformed by an even larger margin than in Europe. The decline of Chinese internet companies, which were once big growth stocks, helps explain why value investing has triumphed over growth investing in emerging markets in recent years. On the developed-markets side, Japan has seen rising interest rates and improved economic and investment conditions disproportionately benefit financial-services stocks, which tend to reside on the value side of the market. Value's underperformance in the US: Is it macro or micro? While I have mentioned some macroeconomic factors above, I am generally skeptical of attempts to explain style leadership from the top down. Back in 2022, when sticky inflation prompted the largest interest-rate hikes in a generation, US growth stocks fell much further than value. A popular narrative arose: Growth stocks are more sensitive to interest rates. But then growth bounced back in 2023 despite high rates. The Magnificent Seven and others rode a wave of enthusiasm for AI. Growth stocks' thriving amid higher rates is hardly unprecedented. Between 2015 and 2018, the US Federal Reserve hiked rates several times, yet growth beat value by a wide margin. Ultimately, I agree with Rasmussen that the triumph of growth over value in the US has more to do with 'historically unique and rare circumstances.' I've been following markets long enough to know that style leadership can be cyclical. Right now, it's value investing that's being fundamentally questioned. Value stocks have been called 'structurally challenged,' in 'secular decline,' and 'value traps.' But the value side of the market has always been home to troubled companies. Value investing is about stocks that under promise and overdeliver. Perhaps the long-term cycle will turn again in value's favor. AI could be revolutionary, but, like the internet, ahead of itself from an investment perspective. We could look back at 2025 as a historical inflection point, as marking a new market regime. The problem is that these things are only clear in retrospect. It will take time to know if the rotations we've seen in early 2025 will last, or if they're just head fakes. ____ This article was provided to The Associated Press by Morningstar. For more markets content, go to Dan Lefkovitz is a strategist for Morningstar Indexes.
Reuters
3 hours ago
- Reuters
Microsoft in advanced talks for continued access to OpenAI tech, Bloomberg reports
July 29 (Reuters) - Microsoft (MSFT.O), opens new tab is in advanced talks for a deal that would give the Windows maker continued access to critical OpenAI technology in the future, Bloomberg News reported on Tuesday, citing two people familiar with the negotiations. The companies have discussed new terms that would allow Microsoft to use OpenAI's latest models and technology even if the ChatGPT maker declares it has achieved artificial general intelligence (AGI), or AI that surpasses human intelligence, the report said. A clause in OpenAI's current contract with Microsoft will shut the software giant out of some rights to the startup's advanced technology when it achieves AGI. Negotiators have been meeting regularly, and an agreement could come together in a matter of weeks, Bloomberg News reported. OpenAI did not immediately respond to a Reuters request for comment, while Microsoft declined to comment. OpenAI needs Microsoft's approval to complete its transition into a public-benefit corporation. The two have been in negotiations for months to revise the terms of their investment, including the future equity stake Microsoft will hold in OpenAI. Last month, the Information reported that Microsoft and OpenAI were at odds over the AGI clause. OpenAI is also facing a lawsuit from Elon Musk, who co-founded the company with Sam Altman in 2015 but left before it surged in popularity, accusing OpenAI of straying from its founding mission — to develop AI for the good of humanity, not corporate profit. Microsoft is set to report June-quarter earnings on Wednesday, with its relationship with OpenAI in the spotlight, as the startup turns to rivals Google (GOOGL.O), opens new tab, Oracle and CoreWeave (CRWV.O), opens new tab for cloud capacity.
BBC News
3 hours ago
- BBC News
What is AI, how do apps like ChatGPT work and why are there concerns?
Artificial intelligence (AI) has increasingly become part of everyday life over the past is being used to personalise social media feeds, spot friends and family in smartphone photos and pave the way for medical the rise of chatbots like OpenAI's ChatGPT and Meta AI has been accompanied by concern about the technology's environmental impact, ethical implications and data use. What is AI and what is it used for? AI allows computers to learn and solve problems in ways that can seem cannot think, empathise or scientists have developed systems that can perform tasks which usually require human intelligence, trying to replicate how people acquire and use programmes can process large amounts of data, identify patterns and follow detailed instructions about what to do with that information. This could be trying to anticipate what product an online shopper might buy, based on previous purchases, in order to recommend technology is also behind voice-controlled virtual assistants like Apple's Siri and Amazon's Alexa, and is being used to develop systems for self-driving also helps social platforms like Facebook, TikTok and X decide what posts to show users. Streaming services Spotify and Deezer use AI to suggest are also using AI as a way to help spot cancers, speed up diagnoses and identify new vision, a form of AI that enables computers to detect objects or people in images, is being used by radiographers to help them review X-ray results.A simple guide to help you understand AIFive things you really need to know about AI What is generative AI, and how do apps like ChatGPT and Meta AI work? Generative AI is used to create new content which may seem like it has been made by a does this by learning from vast quantities of existing data such as online text and and Chinese rival DeepSeek's chatbot are popular generative AI tools that can be used to generate text, images, code and more Gemini or Meta AI can similarly hold text conversations with like Midjourney or Veo 3, are dedicated to creating images or video from simple text prompts. Generative AI can also be used to make high-quality mimicking the style or sound of famous musicians have gone viral, sometimes leaving fans confused about their authenticity. Why is AI controversial? While acknowledging AI's potential, some experts are worried about the implications of its rapid International Monetary Fund (IMF) has warned AI could affect nearly 40% of jobs, and worsen financial Geoffrey Hinton, a computer scientist regarded as one of the "godfathers" of AI development, has expressed concern that powerful AI systems could even make humans extinct - a fear dismissed by his fellow "AI godfather", Yann also highlight the tech's potential to reproduce biased information, or discriminate against some social is because much of the data used to train AI comes from public material, including social media posts or comments, which can reflect biases such as sexism or apology as AI labels black men 'primates'Twitter finds racial bias in image-cropping AIAnd while AI programmes are growing more adept, they are still prone to errors. Generative AI systems are known for their ability to "hallucinate" and assert falsehoods as halted a new AI feature in January after it incorrectly summarised news app BBC complained about the feature after Apple's AI falsely told readers that Luigi Mangione - the man accused of killing UnitedHealthcare CEO Brian Thompson - had shot has also faced criticism over inaccurate answers produced by its AI search has added to concerns about the use of AI in schools and workplaces, where it is increasingly used to help summarise texts, write emails or essays and solve bugs in are worries about students using AI technology to "cheat" on assignments, or employees "smuggling" it into musicians and artists have also pushed back against the technology, accusing AI developers of using their work to train systems without consent or compensation. Thousands of creators - including Abba singer-songwriter Björn Ulvaeus, writers Ian Rankin and Joanne Harris and actress Julianne Moore - signed a statement in October 2024 calling AI a "major, unjust threat" to their Eilish and Nicki Minaj want stop to 'predatory' music AIAI-written book shows why the tech 'terrifies' creatives How does AI impact the environment? It is not clear how much energy AI systems use, but some researchers estimate the industry as a whole could soon consume as much as the the powerful computer chips needed to run AI programmes also takes lots of power and for generative AI services has meant an increase in the number of data huge halls - housing thousands of racks of computer servers - use substantial amounts of energy and require large volumes of water to keep them large tech companies have invested in ways to reduce or reuse the water needed, or have opted for alternative methods such as some experts and activists fear that AI will worsen water supply problems. The BBC was told in February that government plans to make the UK a "world leader" in AI could put already stretched supplies of drinking water under September 2024, Google said it would reconsider proposals for a data centre in Chile, which has struggled with grids creak as AI demands soar Are there laws governing AI? Some governments have already introduced rules governing how AI EU's Artificial Intelligence Act places controls on high risk systems used in areas such as education, healthcare, law enforcement or elections. It bans some AI use AI developers in China are required to safeguard citizens' data, and promote transparency and accuracy of information. But they are also bound by the country's strict censorship the UK, Prime Minister Sir Keir Starmer has said the government "will test and understand AI before we regulate it".Both the UK and US have AI Safety Institutes that aim to identify risks and evaluate advanced AI 2024 the two countries signed an agreement to collaborate on developing "robust" AI testing in February 2025, neither country signed an international AI declaration which pledged an open, inclusive and sustainable approach to the countries including the UK are also clamping down on use of AI systems to create deepfake nude imagery and child sexual abuse who made 'depraved' child images with AI jailedInside the deepfake porn crisis engulfing Korean schools Sign up for our Tech Decoded newsletter to follow the world's top tech stories and trends. Outside the UK? Sign up here.
