Delta plans to use AI in ticket pricing draws fire from US lawmakers
"Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday.
The senators cited recent comments from Delta that the airline plans to deploy AI-based revenue management technology across 20% of its domestic network by the end of 2025 in partnership with Fetcherr, an AI pricing company.
They said a Delta executive had earlier told investors the technology is capable of setting fares based on a prediction of "the amount people are willing to pay for the premium products related to the base fares."
The airline said in a statement: "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."
Delta added that dynamic pricing has been used for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand but not a specific consumer's personal information.
Delta said AI technology for dynamic pricing is being tested to eliminate manual processes while accelerating analysis and adjustments and it emphasized all customers see the same exact fares and offers in all retail channels.
Delta said it was testing AI for use in forecasting demand for specific routes and flights, adapting to market conditions in real-time, factoring thousands of variables simultaneously and learning from each pricing decision to improve future outcomes.
In January, Blumenthal along with Senators Maggie Hassan and Josh Hawley asked Frontier Airlines (ULCC.O), opens new tab and Spirit Airlines to disclose whether they were manipulating seat fees by using customers' personal information to charge different fees to passengers on the same flight.
The senators said the airlines were apparently "using customers' personal information to charge different seat fees to passengers on the same flight" despite having the same fare.
Frontier and Spirit did not immediately respond to requests for comment on their current practices on Tuesday.
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