Latest news with #GlenHauenstein
Skift
8 hours ago
- Business
- Skift
Delta's Use of AI for Setting Fares Sparks Concern in Washington
Some are concerned that Delta's use of AI could lead some customers to pay more airfares given the pricing system's individualized approach. Delta Air Lines said this month it had started testing AI to set some airfares, and lawmakers and consumer advocacy groups in Washington are expressing concern about how the practice might affect customers. Delta president Glen Hauenstein said during a call with analysts that the carrier was using AI to price 3% of its domestic fares, and planned to use the technology to price up to 20% of domestic fares by the end of the year. The carrier had already started experimenting with AI for pricing and reservations in 2023. 'We're in a heavy testing phase. We like what we see,' Hauenstein said. 'We like it a lot, and we're continuing to roll it out, but we're going to take our time and make sure that the rollout is successful as opposed to trying to rush it and risk that there are unwanted answers in there.' Delta ha
Fast Company
13 hours ago
- Business
- Fast Company
Delta is just the beginning: How AI is going to put dynamic pricing into everything you buy
Summer vacation season is here, but it may be the last time Americans can travel affordably by plane—especially if Delta has its way. 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.'
The Hill
5 days ago
- Business
- The Hill
Airfare by algorithm: Delta leans into AI pricing — but is it a good thing?
What you pay for a Delta Air Lines ticket may soon depend less on timing and more on what an algorithm thinks you're willing to spend. About 3 percent of Delta's domestic ticket prices are now determined by artificial intelligence (AI), with plans to raise that to 20 percent by year's end, President Glen Hauenstein said on an earnings call last week. During an Investor Day presentation in November, Hauenstein described the new AI pricing technology as a 'super analyst,' calling it a 'full reengineering of how we price and how we will be pricing in the future.' That enthusiasm stems from the airline's partnership with Fetcherr, an Israeli tech company that uses AI to process millions of data points instantly 'to set the perfect price every time,' according to a company blog post. Delta's embrace of AI is the latest example of dynamic pricing, where companies adjust prices in real time based on factors like supply, demand and even individual consumer behavior. The concept isn't new, but the technology is making it far more sophisticated. Fetcherr's website says its algorithms tailor prices based on factors like customer lifetime value, past purchase behaviors and 'the real-time context of each booking inquiry,' all of which, the company says, help create 'a truly personalized offer.' In theory, hyperpersonalization meets customers where they are, offering a custom experience every time. But critics warn that the new pricing tactics may exploit rather than benefit consumers. Sen. Ruben Gallego (D-Ariz.) called Delta's practice 'predatory pricing,' in a post online, while accusing the airline of using AI to 'find your pain point' and 'squeeze you for every penny.' Last year, Wendy's planned to test an AI-driven dynamic pricing model that many likened to Uber's surge pricing. The plan faced intense backlash online before the burger chain clarified that menu prices would not increase during its busiest hours. It remains to be seen whether Delta will face similar pushback. Airlines already adjust fares based on seasonality and demand, so travelers may be accustomed to seeing wide price swings, with or without AI. NewsNation reached out to Delta for more details about its AI pricing strategy. In response, a spokesperson pointed to the company's latest earnings call. Early results suggest Delta's AI pricing strategy has successfully driven revenue, but it may still be some time before it's the norm. 'We're in heavy testing phase. We like what we see,' Hauenstein told investors. 'But we're going to take our time and make sure that the rollout is successful.'
The Verge
5 days ago
- Business
- The Verge
Delta Air Lines is using AI to set the maximum price you're willing to pay
Delta Air Lines is leaning into dynamic ticket pricing that uses artificial intelligence to individually determine the highest fee you'd willingly pay for flights, according to comments Fortune spotted in the company's latest earnings call. Following a limited test of the technology last year, Delta is planning to shift away from static ticket prices entirely after seeing 'amazingly favorable' results. 'We will have a price that's available on that flight, on that time, to you, the individual,' Delta president Glen Hauenstein told investors in November, having started to test the technology on one percent of its ticket prices. Delta currently uses AI to influence three percent of its ticket prices, according to last week's earnings call, and is aiming to increase that to 20 percent by the end of this year. 'We're in a heavy testing phase,' said Hauenstein. 'We like what we see. We like it a lot, and we're continuing to roll it out.' While personalized pricing isn't unique to Delta, the airline has been particularly candid about embracing it. During that November call, Hauenstein said the AI ticketing system is 'a full reengineering of how we price and how we will be pricing in the future,' and described the rollout as 'a multiyear, multi-step process.' Hauenstein acknowledged that Delta was excited about the initial revenue results it saw in testing, but noted the shift to AI-determined pricing could 'be very dangerous, if it's not controlled and it's not done correctly.' Delta's personalized AI pricing tech is provided by travel firm Fetcherr, which also partners with Virgin Atlantic, Azul, WestJet, and VivaAerobus. In Delta's case, the AI will act as a 'super analyst' that operates 24/7 to determine custom ticket prices that should be offered to individual customers in real-time, per specific flights and times. Airlines have varied their ticket prices for customers on the same routes for many years, depending on a range of factors, including how far in advance the booking is made, what website or service it's being booked with, and even the web browser the customer is using. Delta is no exception, but AI pricing looks set to supercharge the approach. Delta has taken heat for charging customers different prices for flights, having rolled back the decision to price tickets higher for solo-travelers compared to groups in May. It's not entirely clear how invasive Delta's AI ticketing will be when it analyzes customers to figure out prices, but Fortune notes that it has privacy advocates concerned. 'They are trying to see into people's heads to see how much they're willing to pay,' Justin Kloczko of Consumer Watchdog told the publication. 'They are basically hacking our brains.' Arizona Senator Ruben Gallego described it as 'predatory pricing' that's designed to 'squeeze you for every penny.'
Yahoo
5 days ago
- Business
- Yahoo
Delta moves toward eliminating set prices in favor of AI that determines how much you personally will pay for a ticket
Delta has a long-term strategy to boost its profitability by moving away from set fares and toward individualized pricing using AI. The pilot program, which uses AI for 3% of fares, has so far been 'amazingly favorable,' the airline said. Privacy advocates fear this will lead to price-gouging, with one consumer advocate comparing the tactic to 'hacking our brains.' Fresh off a victory lap after a better-than-expected earnings report, Delta Air Lines is leaning into AI as a way to boost its profit margins further by maximizing what individual passengers pay for fares. By the end of the year, Delta plans for 20% of its ticket prices to be individually determined using AI, president Glen Hauenstein told investors last week. Currently, about 3% of the airline's flight prices are AI-determined, triple the portion from nine months ago. Over time, the goal is to do away with static pricing altogether, Hauenstein explained during the company's Investor Day in November. 'This is a full reengineering of how we price and how we will be pricing in the future,' he said. Eventually, 'we will have a price that's available on that flight, on that time, to you, the individual.' He compared AI to 'a super analyst' who is 'working 24 hours a day, seven days a week and trying to simulate… real time, what should the price points be?' While the rollout would be a 'multiyear' process, he said, initial results 'show amazingly favorable unit revenues.' Delta accomplishes this pricing through a partnership with Fetcherr, a six-year-old Israeli company that also counts Azul, WestJet, Virgin Atlantic, and VivaAerobus as clients. And it has its sights set beyond flying. 'Once we will be established in the airline industry, we will move to hospitality, car rentals, cruises, whatever,' cofounder Robby Nissan said at a travel conference in 2022. 'Hacking our brains' While Delta is unusually open about its use of AI, other carriers are likely to follow. Already, United Airlines uses generative AI to contact passengers about cancellations, while American Airlines uses it to predict who will miss their flight. 'Personalized pricing has been an airline goal for the past decade and a half,' Gary Leff, a travel industry authority who first noted Delta's AI strategy, told Fortune. 'Delta is the first major airline to speak so publicly about its use of AI pricing, to tout it for its potential upside at its investor day in the fall and to offer concrete metrics around its use in its recent earnings call.' Privacy advocates noted Delta's development with concern.'They are trying to see into people's heads to see how much they're willing to pay,' said Justin Kloczko, who analyzes so-called surveillance pricing for Consumer Watchdog, a California nonprofit. 'They are basically hacking our brains.' Sen. Ruben Gallego (D-Ariz.) called Delta's practice 'predatory pricing,' saying, 'I won't let them get away with this.' A Delta spokesperson told Fortune the airline 'has zero tolerance for discrimination. Our fares are publicly filed and based solely on trip-related factors like advance purchase and cabin class, and we maintain strict safeguards to ensure compliance with federal law.' The spokesperson did not immediately answer follow-up questions on what those safeguards were, whether they are human or automated, or where the 3% of fares that are currently set via Fetcherr are publicly filed. 'Fair' pricing is over To be sure, airlines have long offered different prices to different people, even for the same route, based on factors like how travelers book—directly, via a comparison-shopping site or a travel agent—or how far in advance they shop. As far back as a decade ago, travel websites showed different prices for precisely the same itinerary based on details like which browser a purchaser was using to search for fares. But the use of AI supercharges this type of price discrimination and puts airlines into a legal gray area. '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.' While differential pricing is not illegal per se, federal laws prohibit charging different rates to people based on their sex or ethnicity, and the use of some identifiers like ZIP codes have been shown to have a disparate impact on protected classes. Without a public record of all fares, it would be difficult, if not impossible, to determine if Delta is charging vastly different fares to people based on their membership in a protected class. To complicate matters, while industry experts expect the impact of AI to mean more revenue for Delta, the impact for individual passengers is less certain. In the short-term, AI might mean more discounts offered upfront when Delta needs to fill seats, said Leff. Short-term, shoppers might benefit from using a VPN and clearing cookies when browsing for airfares, but long-term, Delta and other airlines might require passengers 'to be logged in for purchase of tickets in order to obtain status benefits from an airline, essentially being fully within their ecosystem to gain the benefits of that system (i.e. submit to personalized pricing to get extra legroom seats),' Leff said. Early research on personalized pricing isn't favorable for the consumer. Consumer Watchdog found that the best deals were offered to the wealthiest customers—with the worst deals given to the poorest people, who are least likely to have other options. 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