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Delta Air Lines is Using AI to Set the Maximum Price You’re Willing to Pay
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Delta Air Lines is using AI to set the maximum price you’re willing to pay [theverge.com]:
Delta Air Lines is using AI to set the maximum price you’re willing to pay
Delta’s president says the quiet part out loud.
Delta’s president says the quiet part out loud.
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Jess Weatherbed [theverge.com]is a news writer focused on creative industries, computing, and internet culture. Jess started her career at TechRadar, covering news and hardware reviews.
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 [fortune.com] 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 [delta.com], 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 [seekingalpha.com], 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 [skimresources.com] 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 [fortune.com] 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 [x.com] “predatory pricing” that’s designed to “squeeze you for every penny.”
See More:
- AI [theverge.com]
- News [theverge.com]
- Tech [theverge.com]
- Transportation [theverge.com]
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from the "Amazon business model" dept
