Delta Defends AI in Ticket System, Refuting Suggestions of ‘Surveillance’ Pricing

Delta Air Lines is telling a group of Democratic senators that they are off base with suggestions the airline is using artificial intelligence to find the “pain point” at which they can charge individual customers the most they will pay.Senators Gallego, Warner, and Blumenthal sent a letter to Delta chief executive Ed Bastian last month asking the airline to explain its use of so-called “surveillance-based” fares. They want to know whether the airline is leveraging consumer-specific personal data – such as sensitive personal circumstances or prior purchasing activity – to set individualized prices.They gave the airline an August 4 deadline to explain its customized pricing system and tell it how many passengers per day are purchasing tickets or other services using the customized pricing model.In a letter Friday which it shared with the New York Sun, the airline told the senators that their assumptions are incorrect and have “created confusion and misinformation in the public discourse.”The airline’s chief external affairs officer, Peter Carter, said in the response that there is no fare product that Delta is using or testing that targets customers with individualized prices based on personal data.“Furthermore, we have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing and advertising,” Mr. Carter said.“Our AI-powered pricing functionality is designed to enhance our existing fare pricing processes using aggregated data. This technology is a decision-support tool that simply provides informed insights for our analysts, who oversee and fine-tune the recommendations to ensure they are consistent with our business strategy,” he went on to say.He says the AI also works to lower prices when demand drops for flights.Delta previously announced plans to deploy AI-based revenue management technology across 20 percent of its domestic network by the end of the year in partnership with Fetcherr, a company that specializes in using artificial intelligence to help airlines set prices in a way that maximizes profits.The senators cited a testimonial by the president of the airline, Glen Hauenstein, on Fetcherr’s website saying “the initial results show amazingly favorable units revenue versus the beta, so we are all in on this.”Mr. Hauenstein touted the airline’s move into the use of artificial intelligence at last year’s Delta Investor Day. He said AI provides an opportunity for more “granular pricing and responsiveness to customer signals.”The chairwoman of the Federal Trade Commission under President Biden, Lina Khan, previously warned that dynamic pricing using AI could discriminate against some consumers.At a tech conference last year, Ms. Khan warned of a future in which customers could be “charged more for an airplane ticket because the company knows that they just had a death in the family and need to fly across the country.”Delta says there is nothing nefarious about its use of artificial intelligence and it is not creating unique prices for specific individuals.The airline says all customers see the exact same fares and offers at the same time and notes that customers don’t have to log in with an identifiable profile to scan prices. Delta says the technology is being used to forecast demand for specific routes, learn from pricing decisions to improve future outcomes, and adapt to new market conditions in real time.Delta says a number of factors influence prices, including the time and date of flights, the routes, customer demand, and the price of jet fuel.

Delta Defends AI in Ticket System, Refuting Suggestions of ‘Surveillance’ Pricing

Delta Defends AI in Ticket System, Refuting Suggestions of ‘Surveillance’ Pricing

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