Delta Air Lines uses AI to assess customer habits, willingness to pay in new pricing scheme

Delta Air Lines has become the first airline to use AI-powered personalized pricing, with about 3% of domestic flights sold through the system over the past six months. The airline plans to expand this to 20% of tickets by year-end, with executives reporting “amazingly favorable results” that could signal the end of standardized flight pricing across the industry.

What you should know: Delta’s AI pricing system charges different customers varying amounts for identical flights based on their personal data profiles.

• President Glen William Hauenstein confirmed the pilot program’s success on last week’s earnings call, stating “We like what we see. We like it a lot.”
• The airline’s ultimate goal is to eliminate static pricing entirely, moving toward fully individualized pricing models.
• Delta has partnered with Fetcherr, an Israeli company that also works with Azul, WestJet, Virgin Atlantic, and VivaAerobus.

Why critics are concerned: Privacy advocates warn this “surveillance pricing” could exploit vulnerable consumers and violate federal anti-discrimination laws.

• Consumer Watchdog noted that without transparency, it’s impossible to verify whether pricing complies with laws prohibiting different rates based on protected classes like sex or ethnicity.
• George Slover from the Center for Democracy and Technology, a digital rights group, said: “They are increasing their profits, and those profits are coming from the consumers they are taking advantage of.”
• Research shows individualized pricing typically offers “the best deals to the wealthiest customers—with the worst deals given to the poorest people, who are least likely to have other options.”

How the system works: The AI analyzes extensive customer data to determine willingness to pay for specific flights.

• Data sources may include web-browsing activity, prior purchases, product searches, and financial information like “income, assets, debts, and financial condition and history.”
• Social data can indicate urgency, such as whether a flight is needed for an emergency.
• Past purchase patterns reveal how much customers typically spend on comparable items.

Political pushback: At least one lawmaker has explicitly vowed to block Delta’s AI pricing expansion.

• Sen. Ruben Gallego (D-Ariz.) wrote on X: “Delta’s CEO just got caught bragging about using AI to find your pain point—meaning they’ll squeeze you for every penny. This isn’t fair pricing or competitive pricing. It’s predatory pricing. I won’t let them get away with this.”
• The Federal Trade Commission is already studying how individualized pricing could violate the FTC Act or harm consumers.
• Recent Senate hearings have scrutinized pricing algorithms used by companies like Walmart and Amazon.

What Delta says: The airline maintains strict compliance with federal law and denies discriminatory practices.

• A spokesperson told Fortune: “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.”
• Delta has “zero tolerance for discrimination” according to company statements.

Consumer protection strategies: Privacy experts recommend several tactics to avoid personalized pricing manipulation.

• Short-term: Use virtual private networks (VPNs) when shopping for flights to mask personal data.
• Long-term: Stronger privacy laws could limit the data available for AI pricing systems.
• Third-party intermediaries acting as “purchasing agents” could restore anonymity to the shopping process, with nonprofits like Consumer Reports suggested as ideal candidates.

The bigger picture: If successful, Delta’s AI pricing model could fundamentally reshape airline economics and spread across the industry.

• Other airlines are likely watching Delta’s results closely, with the potential for widespread adoption if profits continue to surge.
• The lack of transparency in AI pricing algorithms makes it difficult for consumers to understand or challenge pricing decisions.
• Slover warned that companies using such systems are “all too likely” to be incentivized “to skew in the direction of higher prices” due to reduced consumer awareness and choice.