Delta's AI pricing raises concerns over consumer trust and fairness

In July 2023, Delta Air Lines, headquartered in the United States, announced the implementation of an artificial intelligence (AI) system to determine airfares for its passengers. Initially, the airline was utilizing AI technology from the Israeli start-up Fetcherr for 3% of its ticket sales. The goal is to escalate this usage to 20% by the end of the year. Delta's approach allows for dynamic pricing that varies based on individual customer data, leading to fares that are tailored rather than standardized across all passengers. This pricing strategy has sparked significant debate regarding its implications for consumer trust and fairness. Experts in finance and travel have raised concerns about how this AI-driven approach could lead to increased skepticism among passengers. There are fears that travelers who can afford higher prices may find themselves charged more, creating a significant disparity in what different passengers pay for the same flight. Sam Hollander, co-founder of Autopilot, expressed that this could lead to frustration, likening it to discovering that someone else received a better price for an identical product at the store. Moreover, the idea of AI pricing was criticized by Consumer Watchdog, branding it as “surveillance price gouging.” They highlighted potential legal and ethical issues surrounding this method of pricing, suggesting that it could run afoul of deceptive practices and unfair competition laws, as there are no existing regulations to protect consumers from such pricing tactics. As Delta moves forward with this initiative, it must juggle the benefits of more sophisticated revenue management against the risk of alienating its customer base. The move comes as part of a broader trend within the airline industry to adopt more advanced technology in operations and pricing strategies. With Delta’s AI-based system constantly monitoring supply and demand, it aspires to maximize profitability while still being mindful of the customer experience. However, experts pointed out that if mismanaged, the perception of fairness in ticket pricing could be significantly compromised, with potential long-term consequences for customer loyalty and trust in Delta as a brand.