After Delta Air Lines faced public backlash for expanding its use of artificial intelligence (AI) to set fares for passengers, the airline sent a letter to federal lawmakers on Friday denying that it uses “personalized pricing” to price-gouge consumers.
But many airlines, led by Delta, the nation’s largest, are working with AI consulting companies that boast of their “hyperpersonalized” price setting. This new airfare apparatus is part of the airline industry’s long-standing experiments with big data–driven pricing strategies that have laid the groundwork for economy-wide surveillance pricing that exploits consumers’ privacy to deliver “personalized” prices.
Now, through shared algorithms, airlines’ AI ventures could also lead to illegal collusion that threatens to jack up ticket prices for everyone, according to experts who spoke to the Lever.
Personalized pricing leverages surveillance techniques and data collection to target individual prices for each customer based on their personal information. AI tools can be used to sift through massive troves of data on customers or competitors and analyze trends to generate profit-maximizing price recommendations.
On an earnings call last month, Delta president Glen Hauenstein told investors regarding its AI pricing: “We like what we see . . . and we’re continuing to roll it out,” announcing that the airline planned to set 20 percent of domestic fares with AI tools by the end of the year.
The announcement sparked pushback from federal lawmakers, indignation from travelers, and even condemnation from rival airlines. In response, Delta now claims it won’t use its AI partnership to target consumers with individualized prices based on their unique personal and behavioral…
Auteur: Katya Schwenk
