Did Delta Cross the AI Line? Senators Demand Answers

Delta Air Lines has disputed allegations by lawmakers that it’s using AI to set personalized fares as “misinformation” and insisted that it has “zero tolerance for discriminatory or predatory pricing.”

The carrier raised concerns last month when President Glen Hauenstein told investors that the company intends to set 20 percent of its fares using artificial intelligence (AI) by the end of the year, up from 3 percent currently.

Democratic Senators Ruben Gallego (Arizona), Mark Warner (Virginia), and Richard Blumenthal (Connecticut) wrote to Delta CEO Ed Bastian to express worries that Delta’s “individualized pricing practices“ could violate consumers’ privacy and also lead to “fare price increases up to each individual consumer’s personal’ pain point.’“

Photo: Courtesy of Delta Air Lines

They cited a statement by Hausenstein to investors last December that the airline’s AI pricing technology, powered by Israeli startup Fetcherr, can set fares by predicting “the amount people are willing to pay for the premium products related to the base fares.”

They also drew attention to statements by Fetcherr CEO Roy Cohen that Fetcherr’s AI uses “all the data we can get our hands on“ to set prices, which the lawmakers suggested could include “a passenger’s purchase history, web browsing behavior, geolocation, social media activity, biometric data, and financial status.”

Delta Disputes Allegations

Delta wrote back to the Senators to refute their allegations last week.

In the letter seen by Reuters, Delta Chief External Affairs Officer Peter Clark, insisted that “there is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized prices based on personal data. Our ticket pricing never takes into account personal data.”

Photo: Detroit Airport. Courtesy

Clark characterized the assumption that the airline is using individualized, surveillance-based pricing as “incorrect“ and said it has created “confusion and misinformation in the public discourse.“

“We have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing, and advertising,“ he said.

Delta suggested it is instead using AI to accelerate the analysis of data such as customer demand, fuel prices, and competition that airlines have used for three decades to set dynamic prices.

“Given the tens of millions of fares and hundreds of thousands of routes for sale at any given time, the use of new technology like AI promises to streamline the process by which we analyze existing data and the speed and scale at which we can respond to changing market dynamics,“ Delta said.

Photo: Courtesy of Delta Air Lines

However, neither Delta nor Fetcherr has been forthcoming about how exactly it uses customer data to set fares.

Senator Gallego wasn’t convinced by Delta’s denials. “Delta is telling their investors one thing, and then turning around and telling the public another,“ he said in a statement.

“If Delta is in fact using aggregated instead of individualized data, that is welcome news. But it still begs the question: why did their president brag to their investors about their desire to ‘get you the right offer in your hand at the right time‘?“

Robert Isom Weighs In

Lawmakers weren’t alone in raising concerns about Delta’s AI pricing strategy.

Responding to an analyst’s question during an earnings call last month about an unnamed competitor adopting AI pricing, American Airlines CEO Robert Isom said the technology could erode consumer trust in airlines and raise data privacy concerns.

Photo: American’s CEO Robert Isom. Courtesy of American Airlines

“Consumers need to know they can trust American. This is not about a bait and switch. This is not about tricking… I don’t think it’s appropriate. Certainly, from American, it’s not something we will do,“ he said.

American has adopted AI to identify travelers likely to miss connections and to enrich its existing chatbots, but isn’t using it to set prices.

Last week, Democratic Representatives Greg Casar (Texas) and Rashida Tlaib (Michigan) introduced legislation that would prohibit companies, including airlines, from using AI to set prices or wages based on personal data.