Former FTC Chair Issues Warning on Delta Changes

Delta Air Lines sparked controversy last week when company president Glen Hauenstein announced that the company planned to expand its use of AI in setting its prices. But one former chair of the Federal Trade Commission does not sound enthused about the move.

During an earnings call last week, Hauenstein told reporters that about 3 percent of the airline's domestic ticket prices are already set using AI, and that the company hopes to expand that to 20 percent by the end of 2025. He also boasted about Delta's partnership with Fetcherr, a tech company that claims to be able to "set the perfect price every time" using AI.

Hauenstein compared the AI analysis to a "super analyst" that does not have the same limitations that a human analyst does.

“We’ve started this and I’d say what we have today with AI is we have a super analyst,” Hauenstein said, according to Airline Geeks. “We have an analyst that’s working 24/7, 24 hours a day, 7 days a week. And trying to simulate, given the same inputs that an analyst sees today, real-time, what should the price points be. And that output is different than what we have in the market. And so we’re letting the machine tell us, actually, go ahead and price in a very controlled environment.”

Delta's plan has already sparked concern from a number of different lawmakers, with one going as far as to call the move "predatory." Now, a former FTC chair is speaking out about the move.

During a recent podcast appearance, Federal Trade Commission Chairwoman Lina Khan spoke out about Delta's AI use in setting its fares, issuing a major warning to customers about the potential ramifications of such a move. 

"This idea of surveillance pricing, where not only is your data being collected on you, but then it is being used against you to price as much as you will pay," Biden-era Federal Trade Commission Chairwoman Lina Khan told the Chuck ToddCast last week. "So, imagine you had a death in the family, and you got an email notice about where the services are going to be. You go to buy a plane ticket and the airline company knows you are trying to get to a funeral. It's an emergency, and maybe they'll overcharge you, right?"

Clearly, Delta's plan is controversial, with one competing CEO even expressing concern.

It will certainly be interesting to see how this all plays out.