AI Company Breaks Its Silence on Delta Air Lines Partnership

Over the past few weeks, Delta Air Lines has been in the headlines after company president Glen Hauenstein announced that the company planned to expand its use of AI in setting its prices. However, both Delta and its AI partner have since pumped the brakes a bit after some concerns.

During an earnings call last month, Hauenstein told reporters that the company plans to expand its use of AI in setting its fares, revealing that about 3 percent of Delta'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.

Hauenstein 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.

"The convergence of AI, machine learning and real-time data processing completely transforms how airlines approach pricing strategy," a Fetcherr post on dynamic pricing in aviation reads. "Gone are the days of rigid pricing rules and manual adjustments. Welcome to the era of true dynamic pricing, where artificial intelligence can process millions of data points instantly to set the perfect price every time. Welcome to the modern age of AI dynamic pricing."

The announcement quickly made waves, sparking reactions from lawmakers, customers, experts, and even Delta's competitors.

Lawmakers Demand Answers

Shortly after Hauenstein revealed Delta's plan to expand AI, several lawmakers sent a letter to Delta demanding answers about the plan.

"Individualized pricing, or surveillance-based price setting, eliminates a fixed or static price in favor of prices that are tailored to an individual consumer's willingness to pay," the senators wrote to Delta in a letter obtained by Newsweek.

"Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs."

Some of the lawmakers addressed the plan with personal messages of their own, with one Senator calling the move "predatory" and another demanding answers.

American Airlines CEO Does Not Hold Back

While Delta may be moving forward with using AI in its pricing, American Airlines CEO Robert Isom made it clear that his airline will not.

"I don't think it's appropriate," Isom said during American Airlines' earnings call last month.

Isom did not hold back his true thoughts when asked about the changes Delta was employing.

"I quite frankly think that some of the things I've heard are just not good," Isom said.

"Consumers need to know that they can trust American, ok? This is not about bait and switch. This is not about tricking," Isom added. "And certainly, from American, it's not something we will do."

Former FTC Chair Calls Out Delta

During a recent podcast appearance, Federal Trade Commission Chairwoman Lina Khan spoke out about Delta's AI use in setting its fares, calling out Delta a little bit.

"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?"

Delta and Fetcherr Break Their Silence

After all the criticism and commentary, both Delta and Fetcherr have broken their silence on the plan.

Delta responded to the inquiry from lawmakers with a statement claiming that it does not target customers with individualized fares.

“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,” the company said, via Reuters.

“Furthermore, we have zero tolerance for discriminatory or predatory pricing and fully comply with applicable laws in privacy, pricing and advertising. Our Al-powered pricing functionality is designed to enhance our existing fare pricing processes using aggregated data. This technology is a decision-support tool that simply provides informed insights for our analysts, who oversee and fine-tune the recommendations to ensure they are consistent with our business strategy.”

Following Delta's statement, Fetcherr issued a similar statement.

“Our generative AI system does not and will not use, collect, or receive any personally identifiable information (PII), [and] remains steadfast in our commitment to transparency and to our compliance with applicable regulations,” a spokesperson for Fetcherr said in a statement.