U.S. Lawmakers Investigate Delta Over Use of AI in Pricing
A group of 24 Democratic lawmakers in the U.S. House of Representatives has asked Delta Air Lines CEO Ed Bastian to clarify whether the airline plans to use generative artificial intelligence to set airfares. The letter, obtained by Reuters, was signed by Congressmembers including Jesús “Chuy” García, Jerrold Nadler, Alexandria Ocasio-Cortez, and Dan Goldman.
The lawmakers expressed concern about the possibility of Delta using AI to implement “individualized price discrimination based on surveillance,” utilizing personal data or browsing habits to adjust fares. For example, they mentioned scenarios like detecting visits to funeral home websites to identify moments of high travel need and raising prices accordingly.
Delta’s Response and Technological Plans
Delta responded this past Wednesday, stating that “there is no fare product that has used, is testing, or plans to use that offers individualized pricing based on personal or other information.”
However, the legislators pointed out that the airline has not provided sufficient details about the “strict federal law compliance mechanisms” it claims to have. This lack of clarity has persisted since senators raised similar concerns in July.
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In August, Transportation Secretary Pete Buttigieg announced that his department would investigate whether any airline is using AI to define prices. “We would act firmly if any company attempted to set prices individually through artificial intelligence,” he stated.
Partnership with Fetcherr and Planned Deployment
Delta had previously reported that it plans to implement AI-based revenue management technology across 20% of its domestic network by the end of 2025, in collaboration with Fetcherr, a company specializing in dynamic pricing through artificial intelligence.
Furthermore, the lawmakers cited statements from Delta’s President, Glen Hauenstein, who affirmed that the company would use generative AI to tailor fares “to that flight, at that time, for you, the individual.”
Ongoing Legislative Initiatives
Congressmembers Greg Casar and Rashida Tlaib, also signatories of the letter, introduced a bill in July that seeks to prohibit the use of AI for setting prices or wages based on personal data. The proposal includes a specific clause that would prevent airlines from increasing fares after detecting searches related to family obituaries. This legislation is still pending approval.
Historical Context of Pricing in the Airline Industry
Delta noted in August that airlines have used dynamic pricing models for over thirty years. This system adjusts fares based on factors such as overall demand, fuel prices, and competition, but does not consider consumers’ personal data.
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