Delta uses AI to set airfares. Some senators are worried.

For more than a year, Delta Air Lines has been exploring how artificial intelligence might revolutionize the way it sets airfares. Several Democratic senators say they’re concerned about what it might mean for consumer privacy and fairness.

Expanding the use of AI to set individualized fares, the senators wrote in a letter, will “likely mean fare price increases up to each individual customer’s personal ‘pain point’ at a time when American families are already struggling with rising costs.”

Sens. Ruben Gallego, Richard Blumenthal and Mark Warner wrote they are worried airlines like Delta could use AI to track individuals and exploit them — including in times of need like traveling for a funeral.

But Atlanta-based Delta says that’s not what the technology is doing.

“There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise,” a spokesperson said.

Instead, the technology is using demand for specific routes and flights, flight time and date, customer demand, the price of jet fuel and other information.

Israeli startup Fetcherr manages pricing for about 3% of Delta’s domestic schedule, company President Glen Hauenstein told investors last week. That’s up from 1% last November, and it hopes to reach 20% by the end of the year.

“We’re in heavy testing phase,” he said. “We like what we see. We like it a lot, and we’re continuing to roll it out.

“But we’re going to take our time and make sure that the rollout is successful, as opposed to trying to rush it and risk that there are unwanted answers in there,” he said.

The company is already seeing improved “unit revenues” from it, Hauenstein noted.

Fetcherr did not respond to The Atlanta Journal-Constitution’s request for comment by deadline.

‘Everyone is doing it’

Delta is not alone in its search for ways to revolutionize an airfare pricing model that dates back decades, said Laurie Garrow, director of the Air Transportation Lab at Georgia Tech.

The lab conducts airline revenue management research with input and funding from corporate airline members — including Delta — and will be increasing its focus on AI.

Fetcherr, for example, is already working with several other airlines, including Delta partners WestJet and Virgin Atlantic. “Everyone is doing it,” Garrow told the AJC.

And when it comes to an impact on jobs, Fetcherr argues its technology “isn’t replacing revenue management professionals — it’s empowering them.”

As Delta and other airlines continue expanding their range of fares and cabin classes, it’s “very difficult” to match that with a range of prices, Garrow said. AI is needed to handle that scale, she argued.

Traditional airline pricing involves buckets, or “steps,” of fares, she explained.

When one is sold out, the next up is offered. But AI allows for far more variety in the airline’s decision about what the next higher fare might be, she explained.

The algorithm might recognize that a jump from $100 to $300 is usually too much for someone who appears to be traveling on a vacation — and instead will offer a discount down from $300, in an effort to close the sale.

“If you’re doing a Saturday night stay and you’re going to a leisure destination, we know you’re more price sensitive, so you’re more likely to see a discount,” she said.

So far, she said, the technology doesn’t seem to be “using gender, using age, using ZIP code, using IP (address).” It’s more the time of day or how far out one is booking that can determine a customer’s price sensitivity.

International privacy laws and the threat of public backlash for something like hypothetical price gouging for a funeral attendee, she said, will likely keep it that way.

At this point, when the technology isn’t implemented across platforms, a traveler might notice it only if they compare prices on a carrier’s website versus a travel agency, she explained.

‘Making more money’

“Pricing based on AI algorithms will no doubt increase revenues for Delta,” the senators wrote.

“However, with respect to the interests of Delta’s passengers, there is a danger that this approach will result in higher fares and diminish incentives to improve service.”

Arlines are “going to be making more money,” Garrow confirmed.

But that could be because they have gained passengers that might have otherwise looked to a competitor, she argued. Or a price increase might happen for premium travelers who can afford it.