Delta counters AI pricing backlash, insists it hasn’t ever used personal data

Delta Air Lines has been talking to Wall Street about its current artificial intelligence-driven pricing experiment since November, when it announced that 1% of its domestic schedule was being managed by Israeli startup Fetcherr.

But many in the public didn’t catch wind of these plans until last month, when a group of Democratic senators sent a letter to the Atlanta airline, questioning whether it was using the technology to price gouge based on personal data.

In a world where data privacy concerns and AI’s immense data capabilities are front and center, the letter sparked backlash across social media.

When American Airlines CEO Robert Isom was asked on an investor call whether it, too, would use AI for fare pricing, he seemed to agree: “Quite frankly, (I) think that some of the things I’ve heard are just not good.”

“Consumers need to know that they can trust American, OK? This is not about bait and switch. This is not about tricking and others that talk about using AI in that way, I don’t think it’s appropriate.”

In its response to U.S. Sens. Ruben Gallego, Richard Blumenthal and Mark Warner this week, Delta underscored what it had said publicly, including to The Atlanta Journal-Constitution: “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.”

Delta’s Chief External Affairs Officer Peter Carter wrote that the senators’ letter “presupposes” that Delta is using or intends to use “AI for ‘individualized’ pricing or ‘surveillance’ pricing, leveraging consumer-specific personal data, such as sensitive personal circumstances or prior purchasing activity to set individualized prices.”

“To clarify, this is incorrect and this assumption, unfortunately, has created confusion and misinformation in the public discourse,” he said.

He added the company has “zero tolerance for discriminatory or predatory pricing.”

On Friday afternoon, Gallego accused the airline of “telling their investors one thing, and then turning around and telling the public another. If Delta is in fact using aggregated instead of individualized data, that is welcome news.“

But, he added, “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’?”

The senators had previously quoted former FTC Chair Linda Khan, who warned last year of a scenario of “surveillance pricing” being used by an airline to charge a higher fare “because the company knows that they just had a death in the family and need to fly across the country.”

Instead, Carter said in his letter to the senators, Delta’s AI pricing model is dictated “by market dynamics and vigorous competition” and does not rely on personal data.

Delta President Glen Hauenstein said last month the company hopes to increase the model’s use to 20% of its domestic schedule by the end of the year.

But the airline doesn’t share “any personal information” with its partner on the project, Fetcherr, Carter wrote the senators.

Instead, it is incorporating things like purchasing data, forecasting demand for routes and “new market conditions.”

Additionally, the system recommends price increases and decreases, he said, and fares are publicly filed multiple times per day through the existing, public, centralized airfare data system.