Delta denies using AI to come up with inflated, personalized prices

Delta spent July dealing with backlash over what the airline company claims is widespread public confusion over its AI pricing system.

Now, Delta has finally come forward to break down precisely how the AI pricing works to dispute what it claims are "incorrect" characterizations by consumer watchdogs, lawmakers, and media outlets.

In a letter to lawmakers who accused Delta of using AI to spy on customers' personal data in order to "jack up" prices, Delta insisted that "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."

Confusion arose after Delta Air Lines President Glen William Hauenstein discussed the AI pricing on a summer earnings call. Hauenstein hyped the AI pricing as working to propel revenue, confirming that about 3 percent of domestic flights were sold using the AI pricing system over the past six months and that Delta planned to expand that to 20 percent of tickets by the end of the year.

Critics demanded transparency, raising concerns that Delta's AI pricing could lead to discriminatory pricing based on a customer's search history or prior purchases. But Delta did not rush to clarify how its AI pricing actually works until lawmakers sent a letter probing Delta's AI practices. Those lawmakers had just announced the Stop AI Price Gouging and Wage Fixing Act, with a press release that called out Delta among companies whose AI pricing models needed to be banned to prevent surveillance pricing that lawmakers fear will disproportionately disrupt fair pricing for the least wealthy.

Responding, Delta's chief external affairs officer, Peter Carter, thanked lawmakers for their "thoughtful questions regarding Delta’s use of AI," then cautioned them against making assumptions about Delta's AI pricing.

"Your letter presupposes that we are using, and intend 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," Carter said. "To clarify, this is incorrect and this assumption, unfortunately, has created confusion and misinformation in the public discourse."