For over a year, Delta Air Lines Inc. has been researching how artificial intelligence can revolutionize how airfares are set. Several democratic senators say they are worried about what it means for consumer privacy and equity.
The senator wrote in a letter to expand the use of AI to set separate fares.
Senators Ruben Gallego, Richard Blumenthal and Mark Warner write that Delta is a worried airline that could use AI to track and exploit individuals.
But Atlanta-based Delta says that's not what technology is doing. “There are no fares that Delta has used so far. There are no tests or usage plans targeting customers with individual offers based on personal information or anything like that,” the spokesman said.
Instead, the technology uses demands for specific routes and flights, flight times and dates, customer demand, jet fuel prices and other information.
Israeli startup fetchers manage pricing for around 3% of the Delta's domestic schedule, Glenn Hauenstein president told investors last week. This is up from 1% last November, and we hope to reach 20% by the end of the year.
“We're in a fierce testing phase,” he said. “We like what we see. We love it. We love it. We keep rolling out it. But rather than trying to hurry it up, we take the time to make sure the rollout is successful and put the risk of having an unwanted answer there.”
Hauenstein said the company has already improved its “unit revenue.”
In a statement, Fetcher reiterated that the technology “does not allow personalised or personalized pricing.”
The AI system “does not use, collect or receive personally identifiable information”, and the company “will remain immovable in its commitment to transparency and compliance with applicable regulations.”
“Everyone is doing that.”
Laurie Garrow, director of the Institute of Air Transport at Georgia Tech, says Delta is not just looking for ways to revolutionize airfare pricing models that date back decades.
The lab conducts airline revenue management research with input and funding from members of airlines in companies, including Delta, and focuses on AI.
Fetchel, for example, has already worked with several airlines, including its delta partners WestJet and Virgin Atlantic. “Everyone is doing that,” Gallow told AJC.
And when it comes to the impact on employment, the technology “doesn't replace revenue management experts – it's Give strength they. “
As Delta and other airlines continue to expand their fare and cabin class ranges, it is “very difficult” to match that with price ranges, Garrow said. She argued that AI is necessary to handle the scale.
Traditional airline pricing includes fare buckets or “steps,” she explained. Once one is sold out, the next up will be offered. However, AI allows airlines to diversify much more decisions about what the next high fare is, she explained.
The algorithm may recognize that a jump from $100 to $300 is usually too much for people who appear to be traveling on vacation, and instead offers a discount from $300 to end the sale.
“If you're staying on a Saturday night and going to a leisure destination, you're more likely to see the discount because you know you're more price-sensitive,” she said.
So far, she said she doesn't think the technology “uses gender, age, postcode, IP (address).” It is the time and time of booking where the customer's price sensitivity can be determined.
The threat of public backlash against international privacy laws and things like gouging the hypothetical price of funeral attendees would probably keep it that way, she said.
At this point, if the technology is not implemented across the platform, travelers may only notice it if they compare the traveler's website and the travel agent's prices, she explained.
“Make more money”
“Pricing based on AI algorithms will undoubtedly increase Delta's revenue,” the senator wrote. “However, when it comes to Delta passenger benefits, there is a risk that this approach will result in higher fares and reduce incentives to improve services.”
Arlines “we're going to make more money,” Garrow confirmed. But it could be because they had attracted passengers who might otherwise have looked to their competitors. Or, premium travelers who can afford it could experience a price increase.
And “the more revenue you can earn from the premium class,” added Gallow.
