A few weeks ago, Delta Air Lines surprised the world with its revenue call, saying it had seen “surprisingly favorable” results with a pilot program that uses AI to set ticket prices. The programme involved only 3% of the fares, but Delta confirmed that they want to increase to 20% by the end of the year. Proposals that Delta will use AI to determine the price that travelers willing to pay for privacy concerns that have caused fares, some U.S. lawmakers have spoken out concerns about the potential looting pricing that AI will be able to make.
The worry is that AI models are so smart that they are guaranteed in a world where you can infer the age of YouTube or Google account users from the data Google collects about them. It's not even a science fiction scenario. After Delta's disclosure, Google announced plans to use AI to automatically verify users' age.
Since the Delta revenue report, Democrats Reuben Gallego, Mark Warner and Richard Blumenthal have written to Delta CEO Ed Bastian to express concerns about the use of AI to pricing delta fares. “Delta's current and planned individual pricing practices are likely to not only raise data privacy concerns, but also mean higher fare prices to individual consumers' personal 'problems' at a time when American families are already struggling with rising costs,” said July 21.
Delta responded to a letter last week, saying it would not use personal data to set prices with AI. It's a positive development from the airlines, but Delta doesn't explain how AI determines how it offers dynamic prices to certain customers. As a result, privacy questions still remain.
Delta's disclosure regarding AI use
A representative from Delta told ABC News that the airline's AI ticketing system is in compliance with “pricing and disclosure regulations.” Delta has refused to use individual information about customers in its AI program. “There is no individually informed test of Delta. The power of the market drives the dynamic pricing model that has been used in the global industry for decades.”
The comments mirror Delta's answer to lawmakers on Friday. Reuters saw a copy of a letter Delta sent in response to the three Democrat senators.
The airline also noted that airlines have used dynamic pricing for over 30 years, analyzing factors such as demand, fuel, price, and competition. Using AI “rationalizes the process of analyzing existing data and analyzing the speed and scale that can accommodate changing market dynamics,” Delta argues.
Proposal of a new AI method
The senator praised the Delta disclosure, but they also said questions remained about the company's AI practices regarding setting dynamic prices for fares. “Delta is telling investors one thing, then turning around and telling the public another thing,” Gallego said. “If Delta actually uses aggregations instead of individual data, that's welcome news.”
Reuters also said on Friday that Democrats Greg Kasar and Rashida Tribe introduced legislation last week to prevent businesses from using AI to set prices or wages based on American personal data. The proposed law applies specifically to airlines and prohibits price increases after collecting personal data from users.
Delta can't answer questions about what data it supplies AI, so the system can create dynamic prices “surprisingly favorable.” Reuters reported Tuesday that U.S. Transport Secretary Sean Duffy said the division was concerned about the use of AI for ticket prices for personalized airlines. “We can assure you that someone will do that, in order to try to personalize seat pricing based on how much you make or not, and who you are,” Duffy said. “If any of the companies try to use AI to set individual seat prices, we're very involved.”
Duffy said he will be taking a Delta response “at face value” from last week. This indicates that no investigation is being conducted at this time. However, Duffy's response shows that the government is considering preventing the use of AI for price gouging. Unchecked, AI could help businesses to become more profitable by analyzing user data and determining higher price ranges.
How bad can you do?
The laws introduced last week, Casar and Tlaib cite a January report from the Federal Trade Commission that shows retailers often use personal user information to set prices. This report provides a hypothetical example of a new parent looking at a higher priced baby thermometer and where prices are set based on information collected about users.
A letter sent to Delta by three Democrats in July cites the example of former FTC chairman Lina Khan. Lina Khan “warned of cases that could be particularly bad for using AI to charge passengers with high fares.” The opacity surrounding Delta's new customized pricing model can exacerbate these concerns. ”
The three senators pointed it out in their letters to remind the public that Delta and his partners had said about personalized ticket prices. “As Delta President Glen Hauenstein said at the Investors Meeting in December, Delta's AI pricing technology can set fares based on forecasts of “amounts that people are willing to pay for premium products related to base fares.”
According to Fetcherr CEO Roy Cohen, “the technique of training that decision using 'all the data you can get'” writes. This kind of commentary from officials involved in Delta's AI use suggests that there is a need to eliminate more air for the kind of data that airlines use to set dynamic prices.
