DELTA Air Lines has broken its silence over a controversial change it is hoping to bring to ticket pricing.
Last month the airline confirmed plans to change prices for 20% of its domestic flights by the end of the year with the help of artificial intelligence.
Delta has issued a response to lawmakers who criticised the airline for making a move towards AI pricing (stock)[/caption]
Critics claim the move would see fares rise to ‘individual customer pain points’ as a result of the data analysed by the AI software (stock)[/caption]
The announcement that it would be using AI for pricing during a two-year test with AI pricing firm Fetcherr, sparked a major backlash with lawmakers.
“[It’s] a full re-engineering of how we price, and how we will be pricing in the future,” Delta President Glen Hauenstein said during the company’s Investor Day in November.
He said AI-determined pricing would be personalized by helping “get inside the mind of our customer and present them something that is relevant to them, at the right time, at the right price.”
Democratic Senators Ruben Gallego, Mark Warner, and Richard Blumenthal hit back at the move last month.
They claimed it would punish customers individually by hiking prices “to each individual consumer’s personal ‘pain point’” – something Delta has denied.
The lawmakers cited a comment made in December by Hauenstein in which he linked the AI system and dynamic pricing.
He said AI would be able to price tickets based on a calculation of “the amount people are willing to pay for the premium products related to the base fares”.
But addressing concerns, Delta has confirmed it will not be using AI to individually price fares.
The Atlanta-based airline wrote their response to the backlash in a letter to the senators.
“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 confirmed.
“Our ticket pricing never takes into account personal data.”
Chief external affairs officer Peter Carter added that the company has “zero tolerance” for predatory pricing.
“Our AI-powered pricing functionality is designed to enhance our existing fare pricing processes using aggregated data,” he said.
“This technology is a decision-support tool that simply provides informed insights for our analysts, who oversee and fine-tune the recommendations to ensure they are consistent with our business strategy.”
The lawmakers have welcomed the news from the airline but still raised concerns about the personal data the AI will be using.
Carter said that it would not be sharing any personal customer information with Fetcherr.
“Delta is telling their investors one thing, and then turning around and telling the public another,” Gallego said following the letter.
“If Delta is in fact using aggregated instead of individualized data, that is welcome news.”
The airline has not commented on this latest statement from lawmakers.
It comes as Democrat Representatives Greg Casar and Rashida Tlaib have introduced legislation that would ban companies from using AI to “set prices or wages based on Americans’ personal data”.
The Stop AI Price Gouging and Wage Fixing Act bill was introduced on July 23.
“Whether you know it or not, you may already be getting ripped off by corporations using your personal data to charge you more,” Texas congressman Casar said.
“This problem is only going to get worse, and Congress should act before this becomes a full blown crisis.”
Delta has said that it will not use AI to individualize pricing and will not use personal data when factoring in fares (stock)[/caption]
