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Flying is about to get a lot more personal. Delta Air Lines announced that it’ll use artificial intelligence (AI) to individually determine 20% of its ticket prices by the end of the year. Currently, only about 3% of the airline's flight prices are AI-determined.
The airline calls it a "super analyst" working around the clock. So what does this mean for your wallet when you book your next trip?
What does Delta AI pricing actually mean?
Unlike dynamic airline pricing that considers general demand and supply, Delta's AI system, powered by Israeli company Fetcherr, creates highly personalized prices based on who you are as a customer. The airline's goal is to offer each passenger their specific fare price.
The system analyzes millions of data points in real time, including your booking history, loyalty status, market demand, competitor pricing, external factors like weather and events and your browsing behavior. It takes a comprehensive snapshot of all the factors affecting fare levels across its network and applies AI’s computational power to simulate scenarios and optimize pricing.
How is this different from the pricing we're used to?
Airlines have used dynamic pricing for decades — that's why flights cost more during holidays and less on Tuesday afternoons. But AI pricing takes this further.
Under traditional dynamic pricing
Under AI-powered personalized pricing
In a nutshell, both systems aim to maximize revenue based on what customers are willing to pay, but AI pricing gets more personal about it. Instead of broad categories like "business traveler" or "weekend leisure trip," the AI creates a price specifically tailored to you based on what it knows about your booking habits and travel behavior.
The airline reported "amazingly favorable unit revenues" from its AI pricing pilot program. Delta President Glen Hauenstein said the airline is continuing to work with Israeli technology firm Fetcherr to leverage "AI-enhanced pricing solutions."
For context, corporate travelers, who account for just 12% of passengers, drive 75% of the profits on popular routes. AI pricing helps airlines identify these high-value customers and price accordingly.
What should you know as a traveler?
Legal protections exist, but they're limited. For example, federal laws prohibit charging different rates based on sex or ethnicity, though without a public record of all fares, it could be difficult to determine if Delta is charging vastly different fares to people based on protected class membership.
Information such as your loyalty status, how often you fly, whether you typically book expensive seats and even how you browse may all influence the price you see. AI systems typically learn from patterns. Although few details are publicly available about Delta’s AI pricing, an AI system may learn to show higher prices for last-minute bookings because it knows you have less flexibility.
However, this isn’t wildly different from the dynamic pricing systems most airlines use, which adjust their fare prices based on similar factors. Plus, AI pricing isn't just about higher fares. It might also mean seeing more discounted fares when Delta needs to fill empty seats.
What can you do about AI pricing?
Domestic flights are typically cheapest 38 days before departure, while international flights should be booked as early as possible — ideally 50 days or more before takeoff, according to Google Flights data.
For holiday travel, booking Thanksgiving flights 45 days out and Christmas flights 58 days in advance can help secure an affordable ticket.
To get a good deal on your airline fare, make sure that you:
Time your bookings
Browse smarter
Shop around
Stay flexible when you can
How does this compare to other industries trying AI pricing things?
Airlines aren't alone in embracing AI pricing, but the reception varies dramatically by industry. Airlines have conditioned travelers to expect price fluctuations, so we're used to seeing different costs based on when and how we book.
When fast-food chains like Wendy's announced plans for dynamic pricing earlier this year, the backlash was swift and severe. Customers immediately condemned the prospect of surge pricing on burgers a la Uber and Lyft. The key difference is expectation. We expect airline prices to fluctuate and ridesharing services to charge more during rush hour, but we expect our lunch to cost the same whether it's noon or 3 p.m.
Wendy's quickly backtracked, clarifying that it would offer discounts during slower periods rather than raise prices during busy times. Delta's announcement has also drawn criticism from some politicians and consumer advocates alike, with many expressing concerns about price discrimination and unfair targeting of travelers with less flexibility.
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