Delta Air Lines’ plan to utilize artificial intelligence to set individualized fares has raised privacy concerns among several U.S. senators.

Fortune reports that Delta has run a pilot program, which uses AI for 3% of its fares.

However, privacy advocates fear the strategy to boost profitability could result in price gouging.

“Need help understanding Delta Airlines’ new AI pricing model? Matt Britton, AI and consumer trend expert and author joins KCAL News to explain the major move,” KCAL News wrote.

Check out the report:

Fortune has more:

Fresh off a victory lap after a better-than-expected earnings report, Delta Air Lines is leaning into AI as a way to boost its profit margins further by maximizing what individual passengers pay for fares.

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By the end of the year, Delta plans for 20% of its ticket prices to be individually determined using AI, president Glen Hauenstein told investors last week. Currently, about 3% of the airline’s flight prices are AI-determined, triple the portion from nine months ago.

Over time, the goal is to do away with static pricing altogether, Hauenstein explained during the company’s Investor Day in November.

“This is a full reengineering of how we price and how we will be pricing in the future,” he said. Eventually, “we will have a price that’s available on that flight, on that time, to you, the individual.”

He compared AI to “a super analyst” who is “working 24 hours a day, seven days a week and trying to simulate… real time, what should the price points be?”

While the rollout would be a “multiyear” process, he said, initial results “show amazingly favorable unit revenues.”

Sens. Ruben Gallego (D-AZ), Richard Blumenthal (D-CT), and Mark Warner (D-VA) sent a letter to Delta seeking additional details of its AI-based revenue management technology to set individualized fares.

“We write with concern regarding Delta’s plan to expand the use of artificial intelligence to set individualized fares. Individualized pricing, or surveillance-based price setting, eliminates a fixed or static price in favor of prices that are tailored to an individual consumer’s willingness to pay,” the letter read.

“Delta’s current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer’s personal ‘pain point’ at a time when American families are already struggling with rising costs,” it continued.

“As recently reported, Delta plans to deploy AI-based revenue management technology across 20 percent of its domestic network by the end of 2025 in partnership with Fetcherr, a company specializing in using AI to set prices to maximize company profit for large airlines. As Delta President Glen Hauenstein stated in an investor conference in December, Delta’s AI price setting technology is capable of setting fares based on a prediction of ‘the amount people are willing to pay for the premium products related to the base fares,'” it added.

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Newsweek provided further details:

Delta Air Lines President Glen William Hauenstein told reporters during a July 10 earnings call that roughly 3 percent of the airline’s domestic ticket prices are already set using AI, with hopes to reach 20 percent by the end of 2025.

“So, we’re in heavy testing phase,” Hauenstein said. “We like what we see. We like it a lot and we’re continuing to roll it out. But we’re going to take our time and make sure that the rollout is successful, as opposed to trying to rush it and risk that there are unwanted answers in there.”

Hauenstein also praised Delta’s partnership with Fetcherr, an Israel-based tech company that employs AI to process “millions of data points instantly,” according to its website.

“The convergence of AI, machine learning and real-time data processing completely transforms how airlines approach pricing strategy,” a post on dynamic pricing in aviation reads. “Gone are the days of rigid pricing rules and manual adjustments. Welcome to the era of true dynamic pricing, where artificial intelligence can process millions of data points instantly to set the perfect price every time. Welcome to the modern age of AI dynamic pricing.”

But the approach is problematic, according to Gallego and his Democratic colleagues.

“The implications for individual consumer privacy are severe on their own,” they wrote Delta. “Surveillance pricing has been shown to utilize extensive personal information obtained through a variety of third-party channels, including data about a passenger’s purchase history, web browsing behavior, geolocation, social media activity, biometric data, and financial status.”

Read the full letter:

 

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