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Delta moves to eliminate set prices, use AI to set your personal ticket price

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. 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 t

The economics behind "Basic Economy" – A masterclass in price discrimination

Basic Economy fares are ultra-restricted airline tickets that offer a lower base price in exchange for fewer benefits than standard economy class. Introduced by major U.S. carriers in the 2010s, these fares have become a widespread strategy for market segmentation - a textbook example of price discrimination in practice. By design, Basic Economy compels travelers to self-select based on their willingness to pay and tolerate restrictions, thus allowing airlines to maximize revenue from different

The Economics Behind "Basic Economy" – A Masterclass in Price Discrimination

Basic Economy fares are ultra-restricted airline tickets that offer a lower base price in exchange for fewer benefits than standard economy class. Introduced by major U.S. carriers in the 2010s, these fares have become a widespread strategy for market segmentation - a textbook example of price discrimination in practice. By design, Basic Economy compels travelers to self-select based on their willingness to pay and tolerate restrictions, thus allowing airlines to maximize revenue from different