Delta has become the first airline to announce that it is using AI to boost profits by personalizing pricing through a pilot program that for months has caused customers to pay different prices for the same flights based on their data profile.
Critics have warned that this use of AI goes beyond airline practices that charge people who book flights ahead less than people who book flights at the last minute—and could ultimately mean the end of cheap flights across the board if other airlines follow.
On an earnings call last week, Delta Air Lines President Glen William Hauenstein confirmed that seats on about 3 percent of domestic flights were sold using the AI pricing system over the past six months. By the end of the year, Delta's goal is to boost that to 20 percent of tickets.
Consumer Watchdog has warned that while so-called individualized pricing could theoretically be used to lower prices for Delta customers, without public reporting on how the pricing works, it's impossible to know if it's fair or possibly violating federal laws that prohibit charging different rates based on protected classes, like sex or ethnicity.
Most often when it's used, "the best deals were offered to the wealthiest customers—with the worst deals given to the poorest people, who are least likely to have other options," Fortune reported.
Last November, Hauenstein told investors that Delta's goal is to eventually get rid of static pricing entirely, Fortune reported, likely motivated even more today based on reportedly "amazingly favorable" results the airline has seen so far. Other airlines may follow its lead, as Delta made it clear to investors that even though the feature is still in a "heavy testing phase," it's working to propel revenue.
"We like what we see," Hauenstein told investors on the earnings call. "We like it a lot."