Booking your last-minute summer getaway? Delta Air Lines recently revealed to what extent it is using artificial intelligence to set ticket prices. And while this is just the beginning of the AI revolution in pricing, here's some insight into how it is working so far -- and how it may expand to other industries in the future.
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Delta recently made headlines -- sparking backlash from consumer groups and concern from Congress -- when its president, Glen Hauenstein, revealed during the airline's latest earnings call that the company is currently using AI for 3% of domestic pricing, with the goal of using it for about 20% by the end of the year.
"So, we're in a heavy testing phase. We like what we see. We like it a lot and we're continuing to roll it out," Hauenstein said. "But we're going to take our time and make sure that the rollout is successful . . . the more data it has and the more cases we give it, the more it learns."
When Fast Company reached out to Delta about how this might affect consumers, the airline referred to its letter to Sens. Ruben Gallego (D-AZ), Richard Blumenthal (D-CT), and Mark Warner (D-VA), which stated it is not "using, and [does not] intend to use, AI for 'individualized' pricing or 'surveillance' pricing, leveraging consumer-specific personal data, such as sensitive personal circumstances or prior purchasing activity to set individualized prices. . . . 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."
What AI will likely end up doing, according to ThePointsGuy's Clint Henderson, is creating a "dynamic pricing model on steroids," pinpointing flight prices with greater accuracy, and a whole lot faster.
Delta has partnered with Israel-based software startup Fetcherr, which utilizes its large market model (LLM) to decode intricate market behavior and forecast financial trends, coupled with historical and current data.
Fetcherr's approach encompasses a comprehensive range of factors that influence market dynamics, and its recent white paper lists a few of those variables that go into airline flight pricing, namely "seat availability, current news, weather conditions, significant events, flight schedules, and even fluctuating oil prices, among others."