The impact of AI on Delta Airlines

Delta Airlines recently shared that they are planning to up their use of AI to set individualized, surveillance-based fares for their customers. This strategy is called “dynamic pricing” and is becoming increasingly more common.

This new program is contributing to more concerns amongst consumers about their privacy online. Hikes in prices are also a major criticism, as set pricing will likely become obsolete following the new policies. Democratic Arizona Senator Ruben Gallego has called this move by Delta Airlines “predatory pricing.” He also added that he “won’t let them get away with this.”

Professor Sharon Chen, Chair of the Arizona State University W.P. Carey School of Business and the Co-Director of the Center for AI and Data Analytics for Business and Society, joined “Arizona Horizon” to share more on the impact of AI on set prices.

According to Chen, AI based pricing means that companies use current market data to predict consumer behaviors, which helps them to determine air fares. Factors include the prices of previous tickets and how price sensitive an individual is.

“There is a fine line between revenue optimization, and exploitation,” Chen said. “The concern is that companies actually use this sensitive data to profile our customers and then exploit their vulnerabilities.”

Dynamic pricing in airline fares has been around for decades, however AI has taken these fears to a new level. The AI program works by using specific consumer data, which differs from previous strategies of flexible pricing in the industry.

“Uber, Lyft, they are already doing this dynamic pricing,” Chen said. “In a way, if its practiced responsibly, it can actually increase efficiency.”

While Chen encourages people not to panic just yet, dynamic pricing is just one aspect of the ongoing conversation surrounding online consumer privacy. More information on Delta’s new policy can be found above.