Delta Air Lines is the most profitable airline in the United States, and also tends to innovate in many areas, both for better and worse. Along those lines, over the past year we’ve heard Delta executives talk about how the airline will increasingly be using artificial intelligence (AI) to price airline tickets.
It sounds like the airline is planning on massively increasing its use of this capability over the coming months. But what does that really mean for customers? Well, it’s probably not good…
In this post:
Delta is hugely ramping up use of AI for ticket pricing
During the Delta 2024 Investor Day presentation, Delta President Glen Hauenstein started teasing how the airline would start using AI to price airline tickets. As he described it, “we will have a price available on that airplane at that time that’s available to you the individual,” and described it as “a super analyst, an analyst working 24/7 a day,” to determine the optimal pricing.
During the Delta Q2 2025 earnings call, Hauenstein was asked about the progress of this. TD Cowen Analyst Tom Fitzgerald asked the following:
“I wanted to touch in on your comment on Fetcherr. I think back at the Investor Day, you mentioned that their revenue management solutions were being deployed on about 1% of the network. I was wondering if you could tell us where that number stands today and then just provide a little more details on what you’ve learned with another 6 months of experimenting with AI and revenue management.”
Here’s how Hauenstein responded:
“So today, we’re about 3% of domestic. Our goal is to have about 20% by the end of the year, and that’s a goal. I mean we can report back on what the actual numbers are. But you have to train these models as you might and you have to give it multiple opportunities to provide different results. 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, 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.”
“So this — the more data it has and the more cases we give it, the more it learns, and we’re really excited about it, and we’re really excited about partnering with Fetcherr.”
As you can see, by the end of 2025, Delta may be using its new AI technology to price 20% of tickets, which is an incredibly fast rollout, given how disruptive this could be.
What are the implications of AI pricing for airline tickets?
When I first heard of the concept of AI for airline ticket pricing, I was a little skeptical. Why? Well, airline revenue management already uses a lot of automation, as airlines have millions of different fare combinations filed at any given point, and technology is heavily used with that.
So I wondered, is this AI pricing change actually going to impact consumers, or is this just a way for Delta to cut some jobs in its pricing department? After all, airlines generally charge as much as they can for any given flight, based on the competitive landscape.
What does the transition to AI airline pricing actually look like, though? As you can see, Delta is partnering with Fetcherr on this, an Israeli company that was founded in 2019. Partnering with Delta is a massive win for Fetcherr — the world of airline pricing is notoriously tough to break into, so the fact that Fetcherr managed to get Delta onboard could lead to much further adaptation.
I’ve done a bit of digging on Fetcherr, and the goal is pretty clear. For example, I watched the below pitch for Fetcherr, and a couple of things stood out. First of all, Fetcherr is described as offering “a proprietary engine that accurately and granularly predicts demand and enables high frequency pricing methods used in financial markets and e-commerce.”
Fetcherr has a tactical pricing approach, which “means that it lets our customer take advantage of the vulnerability of their competitors’ rule based system,” “understanding the rules, and then manipulating the market, in order to gain more profit.” The company claims that in testing phases, it has seen revenue uplift of up to 9%, with a 60% decrease in manual processes.
Below you can see some of its services in action.
We’ll have to see how this plays out in practice, but here several thoughts:
- Airline pricing already changes constantly, but it sounds like pricing will become even more dynamic, with constant changes; that will likely be annoying for customers trying to make decisions
- The concept of more customized pricing is concerning, and makes me wonder what factors could be used to price discriminate; I mean, logically, a Delta Diamond Medallion might be willing to pay more for a Delta ticket than a non-elite member, so could we see that reflected in the pricing?
- Fetcherr’s first major partner was Azul, and ultimately Azul operates in much less competitive markets than Delta, where slight pricing adjustments may not hugely impact demand, at least in terms of the competitive landscape
- Ultimately the US airline industry is very competitive, and while the claim of “manipulating the market in order to gain more profit” sounds bad, there’s only so much Delta can get away with, if the pricing changes end up being consumer unfriendly
- To be less cynical, one could also interpret the goal of maximizing profits to come in the form of filling empty seats with more attractive fares
- One certainly wonders how this customized pricing (perhaps using IPs or other user data) will play out in terms of online travel agencies, comparison shopping, etc.
It’s going to be very interesting to see this new pricing model in action, and I’ll reserve final judgment until it’s rolled out on a more widespread basis. It definitely won’t be good for consumers, though I’m also not sure it’ll have a radical impact, simply given the competitive landscape.
Bottom line
While Delta executives have been talking about introducing AI pricing for quite some time now, it seems like the use of this will really ramp up in the near future, with Delta hoping to use this pricing method for 20% of fares by the end of the year.
There’s already a lot of technology used in airline pricing, so it appears that what’s different here is that we’re going to see much more frequent pricing updates, and also more customization for pricing. The goal is clear, and that’s to increase profits. That’s definitely not good, but then again, the industry is competitive, so I’m not sure how much Delta can actually get away with.
What do you make of Delta’s new AI pricing plans?
I found a software that fully defeats the Delta predatory AI pricing
It’s called never fly Delta ever again
Problem solved!
AI is so stupid, it has convinced me to almost never use Siri on my phone, and now I’ve change my browser. Google’s idiotic and frequently wrong AI answers no longer lead off my internet searches. If they keep it up, I believe Google will eventually go the way of Altavista and Lycos. Now Delta invites the same fate. Good luck with that.
Hopefully president AOC will put an end to this garbage. No pricing based on who they think you are. Set buckets with set prices
I’ll just counter back with deep seek AI . Spoof the system. $0.99 mistake fares.
I can see this approach potentially opening a can of worms for Delta. If you price by the individual customer, someone, likely the government or advocacy groups, will want to see the average price breakdown by protected class status of customers (race, gender, advanced age, etc). Even if there is no intentional bias, only disproportionate impact need be demonstrated to create the presumption of discrimination.
Delta doesn't maintain race data on its customers so it would be hard to prove they are biasing anything.
They do have lots of economic and purchase behavior data and that is the basis for any type of pricing and will be in the future.
This type of loyalty coupon and purchase data is no different than what many merchants use today.
It is very possible that DL can use AI to drive INCREMENTAL...
Delta doesn't maintain race data on its customers so it would be hard to prove they are biasing anything.
They do have lots of economic and purchase behavior data and that is the basis for any type of pricing and will be in the future.
This type of loyalty coupon and purchase data is no different than what many merchants use today.
It is very possible that DL can use AI to drive INCREMENTAL purchases rather than solely thinking they are trying to force someone to pay more on the flight they were originally planning to book
Information thaat Delta does have, such as ZIP code, preferred language and names can point to ethnicity, gender or race. And additional demographic information can be obtained via access to your passport. I'm not saying that Delta will misuse information to discriminatory ends...I'm saying there's a pretty good chance someone will make the charge, and that simple statistical chance will leave a protected class paying more. Having to face the accusation is a penalty in...
Information thaat Delta does have, such as ZIP code, preferred language and names can point to ethnicity, gender or race. And additional demographic information can be obtained via access to your passport. I'm not saying that Delta will misuse information to discriminatory ends...I'm saying there's a pretty good chance someone will make the charge, and that simple statistical chance will leave a protected class paying more. Having to face the accusation is a penalty in itself. The best way to defend against this is to proactively share the factors and methodology behind the individualization of price. However, I suspect the software owner will not permit disclosure of their intellectual property, so Delta may have to say "We can't tell you, but trust us". To mix metaphors, I wonder if the juice is worth the squeeze of jumping into this briar patch.
That Fetcherr uses the phrase "manipulating the market" in *positive* terms reveals either 1) a tin ear, or 2) deep cynicism. I'm guessing both; customer service used to be the key to success in hospitality and travel, but now, All Hail the Bottom Line...all the time.
The bottom line is why any company is in business, to make profit for its shareholders.
That Fetcherr uses the phrase "manipulating the market" in *positive* terms reveals either 1) a tin ear, or 2) deep cynicism. I'm guessing both; customer service used to be the key to success in hospitality and travel, but now, All Hail the Bottom Line...all the time.
Hopefully some good “special low fares” will be on the way, esp in longhaul J!
From my understanding, airline pricing updates several times a day. I would assume they're using AI to reduce some of the manual work of having to adjust pricing based on demand. Not sure how that is "manipulating" the market when all airlines update their pricing at the same intervals and based on their own demand/economics.
Most airlines still use static fares, the only thing that gets updated dynamically is availability in individual booking classes. What Delta is proposing is essentially coming up with a tailored fare for each search query.
"to determine the optimal pricing" !!!
What happened to competitive pricing?
I'm waiting for some kid to develop an AI program to challenge the airline AI pricing mechanism.
It will be called "Challenge" and available for a small subscription fee.
Just as easy to use as a VPN connection on your phone or laptop.
IF so, we'll be back to square one!
I think you may be being overly cynical here. First, achieving more profit doesn't have to mean higher prices. Think how often you've seen one air airline hundreds of dollars more expensive than a competitor on the same route. In some cases, that will be because the airline didn't drop the price quick enough. Their price would secure your booking and gain more revenue.
As for charging elite members more for flights, this wouldn't be...
I think you may be being overly cynical here. First, achieving more profit doesn't have to mean higher prices. Think how often you've seen one air airline hundreds of dollars more expensive than a competitor on the same route. In some cases, that will be because the airline didn't drop the price quick enough. Their price would secure your booking and gain more revenue.
As for charging elite members more for flights, this wouldn't be practical – because people can book flights before providing their elite information. They could do it the other way around, but as you say that wouldn't be commercially beneficial!
I'm trying to fully understand what the authors issue is.
Airlines already use dynamic pricing today although at a much slower rate. Consumers can see a price for a ticket today and come back tomorrow and the price has changed, that is the nature of the business. With the introduction of AI dynamic pricing would happen at a much faster rate, but it also means Delta can respond faster to the competitions pricing. If...
I'm trying to fully understand what the authors issue is.
Airlines already use dynamic pricing today although at a much slower rate. Consumers can see a price for a ticket today and come back tomorrow and the price has changed, that is the nature of the business. With the introduction of AI dynamic pricing would happen at a much faster rate, but it also means Delta can respond faster to the competitions pricing. If a competitor drops their fare on for example a morning flights ORD-SEA, Delta could respond within seconds of that fare drop or vice versa if a competitor raises their price, it could allow Delta to raise their price nearly as quickly. This isn't a one way street where with AI help Delta nows gets to charge any price they wish. They still have to be competitive and offer competitive fares given the competitive nature of the US market. The integration of AI just allows them to respond faster and it also means if a consumer sees a price they believe is a good deal they need to lock it in as the price could change in the next 10 minutes instead of 10 hours. But we are seeing this type of dynamic pricing taking place at a much faster rate all across the travel industry.
It was only a matter of time before airlines looked at integrating AI into their existing dynamic pricing programs. Just because Delta is taking the lead on this here in the US doesn't necessarily make it a bad thing for the industry or consumers.
LovetoFly - You're describing traditional dynamic pricing where everyone sees the same price that changes over time. But this is different - Delta's president specifically said they'll have "a price available on that airplane at that time that's available to you the individual." This is about showing different fares to different people simultaneously based on their perceived willingness to pay, not just faster competitive price matching that everyone sees.
Airlines are already doing what you've described they can adjust the price in real time based off your IP address. If your IP address is associated with lets say a wealthier neighborhood airlines current pricing models are set up to assume you'd be willing to pay more and therefore will show you higher prices.
There is even evidence suggesting airlines may go a bit further and use targeting marketing for customers using Apple products....
Airlines are already doing what you've described they can adjust the price in real time based off your IP address. If your IP address is associated with lets say a wealthier neighborhood airlines current pricing models are set up to assume you'd be willing to pay more and therefore will show you higher prices.
There is even evidence suggesting airlines may go a bit further and use targeting marketing for customers using Apple products. This is based off the theory Apple users could be more wealthy and willing to pay a higher price and airlines will show Apple users slightly higher prices even in marketing material.
Why do you think every device we have has location service, IP trackers, data sharing all of this is taking place in real time. The only thing AI will do in the case of airlines and their pricing model is speed up how quickly airlines respond and adjust their pricing to each individual customer. Even in todays environment on a plan with 150 passengers you would be hard press to find 10 people in the same cabin who paid the exact same price for their ticket even if their tickets all used the same fare code.
Israelis developing new ways to screw people over and profit? Color me shocked.
This sounds incredibly annoying. While I can easily see the other big 2 adopting this I hope Delta gets blown out of the water by it and the startup goes bankrupt. We already saw what these “intelligent pricing” tools did in the rental market.
Given your use of tropes and inability to perform the same, I’d colour you shocked, less intelligent and envious.
Please refrain from political banter, you open yourself up to this, "Connor".
Not enough dead kids for you yet? Maybe next Delta can start partnering with the private paramilitaries gunning down refugees at aid depots?
Connor, the so-called "dead kids" would stop today if Hamas releases the remaining hostages and goes into exile. Yet your side never calls for this...
Then agree to a deal, which the Israelis have sabotaged time and time again. “We get to kill you all and steal your land because our religion says we’re better than you” is not a deal.
Yet that philosophy is exactly why the Palestinians were there in the first place. They truly believe that their religion says that they're better than you. That's why the jizya exists. And as for dead kids? No, not enough for me. The Palestinians are enemies of the American people and have been since they were filmed dancing in the streets on 9/11.
I'm sure there are guardrails and testing is meant to eliminate this, but it makes me think there could be the potential for more mistake fares - either on the very low or very high end.
If this causes airfare to move around more quickly, too, it seems like there will be more demand maybe for price watch/alert tools, browser plugins, etc. Technology just chasing technology and we don't end up wildly different than...
I'm sure there are guardrails and testing is meant to eliminate this, but it makes me think there could be the potential for more mistake fares - either on the very low or very high end.
If this causes airfare to move around more quickly, too, it seems like there will be more demand maybe for price watch/alert tools, browser plugins, etc. Technology just chasing technology and we don't end up wildly different than where we are today, assuming all the major players adopt this as a competitive response.
As long as the airline’s honours the super-low AI generated fare, I’ll be happy.
Oh look! A flying pig!
Will it cause more travellers to first use Google Flights and the like to see pricing from all airlines and before any search directly on an airline site to see if their AI generates a higher or lower fare? There might also need to be more use of VPN's to hide the IP address of the traveller.
Poor people in poor neighbourhoods might suddenly have reason to become travel booking assistants!
Separate from the Delta story here, I'm curious how far Fetcherr could be deployed across the industry, if successful.
I.E. would this be proprietary to Delta? or could AA and United use this if it works well?
It's not as though it would be blatant price fixing between carriers but having the same algorithms from the same company determining pricing between competitors would certainly have some rather unique anti-competitive issues for the DOJ to...
Separate from the Delta story here, I'm curious how far Fetcherr could be deployed across the industry, if successful.
I.E. would this be proprietary to Delta? or could AA and United use this if it works well?
It's not as though it would be blatant price fixing between carriers but having the same algorithms from the same company determining pricing between competitors would certainly have some rather unique anti-competitive issues for the DOJ to dissect and, it would seem, in a unique way that has not been addressed.
i.e. if deployed on all three, on an ELP-LGA routing that had ELP-DFW-LGA, ELP-ATL-LGA, and ELP-IAH-LGA all competing. How would AI deal with the pricing between the three when the carriers would normally match each other on price for this type of route but AI would likely have better information that AA should charge a higher rate because that seat on ELP-DFW could make more money on... ELP-DFW-BTR or whatever instead. Or Delta on ELP-ATL-DAB, etc
It may not matter, you'd have to assume this would need to be proprietary and not used across the industry due to this, but just some morning musings.
excellent question.
did DL receive exclusivity and, if not, how does the same system put 'firewalls' between different clients.
and, if DL does have exclusivity, who else is in the space or how long does it take AA or UA or WN to come up w/ similar systems.
There is plenty of AI that is being used and will be used esp. in consumer-related service industries.
As usual, Delta is leading the US industry and probably has the best tool and is also being very up front in saying that it is using AI.
It is also very possible that they are using it to shift travel purchases from other providers and shift passenger purchases to less peak flights.
As usual. lol does your as$hole get jealous of the sh!t that comes out of your mouth? Industry leading and delta do not belong in the same sentence when it comes to technology.
the only jealousy is yours.
Delta grew from the 6th largest US airline in 1978 to the largest in the world based on revenue and most profitable US airline.
those are facts.
Delta has figured out how to do things that help it win in the marketplace.
While we bristle at the use of AI in any part of life, there are plenty of things that airlines do as standard that were "on the edge" when they were introduced even by just one airline.
>largest in the world based on revenue
That's more a factor of being a US airline than anything else. Due to the USA's wealth, size, and lack of alternative modes for mid-long distance travel, our domestic market dwarfs every other country on Earth and gives less barriers to consolidation. Case in point, #2 and #3 on that list are United and American by a long shot before you get to the closest foreign airline,...
>largest in the world based on revenue
That's more a factor of being a US airline than anything else. Due to the USA's wealth, size, and lack of alternative modes for mid-long distance travel, our domestic market dwarfs every other country on Earth and gives less barriers to consolidation. Case in point, #2 and #3 on that list are United and American by a long shot before you get to the closest foreign airline, the Lufthansa group. Almost like the most comparable geographic area to the US, the EU, has more barriers to airline consolidation and therefore more competition and lower revenues as a result.
What "barriers to consolidation" does EU have that US doesn't? Consolidation actually got a bit further in the EU compared to the US, it's just that it's a smaller market + there's a bigger share of LCCs. If anything, I'd say EC is not doing its job protecting consumers by putting more "barriers to consolidation" during some questionable mergers in recent past.
National pride is the big one. The EU has SAS, Finnair, LOT, AF/KL, IAG, Lufthansa, TAP, Czech and other smaller national airlines, plus the ULCCs like RyanAir. And even when consolidation does happen, like Lufthansa buying ITA or Air France/KLM merging, those brands and their operations are often kept distinct from the other brands owned by the parent as opposed to mergers like Alaska's purchase of Virgin America or Southwest buying AirTran, where the purchasee...
National pride is the big one. The EU has SAS, Finnair, LOT, AF/KL, IAG, Lufthansa, TAP, Czech and other smaller national airlines, plus the ULCCs like RyanAir. And even when consolidation does happen, like Lufthansa buying ITA or Air France/KLM merging, those brands and their operations are often kept distinct from the other brands owned by the parent as opposed to mergers like Alaska's purchase of Virgin America or Southwest buying AirTran, where the purchasee is wholy consumed into the purchasing brand and ceases to exist.
y'all can debate the size of the US market relative to other markets/blocs/countries but the point is more about how DL has grown relative to its US competitors.
The size of the big 3 relative to carriers in other countries is a function of the fact that the US has allowed US airlines to consolidate.
And there are 3 multi-carrier airline groupings in Europe that report their revenues as a group so the notion...
y'all can debate the size of the US market relative to other markets/blocs/countries but the point is more about how DL has grown relative to its US competitors.
The size of the big 3 relative to carriers in other countries is a function of the fact that the US has allowed US airlines to consolidate.
And there are 3 multi-carrier airline groupings in Europe that report their revenues as a group so the notion that the EU prevents the type of consolidation that has occurred in the US is just not accurate.
DL has thought outside of the box on many occasions and the US of AI - or getting to it before others - might be yet another one of those things.
Tim, I think you missed my point. Delta being #1 "in the world" is not a function of Delta being good, but a function of Delta being one of 3 established incumbents in the largest protected aviation market in the world. Competition is pretty tight between the US3 and while Delta might be marginally more pleasant to fly, it's still one of three US airlines each with their own massive captive regions. And I did...
Tim, I think you missed my point. Delta being #1 "in the world" is not a function of Delta being good, but a function of Delta being one of 3 established incumbents in the largest protected aviation market in the world. Competition is pretty tight between the US3 and while Delta might be marginally more pleasant to fly, it's still one of three US airlines each with their own massive captive regions. And I did mention Lufthansa Group in my post since they're the biggest in Europe, but due to a more protected European market Lufthansa simply doesn't have nearly the reach that any of the US3 have, which is why the top 3 airlines by profitability are all the US3 and that's unlikely to change in the short term.
managed by AI only means prices will go up
Not necessarily. If you read the article, it's noted that they will monitor competitors' prices. In some cases, they might be forced to lower a price in order to remain competitive on a particular route on a particular date at a particular time.
It will surely be interesting to see how these machine learning models (AI) change pricing of tickets and other aspects of life. Given toxic capitalism where the accumulation of wealth and the rapacious generation of profit is never enough, I look with a jaundiced eye, a bit of trepidation, amusement and interest at the coming changes.
Ultimately, there will be smart system poised against smart system poised against smart system. Most likely, it will drive everyone to the same price in the middle. (Look up something called a Pareto-Levy Distribution. This is the likely outcome, with software limits that exclude the tails.)
People need to remember that the goal is to increase revenue per flight, not per each individual passengers. The airlines have always (well, for decades) been trying to set fares in a way that allows them to squeeze top buck from people willing to pay a lot, while offering cheaper fares to fill the rest of the aircraft with price sensitive passengers. This will just take that to the new extreme - people willing to...
People need to remember that the goal is to increase revenue per flight, not per each individual passengers. The airlines have always (well, for decades) been trying to set fares in a way that allows them to squeeze top buck from people willing to pay a lot, while offering cheaper fares to fill the rest of the aircraft with price sensitive passengers. This will just take that to the new extreme - people willing to pay a lot will pay even more, but an effect should be seen on the other end of the spectrum.
J fares departing from VIE vs BUD can vary by 500-800€ per a return trip these days, not because it's cheaper to operate to BUD but because BUD market is more price sensitive. But there's plenty of us living somewhere between the two airports and having a choice of either. In a dynamic fares model, it would no longer be assumed that one is more or less price sensitive based on the origin of our journey but based on our previous travel patterns etc. Which will be bad for some, and good for others.
What will really matter is what you teach the algorithm. Myself being a leisure traveller who can choose when and where to travel, I imagine I can end up on a winning side of this.
Actually, no you won't. Not if your IP is fed into the algo and your location of purchase IP is used and it is taught that you are departing BUD just for a cheaper fare. It can individually offer you a price at the higher rate based on a combination of factors not currently used and still offer a true BUD resident a lower fare.
But the airline isn't offering the cheap fares out of BUD out of love for "true BUD residents". It's offering them because "true BUD residents" tend to be more price sensitive. If the airline learns that I am price sensitive too, it may actually offer better fares from anywhere because they will know that I'm willing to pay 2500€ but not 3200€ for that ticket to Buenos Aires and might as well offer that price...
But the airline isn't offering the cheap fares out of BUD out of love for "true BUD residents". It's offering them because "true BUD residents" tend to be more price sensitive. If the airline learns that I am price sensitive too, it may actually offer better fares from anywhere because they will know that I'm willing to pay 2500€ but not 3200€ for that ticket to Buenos Aires and might as well offer that price out of VIE as well, while someone who is willing to pay 3200€ will get that price even from BUD. In general, the price airline offers you will go higher if the airline believes you are willing to pay more. On the other hand, if the algorithm figures out you're not, it may lower the price specifically for you to fill that plane without losing revenue from high-yield customers. Of course this would only apply on days/routes with lower demand, but that's where my flexibility comes into the equation.