Research reveals how Delta and other airlines use AI to set ticket prices

Booking your last minute summer getaway? Delta recently revealed to what extent it’s 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’s working so far, and may expand to other industries in the future.

What happened?

Delta recently made headlines, sparking backlash from consumer groups and concern from Congress, when president Glen Hauenstein revealed in the airline’s latest earnings call it’s currently using AI for 3% of domestic pricing, with the goal of about 20% by the end of the year.

“So, we’re in 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. And we’re really excited about partnering with Fetcherr.”

When Fast Company reached out to Delta about how this might affect consumers, the airline referred to its letter to Senators Ruben Gallego, Richard Blumenthal and Mark Warner 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 create “dynamic pricing model on steroids” pinpointing flight prices with greater accuracy and a whole lot faster.

What variables go into AI airline flight pricing?

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, and coupled it 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.”

The question on most passengers’ minds is whether working with companies like Fetcherr will lead airlines to use personalized pricing.

Like Delta, Fetcherr told Fast Company its technology has been developed to streamline processes already in place at companies and “does not allow for individualized or personalized pricing.”

“Our Generative AI system does not and will not use, collect or receive any Personally Identifiable Information (PII) [and] remains steadfast in our commitment to transparency and to our compliance with applicable regulations,” a spokesperson for Fetcherr said in a statement.

Delta isn’t the only airline using AI

In its white paper, Fetcherr said it has also partnered with: Virgin Atlantic, UK; Viva Aerobus, Mexico, West Jet, Canada; and Royal Air Maroc—with the primary focus on optimizing key aspects such as pricing and inventory management.

What’s next for Fetcherr AI after airline pricing?

Looking ahead, Fetcherr said it plans to expand into other industries like hospitality, insurance, commerce, and capital markets; with their models expanding beyond pricing and inventory decisions, to more complex challenges like making supply chain decisions and engaging in B2B strategic decision making.