Delta is implementing a strategy to move from fixed fares to individualized pricing using AI to improve profitability. Currently, 3% of fares are determined by AI, with plans to increase this to 20% by the end of the year. The president described this shift as a complete reengineering of pricing models, viewing AI as a constant analytic resource. The pilot program has shown favorable outcomes in revenue. Delta also aims to expand this pricing strategy beyond airlines into other sectors such as hospitality and rentals, while some consumer advocates express concerns over potential price-gouging.
Delta is moving from set fares to individualized pricing using AI, aiming for 20% of ticket prices to be determined by AI by year-end, with 3% currently in use.
This strategy represents a full reengineering of Delta's pricing model, pushing towards dynamic pricing tailored to individual passenger data and demand.
Initial results of the AI pilot program have shown favorable unit revenues, and the company anticipates expanding this method beyond airlines into hospitality and travel services.
Privacy advocates warn that AI-driven pricing could lead to price-gouging, with one saying it is akin to 'hacking our brains', raising concerns over consumer fairness.
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