Another day, another chance to save face. This time, it’s the Delta AI drama causing some public backlash based on what they told investors.

As you might recall, Delta Air Lines announced a plan during its last earnings call to increase reliance on AI for pricing. They offered a prepared statement and then further elaborated during a Q&A session with analysts. The assumption in bringing this up is to build support for the practice across its competitors. After all, if all airlines do it, it’s easier to pass along price increases to customers.

What’s the latest in the Delta AI drama?

American Airlines CEO says it’s not an “appropriate” practice

Since we last left off, American Airlines CEO Robert Isom blasted Delta for the strategy, calling it “bait and switch” and “tricking” customers.

I quite frankly think that some of the things I’ve heard are just not good… This is not about bait and switch. This is not about tricking. And others that talk about using AI in that way, I don’t think it’s appropriate. And certainly, American, it’s not something we will do.

So much for the thought that other airlines will follow along.

Senators speak out

On top of that, Senators Ruben Gallego, Richard Blumenthal, and Mark Warner, expressed concern over the practice.

The implications for individual consumer privacy are severe on their own. Surveillance pricing has been shown to utilize extensive personal information obtained through a variety of third-party channels, including data about a passenger’s purchase history, web browsing behavior, geolocation, social media activity, biometric data, and financial status. Former FTC Chair Lina Khan has cautioned against a particularly egregious but conceivable example of an airline using AI to charge a higher fare to a passenger “because the company knows that they just had a death in the family and need to fly across the country.”

The opacity surrounding Delta’s new customized pricing model could aggravate these concerns. Consumers have no way of knowing what data and personal information your company and Fetcherr plan to collect or how the AI algorithm will be trained.

Clearly the comments from Delta have reached a much wider audience than they perhaps hoped. Delta doesn’t want their plans to use AI to boost margins to go by the wayside, right?

Delta backtracks on its use of AI

Naturally with all this pressure on the practice, Delta took a step back from its prior stance during its response to the Senators.

“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. Our ticket pricing never takes into account personal data.”

Delta further claimed that dynamic pricing has existed for more than three decades and implied the use of AI will speed up the analysis backing up dynamic pricing.

Perhaps out of fear of regulation that would render the technology and investment meaningless, they say they’re not planning to use the technology. So that’s that, right?

How do you bridge the gap with what they told investors?

At face value, it sure seems like Delta told investors “yes, we’re using AI and we have plans to increase its use.” Then, Delta does an about-face and tells lawmakers that they never had plans to use AI. How do we bridge the gap?

I think the devil is in the details of what is said and what isn’t said.

First, Delta doesn’t have plans to use untested technology. What company would do that? They themselves said they don’t plan to roll it out until it has gone through more extensive testing because they don’t want to be sloppy. So, them telling lawmakers that they don’t have plans to use it isn’t wrong from a certain point of view.

Next, Delta says they don’t intend to use “individualized prices based on personal data,” but didn’t fully deny its use of AI. They also aren’t eliminating using individualized prices based on data other than personal data. So, if they gather data from a source—maybe via an AI tool that aggregates data across a subset of customers—they could then charge individualized prices and not conflict with what they said.

I still fully expect Delta to continue forward with its AI research and to implement personalized prices at some point. And that won’t conflict with what they told these Senators.

How do you feel about the Delta AI drama?

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