With the proliferation of AI, it seems almost inevitable that everything will eventually use the technology, including the new Delta AI pricing strategy.

Delta’s Q2 2025 earnings release

During Delta’s most recent earnings release, the company talked glowingly about the future of the business and how financial results stabilized. Forward bookings are up and premium cabins continue to show high demand. We’ll talk a bit more about that specific topic another day.

The leadership team was able to explain away the potential downsides by calling out offsets, like a weaker dollar compensating for weaker international demand. They also responded to unattractive news regarding overcrowding of lounges by saying there is a plan in place to eliminate most crowds within 2 years. (I imagine part of this for Delta One lounges will be the unbundling of lounge access from ‘basic business’ fares.)

News of Delta’s earnings release caused the stock to jump over 10% on the day. Investors seemingly bought the story from Delta that optimism will continue into the near future. But there was an odd call-out during their release.

The new Delta AI pricing strategy

At the start of their earnings release, Ed Bastian’s prepared remarks briefly touched on a new topic in airfare: AI determining the price you’ll pay.

And commercially, we’re optimizing revenue through our partnership with Fetcherr, leveraging AI-enhanced pricing solutions. While we are still in the test phase, results are encouraging.

Analyst Thomas Fitzgerald of TD Cowen then followed up on this during the Q&A session that followed. Which lead to a bit more of a reveal from Glen William Hauenstein, President of Delta Air Lines, Inc:

So, today, we’re about 3% of domestic. And that’s – 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 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, 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.

Who is Fetcherr?

Fetcherr is a relatively new company that started in 2019 and markets itself primarily to airlines looking for improvement in their financials.

Fetcherr mentions it offers “a cutting-edge generative AI architecture, empowering our enterprise partners to redefine how they maximize profit and optimize workflow”. That’s quite a mouthful, but it’s quite simple. Generative AI means they take past information to make inferences on future outcomes (i.e., it learns as it goes). So all it means is their technology learns from existing and new data to maximize profits.

It sounds great to maximize profits… except when you realize they’re trying to maximize the money from your wallet.

Who are their enterprise partners? They list five on their website:

• Azul
• Delta
• Virgin Atlantic
• VivaAerobus
• Westjet

On top of that, they have quotes from executives of each company talking about how the technology has resulted in more revenue for them. Their board also includes Alex Cruz, former Chairman and CEO of British Airways. So they have a lot of industry weight behind the company.

What does this all mean?

First and foremost, while Delta is getting all the current publicity for their new AI pricing strategy, they are not the only airline doing this. The fact that each of four other airlines are offering public comment suggests that it’s already more broadly in use than you might realize.

Next, it shouldn’t be much of a surprise that Delta’s loyal partners Virgin Atlantic and Westjet are on the short list of adopters for the technology. Delta has a stake in each of these airlines, so finding other companies to also try out the technology seems almost natural. Any learnings from the new Delta AI pricing approach could be shared with other airlines (as long as they avoid anti-trust issues).

Delta can’t do this alone

Don’t be worried yet about unleashing the floodgates on Delta AI pricing. The only way generative AI works is if it understands who is looking to purchase a ticket. Maybe it knows based on cookies, IP address, or your frequent flyer account. But what if you book a ticket via Expedia? Delta presumably has no power to adjust pricing unless somehow they link your account to Expedia.

You can expect Delta to eventually force members to book direct (and log into their account) if they want elite status and/or miles. But you can also expect Expedia and other travel agents to put up a big fight. Not only that, but what does that mean for business travel booking via Concur or other sites? Pricing can’t just remain high there since corporate policy could mean shifting spend towards AA or United.

There are still a lot of question marks to work through as Delta and others figure out the optimal AI strategy. Rather, I think what Delta wants is for more publicity on the topic so that their competitors jump on the bandwagon and once everyone does it, there’s more leverage to make the changes without negative impact to their own bottom line. That’s the real story here.

I expect this to impact their award pricing

Delta already has a stranglehold on one particular group of bookings made on their website: awards booked with SkyMiles. Just think about it:

• It requires login to your account to redeem miles
• The SkyMiles currency is a captive audience–you can’t use that currency on United or American!
• Pricing of Delta flights is already dynamic and not tied to award charts
• Introducing member-specific pricing could mean boosting engagement by offering limited-time deals just for you
• If the system determines it wants more cash, it might show poor value for your SkyMiles to encourage you instead to book not with points but with dollars

I wouldn’t want this to happen, but I think it’s inevitable for Delta to go down this path. Delta has already shown it’s comfortable neglecting true value in its SkyMiles program. However, even they know that if they go too far too quickly that it might result in customer backlash to the point where it damages their relationship with American Express.

What do you think of AI-generated airfare pricing?

Suggested reading:

• Review: Delta Sky Club LAX (One of the Best in the System)
• Making Memories on the Plane with Delta Trading Cards
• Review: Delta One 767-300ER LAX-JFK