Delta President Explains Controversial Change
Delta Air Lines sparked controversy this week when President Glen Hauenstein revealed that the company was planning to expand its use of AI in setting prices. While the change is controversial, Hauenstein certainly thinks it will be good for Delta.
During an earnings call last week, Hauenstein told reporters that about 3 percent of the airline's domestic ticket prices are already set using AI, and that the company hopes to expand that to 20 percent by the end of 2025. He also talked up Delta's partnership with Fetcherr, a tech company that boasts its ability to "set the perfect price every time" using AI.
"The convergence of AI, machine learning and real-time data processing completely transforms how airlines approach pricing strategy," a Fetcherr post on dynamic pricing in aviation reads. "Gone are the days of rigid pricing rules and manual adjustments. Welcome to the era of true dynamic pricing, where artificial intelligence can process millions of data points instantly to set the perfect price every time. Welcome to the modern age of AI dynamic pricing."
However, not everyone is happy with the move.
Several lawmakers have already expressed concern, with one highlighting the issues in a post on social media, and American Airlines CEO Robert Isom has spoken out against the plan, calling it a "bait and switch."
Still, Hauenstein seems to be excited about the plan. During the earnings call, he had two words to describe the AI that the company is using to help set its prices, calling it a "super analyst" that isn't limited in the way humans are.
“We’ve started this and I’d say what we have today with AI is we have a super analyst,” Hauenstein said, according to Airline Geeks. “We have an analyst that’s working 24/7, 24 hours a day, 7 days a week. And trying to simulate, given the same inputs that an analyst sees today, real-time, what should the price points be. And that output is different than what we have in the market. And so we’re letting the machine tell us, actually, go ahead and price in a very controlled environment.”
It will certainly be interesting to see how Delta moves forward with such a controversial plan.