According to company leadership, Delta is now using AI to set proposed fares for passengers on an individual basis. It says the system is more efficient, but definitely more profitable, than older models. As of now, only about 3 percent of domestic fares are being sold using the new AI model, though Delta President Glen Hauenstein told investors earlier this month that the goal is to raise that to 20 percent by the end of the year.

It’s a change many consumer watchdog groups and even some lawmakers are calling discriminatory, invasive, and potentially predatory to consumers.

It’s well known that the aviation industry has used dynamic pricing for decades. In dynamic pricing models, fares can change throughout the day based on factors like time of booking, how much demand there is for the route, seat availability, and the day of the week. The systems are rule-based and somewhat predictable, loosely based on the idea that prices go up when demand increases and drop when fewer people are interested. The rate is generally the same for each person, provided they’re booking the same ticket at the same time.

Delta’s new AI model is a drastic change in that it’s personalized (or some might say “targeted”) to each potential flyer. Instead of calculating prices based on broad traveler trends, the AI estimates an individual’s willingness to pay in real time. That means that two buyers searching for the same flight at the same time could be offered totally different prices based on undisclosed information and factors an AI can surmise about that person. The technology is built by a company called Fetcherr, which says its system calculates individualized pricing based on millions of data points, including “factors like customer lifetime value, past purchase behaviors, and the real‑time context of each booking inquiry.”

In a statement to Business Insider, Delta denied it would use any personal information to influence pricing, including browsing history, financial data, or location data. However, as of now, Delta has declined to specify what data points the AI does use.

“The biggest shift is that AI pricing goes beyond the traditional supply-and-demand model and tailors prices to each individual in real time,” Jesse Neugarten, founder and CEO of Dollar Flight Club, tells Matador Network. He says that in the past, it was route-based factors that determined the cost. “With AI, the algorithm can ingest tons of personal signals like your browsing history, device type, even estimated income level and spit out a price just for you.”

Which could lead to higher prices for flyers overall.

“It’s no longer just ‘prices are going up because a flight is filling up,’” Neugarten says. “Now, it’s ‘prices are going up for you because we think you’ll still pay it.’”

Three Democratic senators (Ruben Gallego of Arizona, Richard Blumenthal of Connecticut, and Mark Warner of Virginia), already sent a warning to the airline, suggesting that AI pricing may be “surveillance-based pricing” — a practice considered predatory to consumers. The senators asked Delta to respond by August 4 with details about what data the AI uses, how the algorithm is trained, and how many passengers have been captured using AI pricing. What may come from the conversation remains to be seen, but it could result in a larger conversation (and potentially regulation) on how AI can be used for consumer pricing.

Consumer advocacy groups echoed the senators’ concerns. “They’re trying to see into people’s heads to figure out how much they’re willing to pay,” according to Justin Kloczko, a reporter with Consumer Watchdog. “It’s hacking our brains for maximum profit.”

In addition to the proposed unfairness of the model, another concern is that the AI pricing tool will create financial penalties for infrequent travelers in an attempt to reward more frequent fliers. That could translate to more expensive fares for lower-income travelers. Studies published in early 2025 across all industries (not just airlines) showed that lower income buyers tend to see the biggest increases in pricing under AI-driven pricing models.

“Legality depends on how the data is sourced and used, but there’s no clear law that says an airline can’t offer a different price to different people based on personal data,” Neugarten says. “Fairness is a different story. If two people are shown two prices for the same seat based solely on how much the system thinks they’re willing to pay, that erodes consumer trust fast. Most travelers have no idea this is happening behind the scenes, which is part of the problem.”

Conversely, Delta says the model is really nothing new. A Delta spokesperson told Boston 25 News that AI pricing technology is just another way of doing what it has been doing for years: changing airfare prices based on demand and availability, and using AI simply “streamlines” that process. And according to Delta President Hauenstein, it’s been profitable, telling investors on the same call that it’s resulting in “amazingly favorable unit revenues.” In other words, consumers are paying more, and the airline is making more money.

Neugarten says while it is technically just an extension of what Delta has already been doing, it’s a big one. “This is the first time we’re seeing personalized pricing on this level, and at machine speed.” He thinks it’s a major shift, akin to flight prices becoming more like an online auction than a clear transaction. “Travelers who aren’t aware of this trend risk overpaying without even realizing it,” he adds.

Because Delta’s AI pricing model is opaque, with the airline intentionally not sharing what factors determine a price, there’s no foolproof way for travelers to avoid AI pricing. But based on what’s known about similar systems, there are a few educated guesses you can make based on what may be an influencing factor. None of these are guaranteed to work, but in general, taking steps to protect your privacy online isn’t a bad idea anyway.

Shop in incognito mode: AI-powered pricing tools probably don’t use cookies, but using a standard browser may give away information like repeat search behavior, or what website you were just on. Using incognito mode, or switching between unlinked devices for different searches, may help minimize how much data Delta can see.

Delay or rush your airfare purchase: Some AI models consider urgency as a factor. So if you’re repeatedly checking the cost of a route over and over, or searching for a very last-minute ticket, the system may think you’re desperate, and try to charge you more. Booking early could help. However, booking a seat at the very last minute could work, too, as the model may lower the price if it thinks you’re undecided on traveling.

Use a VPN to hide your location: Delta says it doesn’t use geolocation for AI pricing, but the broader travel industry often does. Changing your virtual location with a VPN may yield different fares, particularly on international routes. It may also stop programs from being able to make assumptions about your income or ability to pay based on your residential zip code.

Clear your cache and history: Again, Delta says it doesn’t use personal browsing behavior. But just in case other sites do, clearing your saved information and browsing history can reduce the risk of AI systems being able to recognize patterns it can use to adjust the price.

Use a different device than your daily phone or computer: “Booking on a lower-end Android phone may get a different result than a MacBook Pro,” Neugarten says Neugarten.

Change your profile or loyalty status: AI pricing models may reward frequent travelers. However, there’s also a chance it could interpret loyalty status as a sign that you’re willing to pay more to fly with a certain airline. Searching while logged out, as a guest, or on a brand new profile could help you avoid being classified as potential higher paying customer.

The system, developed in partnership with Israeli startup Fetcherr, is already being used on 3% of Delta’s flights, with plans to expand it to 20% by the end of the year, according to the company.

“While we’re still in the test phase, results are encouraging,” said Delta CEO Ed Bastian during the company’s second-quarter earnings call.

Personalized pricing — or surveillance pricing as the Federal Trade Commission (FTC) calls it — is pricing tailored to the individual based on the personal data collected.

For example, two people shopping for airfares at the same time might see different prices if one is a business traveler and the other is a budget-conscious consumer, based on things like income estimates, browsing behavior, purchase history or type of device used. The price is driven by who the buyer is and what the AI algorithm believes he or she will pay.

That’s different from dynamic pricing, which is determined by market factors such as real-time supply and demand and pricing by competitors. While the price changes, everyone sees the same price at a given time. Airlines, ride-sharing and other companies already use dynamic pricing.

In a nutshell, dynamic pricing changes based on when a consumer buys. Personalized pricing changes based on who the consumer is.

Delta President Glen Hauenstein explained it this way during the airline’s “investor day” analyst briefing last November:

“We will have a price that’s available on that flight, on that time, to you, the individual. Not a machine that’s doing an accept reject and a static price grid,” Hauenstein said. He called the AI a “super analyst” and results have been “amazingly favorable unit revenues.”

Delta seeks to gain a “first-mover advantage,” Hauenstein added. “We do believe that we are ahead of our competitors in terms of implementing this and in changing our business processes and rules around it.”

Ultimately, this is “a full reengineering of how we price — and how we will be pricing in the future,” Hauenstein said.

More here: JetBlue and United Link Loyalty Programs Under ‘Blue Sky’ Banner

Using a Consumer’s Personal Data

There’s already rising outrage about the practice.

“Delta’s CEO just got caught bragging about using AI to find your pain point — meaning they’ll squeeze you for every penny,” wrote U.S. Sen. Ruben Gallego, D-Ariz., in a post on X. “This isn’t fair pricing or competitive pricing. It’s predatory pricing. I won’t let them get away with this.”

A Delta spokesperson told PYMNTS: “There is no fare product Delta has ever used, is testing, or plans to use that targets customers with individualized offers based on personal information or otherwise.”

“A variety of market forces drive the dynamic pricing model that’s been used in the global industry for decades, with new tech simply streamlining this process. Delta always complies with regulations around pricing and disclosures,” the spokesperson added.

In January, the FTC issued a study on “surveillance pricing,” noting that it has been going on in retail. According to the FTC, some retailers track consumer behaviors — ranging from how shoppers move the mouse on a webpage to the products they abandon in an online shopping cart — to customize pricing.

At least 250 companies from grocers to clothing retailers are using surveillance pricing, the FTC found, but did not name names.

Consumer Watchdog’s December 2024 report said Target charged people $100 more for a TV when they’re in a Target parking lot versus another location. According to the same report, travel booking platform Orbitz found that Mac users were willing to spend more money to stay at hotels and charged them more.

“It’s price gouging based on predictive behavior,” wrote Justin Kloczko, author of the report. “A lot is not known because of corporate secrecy, but what we do know now is companies are experimenting with surveillance pricing as a way for businesses to weaponize personal data against you in order to charge more.”

PYMNTS reached out to Target and Orbitz for comment, but has yet to receive replies.

Peter Fader, a marketing professor at The Wharton School of the University of Pennsylvania who specializes in customer lifetime value modeling, said in a LinkedIn post that “there’s going to be plenty of public outcry over Delta Air Lines’ new personalized pricing initiative.”

“Concerns about ethics, privacy, price-gouging and ‘brain-hacking’” are “valid” but “that’s not what worries me most,” he wrote.

Fader said Delta may be overestimating its ability to accurately assess individual price sensitivity.

“There’s just too much noise, too much volatility, too much model risk” to do personalized pricing well, he said.

The smarter approach would be to group customers based on behavioral traits like recency, frequency and monetary value.

“Within these segments, individual errors cancel out, and decisions become more stable, more defensible, and more profitable,” Fader added.

See also: European Airlines Report Uncertainty Drives Decline in Bookings to US

Personalized Pricing May Not Fly in Europe With GDPR

Delta faces a host of business risks, one of which is erosion of customer trust, said Philip Carls, who serves on the board of Priceagent.

“This will likely dent customer trust since, unlike traditional pricing, passengers won’t know if they’re getting a fair deal or being targeted,” Carls told PYMNTS, adding that privacy issues could also be raised.

“It is unclear exactly what factors are being used to target set prices,” Carls said. “It’s also unclear how this will play out with aggregators, travel agencies, partner or alliance airlines and other channels. It’s also unclear how effective this will be if competitors adopt similar algorithmic pricing — there is only so much upside Delta can charge before someone switches and flies a different airline.”

There’s regulatory risks as well. While such pricing strategies may be legal in the U.S., they face more restrictions in the EU and U.K.

“In Europe, GDPR limits data usage, and airlines must justify personalized pricing under ‘legitimate interest,’” Carls said, adding that there could be antitrust concerns as well if pricing algorithms lead to collusion. What’s more is that consumers will sue if they feel unfairly targeted. “If pricing seems discriminatory, there will be lawsuits,” he said.

Tom Randklev, head of product at payment orchestration firm CellPoint Digital, which serves the airline and other industries, noted that Delta’s move could lead other carriers to follow suit.

“The benefits highlighted from Delta’s pilot will generate significant interest and imitation from the other carriers,” Randklev told PYMNTS. He added that other major airlines, such as United and American, already use AI in revenue management, while noting that Delta’s partner, Fetcherr, also works with Virgin Atlantic, WestJet, Azul and Viva airlines.

But Delta’s Hauenstein said the airline will proceed with care.

“We’re all in on this,” he said. “We’re very excited about it, but we want to be really smart about it because it could also be very dangerous, if it’s not controlled and it’s not done correctly.”

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