Airlines are turning to AI to figure out just how much we’re willing to splurge on our summer vacations.
Driving the news: Delta Air Lines has started using an AI-powered pricing system that calculates airfare for individual customers, not just based on demand, but by determining exactly how much they’d be willing to pay.
- According to notes from the company’s earnings call, the system currently sets prices for only 3% of customers, but that number will climb to 20% by the end of the year.
- Fetcherr, the travel firm that provides the pricing system, has partnered with a number of other airlines, including WestJet and Virgin Airlines.
Why it matters: This is a lot different than dynamic pricing, where high demand for an Uber or concert tickets drives up the cost for everyone. By using personal data, this AI system can calculate to the penny how much it can squeeze from each customer for the same product.
- It’s not clear what data the system evaluates, but privacy experts have expressed major concerns over what information is guiding those individual pricing decisions.
Big picture: Delta is test-driving what could be a broader shift away from universal price rates. Consumer trend analyst Matt Britton told Fortune, “The era of 'fair' pricing is over. The price you see is the price the algorithm thinks you’ll accept.”—LA