Airfare by algorithm: Delta leans into AI pricing — but is it a good thing?

(NewsNation) — What you pay for a Delta Air Lines ticket may soon depend less on timing and more on what an algorithm thinks you're willing to spend.

About 3% of Delta's domestic ticket prices are now determined by artificial intelligence, with plans to raise that to 20% by year's end, President Glen Hauenstein said on an earnings call last week.

During an Investor Day presentation in November, Hauenstein described the new AI pricing technology as a "super analyst," calling it a "full reengineering of how we price and how we will be pricing in the future."

That enthusiasm stems from the airline's partnership with Fetcherr, an Israeli tech company that uses AI to process millions of data points instantly "to set the perfect price every time," according to a company blog post.

Delta's embrace of AI is the latest example of dynamic pricing, where companies adjust prices in real time based on factors like supply, demand and even individual consumer behavior. The concept isn't new, but AI is making it far more sophisticated.

Fetcherr's website says its algorithms tailor prices based on factors like customer lifetime value, past purchase behaviors and "the real-time context of each booking inquiry," all of which, the company says, help create "a truly personalized offer."

In theory, hyperpersonalization meets customers where they are, offering a custom experience every time. But critics warn that the new pricing tactics may exploit rather than benefit consumers.

Democratic Arizona Sen. Ruben Gallego called Delta's practice "predatory pricing," accusing the airline of using AI to "find your pain point" and "squeeze you for every penny."

Last year, Wendy's planned to test an AI-driven dynamic pricing model that many likened to Uber's surge pricing. The plan faced intense backlash online before the burger chain clarified that menu prices would not increase during its busiest hours.

It remains to be seen whether Delta will face similar pushback. Airlines already adjust fares based on seasonality and demand, so travelers may be accustomed to seeing wide price swings, with or without AI.

NewsNation reached out to Delta for more details about its AI pricing strategy. In response, a spokesperson pointed to the company's latest earnings call.

Early results suggest Delta's AI pricing strategy has successfully driven revenue, but it may still be some time before it's the norm.

"We're in heavy testing phase. We like what we see," Hauenstein told investors. "But we're going to take our time and make sure that the rollout is successful."