With major ramifications for passengers, airlines are increasingly using artificial intelligence to determine ticket prices. Now, simple actions like allowing browser cookies, accepting website agreements, or enrolling into loyalty programs can influence a flight's price. The move to AI-driven pricing brings up significant challenges of equity, privacy, and the possibility of increased travel costs.
Recently, Delta Air Lines revealed that the Israeli startup Fetcherr's AI technology is used to determine about 3% of its domestic ticket rates. To generate customised offers, this system analyses a number of variables, such as past purchasing patterns, user lifetime value, and the current context of each booking query. The airline plans to raise AI-based pricing to 20% of tickets by the end of 2025, according to Delta President Glen Hauenstein, who also emphasised the favourable revenue impact.
Regulatory issues
US lawmakers have questioned the use of AI pricing models, fearing that it may result in increased fares and unfair disadvantages for some customers. The public's response has been mixed; some passengers are concerned about customised pricing schemes that could make air travel less transparent and affordable.
In order to adopt dynamic, data-driven pricing strategies, other airlines are doing the same by investing in AI knowledge and creating machine learning solutions. Although this tendency welcomes increased regulatory scrutiny, it also signifies a larger transition within the industry. In an effort to strike a balance between innovation and justice, authorities are looking more closely at how AI technologies impact consumer rights and market competition.
In Canada, airlines such as Porter recognise the use of dynamic pricing and the integration of AI in some operational areas, but they do not yet use AI for personalised ticket pricing. Canadian consumers benefit from enhanced privacy safeguards under the Personal Information Protection and Electronic Documents Act (PIPEDA), which requires firms to get "meaningful consent" before collecting, processing, or sharing personal data.
Nevertheless, experts caution that PIPEDA is out of date and does not completely handle the complications posed by AI-driven pricing. Terry Cutler, a Canadian information security consultant, notes that, while certain safeguards exist, significant ambiguities persist, particularly when data is used in unexpected ways, such as changing prices based on browsing histories or device types.
Implications for passengers
As airlines accelerate the introduction of AI-powered pricing, passengers should be cautious about how their personal information is used. With regulatory frameworks trying to keep up with rapid technology innovations, customers must navigate an ever-evolving sector that frequently lacks transparency. Understanding these dynamics is critical for maintaining privacy and making informed judgements in the age of AI-powered air travel pricing.
