US Transportation Secretary Warns Airlines Over AI Personalized Pricing

Transportation Secretary Sean Duffy and several Democratic lawmakers have raised concerns about airlines potentially using artificial intelligence (AI) to set personalized ticket prices, which could lead to fare increases based on individual consumer data such as income or browsing history. Delta Air Lines, currently testing AI-driven dynamic pricing across 20% of its domestic network in partnership with Fetcherr, has denied using AI for individualized pricing, emphasizing that its pricing adjusts based on market factors rather than personal data. Despite these denials, the issue has sparked a backlash over transparency and fairness, with lawmakers threatening investigations and proposing legislation to ban AI-based personalized pricing and wage decisions. The debate highlights a broader tension within the airline industry between leveraging AI for profitability and maintaining consumer trust, especially as regulatory agencies like the Department of Transportation and Federal Trade Commission consider issuing guidelines on AI pricing practices. Industry experts note that while dynamic pricing is common, the use of AI to personalize prices to consumers' 'pain points' raises ethical and regulatory concerns, reminiscent of controversies surrounding surge pricing in other sectors. Delta maintains it complies with regulations and does not engage in 'surveillance pricing,' but the scrutiny underscores risks of reputational damage and potential regulatory actions.