At least on paper, companies aren’t supposed to discriminate against their customers, but Delta Airlines just announced plans to do exactly that. In yet another attempt to boost profits, Delta’s president Glen Hauenstein told investors the airline will use AI to dictate ticket prices for at least 20% of all flights by the end of the year. Eventually, the goal is to get rid of static pricing completely, Fortune reports.
It will reportedly take several years for Delta to get rid of set pricing, but so far, Hauenstein claimed early results “show amazingly favorable unit revenues.” And Delta isn’t the only airline looking to boost profits by using software to squeeze as many dollars as possible out of its customers. The company it’s partnered with, Fetcherr, also reportedly works with Azul, WestJet, Virgin Atlantic, and VivaAerobus, but Delta is arguably the first to talk as openly as it has about its plans to charge you more if it thinks you might be willing to pay more.
When Fortune contacted Delta for a comment, a spokesperson for the airline said it “has zero tolerance for discrimination. Our fares are publicly filed and based solely on trip-related factors like advance purchase and cabin class, and we maintain strict safeguards to ensure compliance with federal law.” That said, they didn’t respond when asked “what those safeguards were, whether they are human or automated, or where the 3% of fares that are currently set via Fetcherr are publicly filed.”
But while Delta may not specifically discriminate on the basis of race or gender, that doesn’t mean you won’t see different prices based on your zip code or other factors that may end up having a disparate impact on protected groups. And since it’s all done with software, don’t expect independent watchdog groups to have an easy time checking to see what differences there are in the prices Delta charges different types of people.
Surveillance pricing
Surveillance pricing isn’t new, but AI has definitely supercharged companies’ abilities in that arena. And while you might assume that airlines such as Delta would mainly focus on squeezing more money out of the wealthy while little ol’ you would get by paying the lowest prices, that isn’t necessarily the case. Consumer Watchdog found that when companies use surveillance pricing, they tend to favor the wealthy and instead offer higher prices to customers with lower incomes.
The folks at Consumer Watchdog aren’t the only ones to have noticed this trend. Back in 2012, a Wall Street Journal investigation into what we now see as the early days of modern surveillance pricing arrived at a similar conclusion, writing that “areas that tended to see the discounted prices had a higher average income than areas that tended to see higher prices.”
For now, you may be able to circumvent surveillance price gouging by clearing your cookies and using a VPN, but don’t expect that to work for long. As travel expert Gary Leff told Fortune, before you know it, airlines such as Delta will likely require customers “to be logged in for purchase of tickets in order to obtain status benefits from an airline, essentially being fully within their ecosystem to gain the benefits of that system (i.e. submit to personalized pricing to get extra legroom seats).”
What you can do about it
At the very least, it sucks knowing you may end up paying more for the exact same product than someone else, but it also feels like the kind of thing that should be illegal. Some lawmakers appear to agree, too, with Arizona Senator Ruben Gallego tweeting, “Delta’s CEO just got caught bragging about using AI to find your pain point — meaning they’ll squeeze you for every penny. This isn’t fair pricing or competitive pricing. It’s predatory pricing. I won’t let them get away with this.”
Additionally, since surveillance pricing isn’t a completely new development, a few states have already introduced bills that would ban the practice. The list currently includes California, Colorado, Georgia and Illinois. If you live in one of those states, you can help by calling your Governor, state representative and state senator to encourage them to support these bills. And even if your state doesn’t already have a bill that would ban surveillance pricing, you can pressure your lawmakers to introduce one of their own.
Unfortunately, Republicans are the party of letting businesses do whatever they want (unless it involves making sure unqualified white guys don’t give out all the best jobs and highest salaries to other unqualified white guys), so don’t expect the federal government to swoop in and save us anytime soon. Getting a federal law passed would require flipping both the House and the Senate, as well as electing a new president who isn’t already in Big Business’s pocket. But it’s absolutely possible to get these laws passed at the state level if we make enough calls and force our elected officials to take surveillance price gouging seriously.
