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Democratic senators express concerns over AI pricing

impact

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Legislation proposed to ban AI-based personalized pricing

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Transportation Secretary Duffy warns against AI-based

personalized pricing

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Dynamic pricing used for decades without personal data

(Updates with additional comment from Duffy, details on AI

issue, American comment in paragraphs 3-8)

By David Shepardson

Aug 5 (Reuters) - U.S. Transportation Secretary Sean

Duffy said Tuesday the department has concerns about the use of

AI to set personalized airline ticket prices and will

investigate if anyone does so.

Last week, Delta Air Lines ( DAL ) told lawmakers it will not

and has not used AI to set prices for individual consumers. "To

try to individualize pricing on seats based on how much you make

or don't make or who you are, I can guarantee you that we will

investigate if anyone does that," Duffy said. "We would engage

very strongly if any company tries to use AI to individually

price their seating."

Duffy noted Delta clarified that it would not use AI for pricing

individual tickets, "and I'll take them at face value."

Late last month, Democratic Senators Ruben Gallego, Mark

Warner and Richard Blumenthal said they believed the

Atlanta-based airline would use AI to set individual prices,

which would "likely mean fare price increases up to each

individual consumer's personal 'pain point.'"

Delta previously said it plans to deploy AI-based revenue

management technology across 20% of its domestic network by the

end of 2025 in partnership with Fetcherr, an AI pricing company.

Fetcherr on its website says its technology is "trusted

by the world's leading airlines," and lists Delta, Westjet,

Virgin Atlantic, Viva and Azul.

American Airlines ( AAL ) CEO Robert Isom said last month

using AI to set ticket prices could hurt consumer trust.

Democratic lawmakers Greg Casar and Rashida Tlaib have

introduced legislation to bar companies from using AI to set

prices or wages based on Americans' personal data and would

specifically ban airlines raising individual prices after seeing

a search for a family obituary.

Delta said airlines have used dynamic pricing for more than

three decades, in which pricing fluctuates based on a variety of

factors like overall customer demand, fuel prices and

competition, but not a specific consumer's personal information.