Delta Airlines has been in the news lately. Their president, Glen Hauenstein recently told investors that Delta will be moving towards an AI Individualized Pricing Model for up to 20% of their ticket sales. The pilot program has been in operation for some time, but only for about 3% of its ticket sales.
“This is a full re-engineering of how we price and how we will be pricing in the future,” said Hauenstein. Eventually, “we will have a price that’s available on that flight, on that time, to you, the individual.”
Hauenstein elaborated more on the subject stating the initial results “show amazingly favorable unit revenues.”
For anyone to assume these AI dynamic pricing models will only be utilized in the airline industry would be foolhardy. They will be showing up in every sort of environment very soon.
Under Delta Airlines’ current AI dynamic pricing approach, (for those to whom the model is used upon) when a customer logs on to purchase a ticket, all known information about the person is loaded up into the model, a profile is created, then an individual price is presented to that person.
Privacy advocates and Consumer Watchdogs appear to be in uproar over this news. Claims are being made that this goes too far and these AI models are looking into the minds of their customers. Others are claiming this is predatory pricing and protected classes will be discriminated against.
Make no mistake, there will be regulations regarding AI dynamic pricing models in the future. This type of technology is going to be everywhere within a few years. Especially given the fact there is no current laws against dynamic pricing.
Imagine a world where you go into the grocery store and the cameras measure your core body temperature, how you walk, and from that data alone the dynamic models can sense how hungry you are. End cap display prices will change as you walk around the corner. Announcements will be heard over the speakers about specials at the deli.
There is going to be a fight in Washington over this. Those against are going to insist that the models are racist and are using zip codes tied to credit cards and loyalty programs to determine price. What they don’t understand is none of that type of data is needed anymore.
These models will not need your zip code, they will simply determine your level of education and income based on how you walk through the store, by what aisles you travel down, by what you purchase.
The current fair pricing laws will be totally inadequate for the type of technology which is right around the corner. The politicians will not even understand the problem that’s before them. The entire future of these AI dynamic pricing models will be determined by the lobbyist in Washington, D.C.
When these regulations are created, you can rest assured they will follow existing Title IX and other civil rights regulations. Any collected information which would have been viewed as discriminatory under these existing laws will be viewed the same here.
It will be imperative that corporations maintain a record of the variables and inputs used by their AI dynamic pricing models.
Also, offering individualized pricing may be a mistake for the time being. It may prove more prudent for corporations to offer different pricing tiers than actual individualized pricing.
Corporations should also consider dividing their AI models into two separate parts, much like using a Chinese wall. By aggregating certain parts of the data and allowing the second half of the model to have access to the banded parts of that data, you could argue discrimination is not possible. It is doubtful these types of measures will be offered by vendors selling AI dynamic pricing models, considering the fact they are not required yet by law to do so. However, for those corporations wishing to position themselves wisely, they may wish to build these safe measures into their pricing models beforehand.
Ultimately, the corporations wishing to use dynamic pricing models will have more money than the privacy groups and the watchdogs. Thus, the amount of regulations which are going to be placed on these pricing models will be rather lite.
Jonathan Adams
August 5th, 2025