American Air CEO says using AI to set fares is a 'bait and switch' move

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American Airlines Group Inc.’s top executive blasted the use of artificial intelligence in setting air fares, calling the practice inappropriate because it could trick travelers.

“Consumers need to know that they can trust American,” Chief Executive Robert Isom said on a call with analysts after the company reported earnings. “This is not about bait and switch. This is not about tricking.”

Isom’s criticism of the practice echoes several members of the US Congress, who are pushing for answers from Delta Air Lines Inc. on its plans to use AI to help set pricing on as much as 20% of its network by the end of this year. Delta said this month that it’s still in the testing phase that involves about 3% of the network today.

Delta says it’s testing AI to eliminate manual processes and accelerate analysis for dynamic pricing, a strategy long used by airlines and others to raise or lower fares based on demand, timing and other factors. It is not using the technology to target customers using personal data, and all customers see the same fares in all retail channels, the carrier said in a statement.

“There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise,” according to the statement from the airline. “A variety of market forces drive the dynamic pricing model that’s been used in the global industry for decades, with new tech simply streamlining this process.”

American is using AI to improve airline operations and recovery from service interruptions and to make it easier for consumers to work with the carrier, Isom said. Employing it in pricing decisions “is not something we will do,” he said, adding that “some of the things I’ve heard are just not good.”

Lawmakers on both sides of the aisle have criticized Delta over its plans. A group of Democrats, including Sens. Ruben Gallego, Richard Blumenthal and Mark Warner, sent a letter to Delta Chief Executive Ed Bastian on Monday inquiring about the practice.

“Delta’s current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer’s personal ‘pain point’ at a time when American families are already struggling with rising costs,” the letter said.

Republican Senator Josh Hawley also levied criticism against the carrier, saying in a post Wednesday on social media platform X that “this is the worst thing I have heard from the already awful airline industry.”