Airlines Are Using Generative A.I. to Set Individualized Prices ⇥ fortune.com

Bruce Parkinson, TravelPulse Canada, in June 2024:

The WestJet Group has partnered with Tel Aviv-based tech startup Fetcherr to implement what it is calling the industry’s first AI-driven pricing, inventory and publishing engine.

WestJet will implement Fetcherr’s ‘Large Market Model’ technology, described as a “market engine that understands market dynamics, precisely forecasts demand and market trends and generates the best market moves based on the predicted actions of all market variables.”

Alex Cruz, the vice-chair on WestJet’s board, is also on the board at Fletcherr.

Irina Ivanova, Fortune:

By the end of the year, Delta plans for 20% of its ticket prices to be individually determined using AI, president Glen Hauenstein told investors last week. Currently, about 3% of the airline’s flight prices are AI-determined, triple the portion from nine months ago.

Over time, the goal is to do away with static pricing altogether, Hauenstein explained during the company’s Investor Day in November.

North American airlines, including Delta and WestJet, are apparently doing just fine for customer satisfaction, which is surprising. Canada has two major airlines and, because I live west of Ontario, I have to deal with WestJet whenever I go pretty much anywhere. I expect only the basics and still find myself disappointed. But I guess their reputations have enough leeway to permit the kind of dynamic pricing future described with caution in science fiction novels. Or maybe our standards are simply too low.

By the way, in case you are unsure who this dynamic pricing benefits — you are not, but stick with me — it is the airlines. Fletcherr’s co-founder said at a conference last year that the company’s technology generated 10% additional revenue for participating airlines, considerably more than the 4–5% found by the less-sophisticated dynamic pricing examined in a 2022 working paper by the National Bureau of Economic Research (PDF).