You're shopping in a store and you see one price. Then you go online and see something totally different. This is personalized pricing.Sometimes called surveillance pricing. And it's about charging people what they're most likely to pay. What if you were charged more because you had an iPhone.The FTC found that more than 250 companies were using this pricing model across all industries. Retailers, ride share apps, even food delivery services are experimenting with this, which means that you and your neighbo ...

Core Insights - Delta Air Lines is implementing an AI-powered personalized pricing system that tailors airfares to individual customers, with plans to expand its use to 20% of flights by the end of 2025 [1][3][19] - The initiative has sparked controversy, with lawmakers and advocacy groups labeling it as "predatory" and raising concerns about privacy and fairness [1][9][17] - Delta aims to gain a competitive edge by being a first mover in this pricing strategy, which is a significant shift from traditional pricing models [7][19] Company Strategy - Delta's AI pricing system is currently in a testing phase, being used on 3% of flights, and results so far have been described as encouraging by Delta's CEO [3][19] - The system adjusts prices based on individual behaviors such as booking history and device use, differentiating it from traditional dynamic pricing [4][5][6] - Delta's President emphasized that this approach represents a full reengineering of pricing strategies, aiming to provide individualized offers rather than static price grids [7][19] Industry Context - The practice of personalized pricing, also referred to as surveillance pricing, is already being utilized by various retailers and could lead to broader adoption in the airline industry [4][10][12] - Other airlines, including United and American, are also exploring AI in revenue management, indicating a potential trend in the industry [19] - The Federal Trade Commission has noted that surveillance pricing is prevalent in retail, with concerns about ethical implications and consumer privacy [10][13] Regulatory and Ethical Concerns - There are significant regulatory risks associated with personalized pricing, particularly in Europe where GDPR imposes strict limitations on data usage [1][17] - Concerns have been raised about potential discrimination and the possibility of lawsuits if consumers feel unfairly targeted by pricing algorithms [17][15] - Experts suggest that Delta may be overestimating its ability to accurately assess individual price sensitivity, which could lead to volatility in pricing decisions [13][14]