AI is targeting the budget options on popular flight paths.

      The chance of finding an affordable seat on a popular flight is diminishing. Airlines are increasingly turning their pricing processes over to artificial intelligence, which generally results in higher ticket prices on busy routes. Traditionally, carriers priced seats using analysts and established practices, such as raising fares by 20 percent once a flight is a quarter full. AI now replaces these methods with models that evaluate numerous variables in real time and adjust prices continuously based on demand, according to Bloomberg.

      This shift reduces the pricing discrepancies that previously allowed travelers to uncover deals. Airlines like Delta and Virgin Atlantic are implementing these tools to maximize revenue from each flight. They offer fewer seats at lower prices than they believe travelers are willing to pay and aim to fill planes closer to capacity.

      There is some positive news for passengers as well. These models can also lower fares on less busy routes to fill vacant seats, meaning that flights during off-peak times may become more affordable. "Consumers should anticipate that airlines will be more strategic with their pricing," remarked Bryan Terry from Alton Aviation Consultancy. They will "utilize this capability to increase fares where feasible and lower prices where they can stimulate demand."

      Opinions vary on whether these changes benefit travelers. One analyst noted that booking early or being savvy can still result in better prices than the average fare. However, critics argue that airlines operate on slim margins and will use increasingly effective tools to elevate average fares and fill more seats.

      Israeli startup Fetcherr is at the forefront of this transition. Its platform is utilized by nearly a dozen airlines, including WestJet in Canada and Azul in Brazil. During recent disruptions in the Middle East, it adjusted flight prices globally in response to fluctuations in oil prices, cancellations, and changing demand. "Our models analyze dozens, if not hundreds, of variables to determine fares. This level of analysis is only possible because of AI," stated co-founder Uri Yerushalmi. The company claims it primarily boosts revenue by filling more seats rather than increasing ticket prices.

      AI is also adding value even after purchase. Volantio’s software, which is employed by Japan Airlines, identifies passengers who might be willing to exchange a busy flight for a voucher. It then resells the available seat to a last-minute business traveler for $1,000. Such tools are also being adopted in hotel and booking sectors.

      However, a significant concern arises about where this trend could lead: fares tailored to each traveler's maximum "willingness to pay," a concept that analysts refer to as the “pain point.” Consumer advocates and US lawmakers have raised alarms that airlines could employ generative AI for "surveillance pricing," charging different individuals varying fares for the same seat based on data like browsing history or income.

      This is no longer merely a theoretical concern. The US Federal Trade Commission has initiated a civil investigation into whether airlines utilize personalized data profiles to inflate prices, as reported by Simple Flying. Some states, like Maryland, have already taken action with the passage of the Protection from Predatory Pricing Act, and regulators in other regions are also taking a closer look following incidents such as the fine against Trip.com in China.

      The airlines assert that they have not reached this point yet. Delta, which chose not to comment, has publicly denied using personal information to set fares. Fetcherr states that its models rely on aggregated market data, while Volantio claims its offers are not customized.

      Currently, the pressure is focused on the overall market rather than individuals. As AI continues to transform pricing practices in travel and beyond, the traditional method of searching for hidden bargain fares is becoming increasingly challenging.