AI is targeting the lower-priced options on heavily trafficked flight paths.

      The chance of accidentally finding a low-cost seat on popular flights is diminishing. Airlines are increasingly relying on artificial intelligence for their pricing strategies, leading to higher fares on busy routes. Traditionally, airlines would set prices using analysts and simple heuristics, like increasing fares by 20 percent once a flight reaches a quarter full. AI has replaced these methods with sophisticated models that analyze numerous variables in real time, continuously adjusting to demand, as reported by Bloomberg.

      This shift has narrowed the pricing gaps that previously allowed travelers to snag deals. Airlines such as Delta and Virgin Atlantic are utilizing these technologies to maximize revenue from each flight, selling fewer seats for less than what they predict customers are willing to pay, and moving closer to full capacity.

      There are also potential benefits for travelers. These models can lower fares on less busy routes to fill empty seats, which means off-peak and low-demand flights could become cheaper. “Consumers should anticipate that airlines will utilize smarter pricing strategies,” stated Bryan Terry of Alton Aviation Consultancy. Airlines will aim to "capitalize on this ability to increase fares where they can and lower prices when they have the flexibility to encourage demand."

      However, whether this is advantageous for travelers is debated. An analyst observed that booking early or strategically can still result in lower fares than average. Critics argue that airlines operate on narrow profit margins and will increasingly employ advanced tools to elevate average fares and fill more seats.

      Israeli startup Fetcherr is a key player in this transformation. Its platform is utilized by almost a dozen airlines, including Canada’s WestJet and Brazil’s Azul. During recent disruptions in the Middle East, it adjusted flight prices globally in response to fluctuating 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,” remarked co-founder Uri Yerushalmi. The company claims that its primary focus is on increasing revenue by filling more seats rather than simply raising ticket prices.

      AI is also generating value post-purchase. Volantio’s software, used by Japan Airlines, identifies passengers willing to change their busy flight for a voucher. It then resells the vacated seat to a last-minute business traveler for $1,000. Similar technologies are also being applied in hotels and other bookings.

      Concerns have emerged regarding “surveillance pricing,” where fares are tailored to each traveler’s highest willingness to pay—an issue that analysts refer to as the “pain point.” Consumer advocates and U.S. lawmakers have raised alarms about the potential for airlines to employ generative AI for this purpose, charging different rates for the same seat based on factors such as browsing habits or income.

      This concern is becoming increasingly real. The U.S. Federal Trade Commission has launched a civil investigation into whether airlines are using individualized data to inflate prices, as reported by Simple Flying. Some states have already taken action, with Maryland enacting a Protection from Predatory Pricing Act. Regulators in other areas are also monitoring the situation following incidents like China’s Trip.com fine.

      Airlines maintain that they have not reached this point yet. Delta, which chose not to comment, has publicly denied setting fares based on personal data. Fetcherr asserts that its models rely on aggregated market data, while Volantio claims its offers are not personalized.

      For the moment, the pressure is applied on an aggregate level, not individually. As AI continues to transform what consumers pay across the travel industry and beyond, the once-common strategy of seeking out hidden bargain fares is quietly becoming more difficult.