The largest air carriers in the world are in a race to be the first to develop and implement a new way of calculating airfare: millions of variables analyzed by artificial intelligence down to the personal level of every single customer that logs in to book a ticket. The level of personalization has earned this new airfare pricing software the name surveillance pricing as it is intended to consider every detail of every individual customer down to device type, location, and loyalty status.

The goal of all of this data processing is to find the highest willingness-to-pay price of every individual for every flight at any given moment. Also known as the ‘pain point’ by analysts, it has been decried by critics as an anti-consumer move that will virtually eliminate bargain airfare from existence.

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As Bloomberg reported, airlines already employ teams of analysts to help with pricing models that account for customer behavior and market forces. One simple example is the practice of increasing fares by 20% once a given flight is 25% booked. Now, with the rise of AI, legacy carriers like Delta Air Lines and Virgin Atlantic are using the premise of rising operating costs to justify the implementation of surveillance pricing. The goal is to extract all possible revenue from every single flyer without offering any new or improved products or services to maximize profit.

Essentially, surveillance pricing is a technologically evolved form of dynamic pricing that already exists. The application of AI as the driver behind dynamic pricing makes it capable of considering a massive amount of data in a rapid time period to empower much more sophisticated market analysis. In spite of the alarm bells raised about anti-consumerism, airlines claim that this will also be used to save money for travelers on lower-demand itineraries by reducing prices as well.

Bryan Terry, an analyst at New York-based Alton Aviation Consultancy, gave this comment to Bloomberg:

“Consumers should expect that airlines will be smarter about their pricing and will exploit that capability to raise fares where possible and cut prices where they have room to stimulate demand.”

Fetcherr: The AI Bots Replacing Analysts

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The shift from human-managed dynamic pricing to AI-driven surveillance pricing represents a massive evolution in how airlines monetize seats. Because humans cannot monitor millions of routes simultaneously, lag times occurred. By replacing human analysts and rigid rules with autonomous AI bots, airlines can now squeeze every ounce of consumer surplus out of the open market in real time.

In general, the process for revenue analysts is conducted through spreadsheets and SQL queries to forecast demand. The formulas divide a plane’s cabin into roughly two dozen fixed fare tiers with a set number of seats. When the fixed volume of seats in one tier sells out, the price steps up to the next predetermined price point on the higher tier.

Tech firms like Israel-based Fetcherr replace this with a 24/7 analysis through the power of AI large market models. So instead of following a step-up system with rigid pricing, the bot can adjust prices nearly instantaneously based on data points like competitor price updates, active passenger search behavior, historical route elasticity, weather, macroeconomics, and local events.

Big Brother Gets Ready To Set Ticket Prices

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Airline loyalty programs have evolved beyond simple rewards tools into comprehensive consumer data networks. In the future, when you log into a travel app, link your frequent flyer number, or search for flights while connected to a loyalty profile, AI bots can cross-reference vast amounts of tracking data. They will then use that information to calculate the maximum figure of your individual ‘Willingness to Pay’ price point. Delta, at least, has denied any such practices, however speculation and concern abound about the true scope of the technology.

Through modern advertising networks and data aggregators, airlines could theoretically match a user’s email address or device ID to other external data sources. This gives the AI visibility into your income bracket, recent luxury purchases, real estate values, and general spending habits. LMMs may even track exactly how long your mouse hovers over a specific flight option, how quickly you scroll past a price increase, and whether you hesitate before closing a tab.

Currently, the only obstacles to the full-scale rollout of this technology are state laws in the US, such as Maryland’s Protection from Predatory Pricing Act, as Bloomberg reported. Additionally, the Federal Trade Commission has begun a civil investigation demand into whether airlines are leveraging individualized data profiles to hike consumer costs. As for now, the future of AI ticket pricing remains undetermined.