Your points just reinforce my view of Gary Leff, which is that he does a lightweight job of reporting with minimal substance. He’s better than Simpleton Flying, but that’s a very low shadow to surmount.
-- Karl > On Jul 22, 2025, at 1:28 PM, Hubert Horan via Mifnet > <[email protected]> wrote: > > Gary Leff published a follow up to the Delta “AI pricing” article [1] > previously posted on the Mifnet. As with the first article, it includes Glen > Hauenstein quotes claiming that this he was anticipating “a full > re-engineering of how we price, and how we will be pricing in the future” – > Delta was working to “get inside the mind of our consumer and present them > something that is relevant to them, at the right time, at the right price.” > > But unlike the first article Leff claimed that AI pricing at Delta would be a > wonderful thing for consumers because it would mean “lower prices, rather > than higher prices and agreeing to AI pricing could even become a requirement > of airline elite status.” This makes absolutely no sense to me. Leff didn’t > support this claim with any explanation of how Delta’s “AI pricing” would > actually work, or what the overall effect of “AI pricing” might be. He didn’t > quote anyone with direct experience with today’s pricing/yield management > practices or anyone familiar with LLCs in consumer pricing. Can anyone > explain how one might conclude that Delta’s “AI pricing” would produce lower > overall prices? > > Why would Delta undertake a major project if it thought the net result would > be lower fares? Maximizing its share and yield from “high-end” passengers has > been central to Delta’s strategy for the last decade. Why would it highlight > the project to investors, who are only interested in evidence of the market > power needed to extract higher and higher fares? > > Delta (and its competitors) already have very high load factors. Figuring out > how to sell more cheap tickets makes no sense unless you have tons of empty > seats, and even then airlines understand the solution is to cut capacity. And > selling more cheap seats is the easy part of revenue management (if you are > departing with lots of empty seats don’t shut off discount sales so soon). > Figuring out how to grab a few more dollars from the last seats on > high-demand flights is the hard part. > > Hypothetically “AI systems” might be of some value in pricing tickets to very > frequent/higher-yield passengers although no one has explained what exact > information about these passengers an LLC might use, where the new info would > come from, or how it would be used to change the fare displays those > customers might see. But most domestic pax are very infrequent flyers. I > vaguely recall a Scott Kirby quote saying something like 80% of his traffic > only bought one ticket a year. What info would an LLC be able to collect on > these more price-sensitive passengers, and how would it determine that a > customized deeper discount would get this person to buy but not this other > person? > > Leff’s point about trying to force Delta customers with elite status into an > AI-driven sales channel might be correct, but I suspect there’d be backlash, > and as Leff notes most of these folks would know how to determine whether > they are getting the market fare. But this falls into the “forcing our best > customers to pay even higher fares than they do now” category, not the offer > consumers lower fares category. > > I understand that “forcing our best customers to pay even higher fares than > they do now” may be a strategic priority at Delta given the lack of obvious > other ways to quickly juice profits. But that approach would logically focus > on forcing them into captive, controlled channels, and preventing them from > being able to readily access information about competitive alternatives. All > of which should be seen as pure evil by anyone who thinks “market > competition” is a good thing. Again it is not clear what the LLC vendors are > offering that could actually make Delta’s higher-yield frequent flyers more > willing to use captive, controlled channels. > > There is a bit of a parallel here with ongoing Mifnet discussion about > ATC/airline reliability issues. No one stops to explain what they think the > deficiencies of longstanding airline pricing/revenue management systems are. > What is preventing these weel-developed systems from maximizing network unit > revenue today? We jump immediately to an announcement that we are throwing > big bucks at consultants offering a fancy sounding “technological” solution > without ever explaining exactly what the new technology does (that the > current technology couldn’t) and how it will solve the defined problem. > > Since no one (including airline investors and executives) takes that > approach, reporting is dominated by PR hackery based on transparently false > claims. Airline “AI pricing” is just the same type of “price discrimination” > we’ve seen for decades (as Hauenstein says it’s an attempt to radically > reengineer traditional pricing). Like traditional revenue management it will > drive major efficiency/productivity gains (none of the conditions that > allowed traditional revenue management to improve overall efficiency in past > decades exist anymore). It will hugely benefit consumers by lowering prices > (a sure signal that the real objective is to screw consumers). > > > [1] > https://viewfromthewing.com/several-airlines-now-quietly-let-ai-set-ticket-prices-surprisingly-thats-great-news-for-your-wallet/ > > <https://viewfromthewing.com/several-airlines-now-quietly-let-ai-set-ticket-prices-surprisingly-thats-great-news-for-your-wallet/> > -------------------------------------------------------------------------- > Revised: 20250507 > > You are receiving The Mifnet because you requested to join this list. > > The Mifnet is largely a labor of love, however the infrastructure isn't > exactly cost-free. If you'd care to make a small contribution to the effort, > please know that it would be greatly appreciated: > https://wardell.us/url/mifbit > > All posts sent to the list should abide by these policies: > > 1) List members acknowledge that participation in Mifnet is a privilege--not > a right. > 2) Posts are always off the record, absent specific permission from the > author. > 3) The tone of discussions is collegial. > 4) Posts are expected to be in reasonably good taste. > 5) We discuss ideas and not personalities, and we don't speak ill of other > Mifnet members. > > * The Mifnet WEB SITE is: > https://www.mifnet.com/ > > * To UNSUBSCRIBE from this list at any time please visit: > https://lists.mifnet.com/ > OR: SEND THIS MESSAGE via email: > [email protected]?subject=leave > > * Send Mifnet mailing list POSTS/SUBMISSIONS to: > [email protected] > > * You may reach the person managing The Mifnet at: > [email protected] > > * Please consider the DIGEST version of The Mifnet, which consolidates all > list traffic into 1-3 > messages daily. 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