Sun, Sand, and Surveillance Pricing: Groundwork’s Owens Slams Travel Giants for Using Tech to Hike Families’ Vacation Costs

Sun, Sand, and Surveillance Pricing: Groundwork’s Owens Slams Travel Giants for Using Tech to Hike Families’ Vacation Costs

At the peak of summer travel season, consumer advocates are sounding the alarm about airlines, hotel chains, and car rental companies using AI tools to hike prices and charge excessive fees on working families already stretching their budgets to enjoy their summer vacations.

In recent weeks, Delta Airlines has faced increased scrutiny after announcing it would start using AI-powered surveillance pricing to set fares for 20% of its domestic flights. Meanwhile, rental car companies and hotel chains are using their own pricing algorithms and AI tools to charge consumers more.

In response to the wave of high-tech pricing schemes across the travel industry, Groundwork’s Executive Director Lindsay Owens released the following statement:

“The travel industry is turning dream vacations into budgeting nightmares for American families. Companies are rolling out new ways to charge customers more, while working people now have to worry not only about affording their vacations, but how to beat the bots while booking them. Our lawmakers need to crack down on these companies’ tricks and protect consumers from unfair, deceptive, and downright illegal pricing practices.”

In particular, Delta has received criticism for working with software startup Fetcherr to deploy prices set by AI across 20% of its domestic network by the end of the year. Fetcherr, which specializes in using AI to identify and set the maximum price that a customer is willing to pay, also works with additional airlines and plans to expand to other industries, such as hospitality and insurance.

In response to a letter from a handful of Senate Democrats, Delta later backtracked and claimed that the company would not set personalized prices with AI. However, as Owens told Bloomberg Businessweek, Delta’s initial plans and the extreme negative response they received demonstrate serious concerns about how companies set their prices and how AI, without proper regulation, could provide an avenue to gouge consumers as much as possible. Owens told Bloomberg: “This isn’t going to stop at Delta… the airline industry is going to export these practices to other industries.” Read the full story here.

In addition to the airline industry, hotels and booking platforms are using pricing algorithms to hike hotel prices. This includes popular platforms like Expedia, Hotels.com, and Booking.com. Consumers are also pushing back on rental car company Hertz for using AI to scan cars for damage, slapping hundreds of dollars in administration and processing fees on top of alleged damage claims.

Background on the travel industry and pricing:

Hotels

• The U.S. Department of Justice (DOJ) launched an antitrust case against Caesars and other Las Vegas hotel operators alleging that the hotels used the same pricing algorithm, developed by Cendyn Group, to coordinate room rates.
  • The DOJ contends that simply agreeing to use a shared algorithm that sets base prices based on pricing data provided by the hotel company can constitute illegal collusion under Section 1 of the Sherman Act—even without explicit agreements on final price.
  • According to the FTC release, these pricing schemes “make it harder for travelers to comparison-shop for the best rate.”
• An investigation by SFGATE revealed that booking platforms such as Expedia, Hotels.com, and Booking.com consistently raise prices for Bay Area users based on their IP addresses. For instance, a room at Manhattan’s Public Hotel was listed at $829 per night for users browsing from San Francisco, while the same room on the same dates was offered at just $318 to users in Phoenix and Kansas City.
• Orbitz, a travel-deals site, discovered that users of Apple Inc.’s Mac computers tend to spend up to 30% more per night on hotels. As a result, the online travel agency began displaying different, often more expensive travel options to Mac users compared to those using PCs.

Rental Cars

• Car rental company Hertz and its subsidiaries (Dollar and Thrifty), Sixt, and Avis (Budget and Payless) increasingly rely on AI-driven technology to determine damage to rental cars, leading to surprise charges for damage that’s nearly imperceptible to the human eye:
  • Hertz has implemented AI-powered damage detection technology at six major U.S. airports, with plans to expand. The system captures thousands of high-resolution images as vehicles pass through rental lot gates at pickup and return, with AI flagging any discrepancies.
  • The AI system automatically generates damage reports, which are reviewed by a human only if a customer disputes the charge. Charges are attached to a series of hidden fees.
    • For example, one customer was charged $80 for the damage and $115 in fees, including those incurred “as a result of processing” the damage claim and the “cost to detect and estimate the damage” that occurred during the rental.
    • Another customer was charged $440 ($250 for the repair, $125 for processing, and another $65 administrative fee) for a 1-inch scuff on his rental’s wheel.
  • The company incentivizes quick payment with discounts for those who pay immediately or within a short window—placing a heavier burden on lower-income customers who may not have cash readily available.

Airlines

• Groundwork endorsed legislation introduced in the House of Representatives prohibit surveillance pricing and algorithmic wage setting, with Owens releasing the following statement:
  • “Delta’s announcement should be a wakeup call for policymakers. The airline industry has pioneered and then exported some of the most opaque, unpredictable, and frustrating pricing practices consumers face across the economy. Now, consumers are at risk of their data being used against them, with companies using their purchase history, personal financial information, and more, to charge them as much as they possibly can for every flight they book. Any form of surveillance pricing is invasive and predatory–and it shouldn’t be legal. Lawmakers must crack down on surveillance pricing now, before it is too late.”
• At its 2024 Investor Day, Delta detailed how it is using AI to price fares, specifically citing opportunities to hike prices:
  • At Investor Day 2024, Delta revealed it was undergoing a “full reengineering of how we price and how we will be pricing in the future” in partnership with AI company Fetcherr.
  • Delta’s President stated on the call: “Generally, we match our competitors’ fares and they may or may not be available. But if we take small increments and say to Tokyo, could we take a $20 increase in our fares and not see a decline in market share? Could we take $40? It’s doing that real-time now.”
• Delta planned to go from AI pricing 1% of domestic fares in 2024 to 20% by the end of 2025:
  • Delta’s CEO told analysts the company is using Fetcherr to price 3% of their domestic fares as of July 2025, and they were hoping for 20% by end of the year.
• Fetcherr is an AI pricing vendor used by Delta that utilizes what they call an “aggressive algo trading system.”
  • Fetcherr’s Co-founder stated: “I think that the most interesting thing that the system can do, it’s because it’s an aggressive algo trading system, it has a tactical pricing approach. It means that it lets our customer take advantage of the vulnerability of their competitor’s rule based system by understanding the rules and then manipulating the market in order to gain more profit.”
• Another AI pricing vendor called FLYR offers a “dynamic pricing engine” and reported managing $14 billion in airline revenue in 2021. Today, it is the vendor utilized by Jetblue and Virgin Atlantic, and reports offering “dynamic pricing, real-time recommendation,” and “personalized offers” by utilizing data that includes preferences, past engagement, loyalty status, location, and more.
  • Jetblue described its partnership as “maximizing opportunities across the business, enabling quick, precise capacity plans and pricing adjustments.”
  • Virgin Atlantic touted how FLYR enables “a dynamic pricing model that responds to a range of variables including route, seat zone, and traveler demand.”
• PROS is a longtime airline pricing vendor now pitching a “willingness to pay” AI model to maximize price per customer.
  • PROS executive Justin Jander touted how the software hikes costs for those who must travel: “Many passengers think of the product as simply their seat on the plane, but in reality, the product also includes the timing of when the ticket was bought. A business traveler who needs to fly tomorrow to close a $10 million deal is more willing to pay a higher price than someone visiting their grandmother for her 50th anniversary, whose willingness to pay is much lower.”
  • PROS cited Hawaiian Airlines reserving seats for higher-paying customers rather than discounting them as a way to boost revenue: “In running the PROS WTP model without manual intervention, Hawaiian Airlines saw better revenue performance by holding out for higher-paying customers. ‘This automated approach outperformed the manual rules, giving the airline confidence in the solution and helping maximize revenue,’ Jander said. ‘This also meant that by holding seats for higher-paying customers, the airline avoided the risk of having to turn away passengers or send them to a competitor.’”
  • A Harvard MBA Case Study from 2022 suggested Southwest was using AI models “to identify a customer’s willingness to pay, and extract as much as possible in the fare.”
    • A LinkedIn post by an executive at PROS—a revenue management firm—noted that after noticing a drop in demand, Southwest’s “AI system quickly responded by reducing the number of low-fare seats allocated for that period and retained more seats for higher-paying customers as the demand recovered.”
  • Lufthansa Group uses PROS AI to set pricing and drive up prices during the holiday season or extreme weather events.
    • A PROS press release advertised how the airline is using AI to “maximize revenue across every seat, on every flight, every day.”
    • A PROS LinkedIn post brags that Lufthansa used AI to adjust prices up in high demand periods like holidays and weather events to capture more revenue.
  • British Airways also utilizes PROS to use “customer’s booking history, loyalty program engagement, and online behavior” to set prices.
    • Another PROS LinkedIn post discusses how frequent travelers are targeted with higher prices.
• The AI pricing vendor Sabre boasted its AirPRiceIQ “leverages the power of advanced machine learning models to optimize airfare offers based on passenger capacity, competition, market conditions, and customer information.”
  • Sabre showed an example of optimizing price for a price sensitive leisure traveler: “In this shopping session, a traveler’s segment is identified as leisure with prevailing price sensitivity over schedule. We can see all the travel options for a route and the corresponding pre-filed airfares from the Lowfare search. Sabre Mosaic AirPrice IQ dynamically optimizes airfare based on competitors’ itineraries and airfares, value to customer and customer choice modeling. The system recommends offer optimizations with details like potential revenue uplift, probability of conversion, projected profit improvement, minimum itinerary bid price, and more.”