Airfare Pricing Enters the AI Era! Bargain Hunting May Become History as Airlines Maximize Revenue Through Real-Time Adjustments

Travelers hoping to snag cheap airfares may find their luck running out. Airlines are now using artificial intelligence (AI) to instantly analyze dozens of variables, allowing them to dynamically adjust ticket prices and maximize revenue—though this also means bargain hunters will have a harder time finding low-priced seats.

In the past, airlines relied heavily on analysts to design pricing rules—for example, raising fares by 20% once 25% of seats on a flight were sold. However, with rising costs including labor, maintenance, and fuel, carriers from Delta Air Lines (DAL-US) to Virgin Atlantic are accelerating the adoption of AI-powered pricing technologies to extract more revenue from every flight.

For passengers, this could mean higher prices on popular routes, as airlines reduce the number of seats sold below what travelers are willing to pay and aim to maintain higher load factors. In other words, the airline industry’s pricing model is shifting from fixed rules and spreadsheets to predictive models that continuously adjust prices based on real-time market demand.

Bryan Terry, an analyst at New York-based aviation consultancy Alton Aviation Consultancy, said: "Consumers should expect airline pricing to become smarter—raising prices when demand allows, and lowering them quickly when they need to stimulate bookings."

He noted that AI enables earlier and more accurate detection of market changes, allowing airlines to adjust prices more dynamically.

However, AI could also benefit some travelers. According to Terry, during off-peak periods or on lower-demand routes, airlines can use AI to lower prices and stimulate bookings, filling empty seats. This creates opportunities for travelers to purchase cheaper tickets.

The main reason airlines are aggressively adopting AI is the continuous rise in labor, maintenance, and fuel costs, forcing operators to find ways to increase per-flight revenue.

Aviation software providers such as Amadeus and PROS already offer AI-powered fare management tools to help airlines upgrade their revenue management systems.

While airlines have long used dynamic pricing to adjust fares based on demand, aviation analyst Guy Leitch says AI has made these systems faster and more precise. Machine learning models not only analyze historical bookings, remaining seat inventory, and seasonal demand, but also continuously track competitors’ pricing and capacity changes, updating fares almost in real time.

Opinions differ on whether AI pricing ultimately benefits consumers. Analyst Guy Leitch believes efficient markets still favor consumers—those who book early or know the tricks can still find tickets below average prices.

But critics warn that with already thin airline profit margins, carriers will inevitably use more powerful AI tools to raise average fares, load factors, and overall revenue.

Israeli startup Fetcherr is one of the key players driving this transformation. Its AI platform is currently used by nearly 12 airlines, including Canada’s WestJet and Brazil’s Azul Airlines.

The company’s AI system continuously updates fares in response to market changes. During the Middle East conflict, it immediately factored in oil price fluctuations, competitors exiting the market, flight cancellations, and shifting route demand to reprice tickets globally in real time.

Fetcherr says its AI increases revenue not primarily by raising ticket prices, but by boosting load factors on individual flights. Co-founder and Chief AI Officer Uri Yerushalmi said: "Our models analyze dozens, even hundreds, of variables to determine pricing—something only AI can do. Whenever the market changes, the platform adjusts prices instantly."

AI can even generate additional revenue after a passenger has completed booking. For instance, even if a traveler booked a popular flight months ago at a low price, if demand spikes a week before departure, Atlanta-based company Volantio’s AI platform can analyze airline booking data to identify passengers likely willing to switch flights and offer them vouchers as compensation.

The freed-up seats can then be resold at a premium to last-minute business travelers, further increasing revenue.

Volantio co-founder and CEO Azim Barodawala said: "Airlines can sell seats at higher prices, while passengers receive compensation for adjusting their plans. It’s a win-win."

However, AI pricing raises concerns about "surveillance pricing." Last year, U.S. consumer groups and lawmakers warned that airlines might eventually use generative AI to set different prices for the same seat based on personal data such as browsing history and income.

Delta Air Lines declined to comment this week but has previously stated it does not and will not use personal data for AI pricing.

Israeli startup Fetcherr says its models rely on aggregate market data, not individual passenger information. U.S.-based Volantio also says its flight-change incentives are not personalized based on user data.

For airlines, the appeal of AI is clear. Analyst Terry said: "This is essentially the airline’s ultimate secret weapon. In today’s environment, increasing revenue is easier than cutting costs, so carriers will keep looking for new ways to generate income."

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