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Delta Air Lines CEO signals major shift in what travelers pay
Delta Air Lines plans to use AI to help the airline significantly improve its profitability by making smarter decisions across pricing, operations, and other areas of the business, CEO Ed Bastian confirmed.
“If we could take two, three, four points of our cost down from making smarter, better decisions over a series of several years — my gosh — you look at a margin at Delta, you go from a 10% margin to a 15% margin, it’s a 50% improvement in your profitability. These things are billions of dollars substantial,” said Bastian during Scott McCartney’s Airlines Confidential podcast.
View from the Wing’s Gary Leff, an expert in miles, points, and business travel, explained that the carrier aims to replace slow decisions made by employees with “constant machine-made decisions across pricing, upgrades, crew recovery, maintenance, fuel, and the back office.”
“…You can make better revenue decisions on how you manage different buckets. So I think the opportunity is there,” Bastian added.
“I think the issues of trust and governance are also really important, and that’s why I never refer to AI as artificial. I always call it augmented intelligence. It’s going to make our people smarter and better.”
Delta already faced scrutiny from lawmakers over AI use
In July 2025, I reported on how, during a second-quarter earnings call, Delta President Glen Hauenstein confirmed the carrier is partnering with tech startup Fetcherr to deploy AI-driven dynamic pricing solutions across its network.
The airline initially rolled out the AI pricing system across about 3% of its domestic network, with a goal of expanding the technology to about 20% by the end of 2025.
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However, the rollout sparked intense political scrutiny. U.S. Senators Ruben Gallego, Richard Blumenthal, and Mark Warner sent a formal letter questioning whether the tool tracks individual browsing history or personal data.
“Delta’s current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer’s personal ‘pain point’ at a time when American families are already struggling with rising costs,” the senators’ letter to Delta Air Lines reads.
Delta pushed back forcefully against those allegations.
In an official response to lawmakers, Delta stated: “There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized prices based on personal data.”
There’s a crucial distinction between dynamic pricing and pricing based on personal data. While senators warned against individualized pricing practices that analyze private consumer data to inflate fares, Delta maintains it relies solely on dynamic pricing: analyzing macro supply and demand across thousands of flights simultaneously to set a universal ticket price for everyone viewing that flight.
Delta Air Lines’ AI pricing isn’t just about charging you more; it can actually lead to cheaper tickets.Boarding1Now / Getty Images
What Delta Air Lines’ AI-driven dynamic pricing means for consumers’ wallets
AI pricing isn’t just about charging you more. It can actually lead to cheaper tickets, Leff points out.
Airlines generally try to capture more revenue from travelers who are less price-sensitive while offering lower fares to more price-sensitive customers. Previously, it was challenging to distinguish between those different types of travelers when determining how much they were willing to pay.
AI might be able to simplify this. In theory, if the system predicts that a traveler will not buy a $500 ticket, it could recommend a lower fare, such as $275, to encourage a purchase.
In practice, this usually means the AI adjusts how many seats are available at each fare level, rather than showing two shoppers different prices for the same seat at the same moment. So if demand data suggests more price-sensitive travelers are searching for a route, the system can open up more $275 seats for everyone to see; it’s reallocating inventory, not tailoring a price to any one person.
“The airline earns more overall because it discounts where a discount changes behavior and avoids discounting where it does not. That lets airlines offer more discount fares to more people, because they can do so without offering them to people who will pay more,” Leff points out.
While Bastian has described a potentially significant profitability opportunity from AI, Leff suggests that Delta could be overestimating the eventual benefit. Leff argues that other airlines will likely adopt similar AI tools, if they haven’t already, potentially eroding any competitive advantage Delta gains from the technology.
“Other airlines will be doing exactly what Delta is doing — United shed 4% of management staff last year, and expects to do the same this year — and with a lower cost base that results will compete down price,” Leff concluded.
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Walmart shoppers must consider one major shift coming to prices
If you’ve filled up a gas tank lately, bought groceries, or just paid attention to your monthly budget, you already know that consumers are stretched. The data are catching up to what people have been feeling for months.
Walmart (WMT) reported fiscal Q2 2027 earnings on Aug. 20 that beat Wall Street’s revenue estimates. But then, it watched its stock drop by almost a double-digit percentage. The culprit wasn’t the headline numbers.
It was the detail underneath: U.S. comparable store sales grew just 2.6%, well below the 3.8% Wall Street expected, according to Reuters. That miss, combined with cautious forward guidance, was enough to unsettle a market that had priced Walmart for stronger momentum.
CFO John David Rainey didn’t sugarcoat the consumer environment when he appeared on CNBC’s “Squawk on the Street.”
“Consumers are still spending, and real wage growth is keeping pace,” Rainey told CNBC. “But all that said, we would love to be able to bring prices down more and see less pressure on their wallets.”
The good news, for shoppers at least, is that Walmart has a $2.9 billion tool to do exactly that.
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How Walmart plans to use its $2.9 billion tariff refund
Here’s the part of the story that matters most for everyday Walmart shoppers. The company received approximately $2.9 billion in International Emergency Economic Powers Act (IEEPA) tariff refunds during Q2, according to the earnings call.
Rather than pocketing the windfall, Walmart is deploying it directly into lower prices.
Rainey told CNBC the impact will be visible in Q3. Walmart already increased price rollbacks to more than 11,000 items in Q2, up from 7,200 at the end of Q1, according to Walmart’s Earnings call insights.
CEO John Furner actually said it on the earnings call.
Our intent was to deploy much of that back into price, and that’s what we’re doing.
The tariff refund contributed roughly 750 basis points to Q2 operating income growth, lifting reported operating income growth to 28.8%, according to Walmart’s Q2 statement.
Gross profit rate expanded to 25.4% for the quarter. Yes, those are strong numbers, but they came with an asterisk that the market didn’t love.
Strip out the tariff benefit, and the underlying operating income growth was at the top end of guidance — solid, but not spectacular.
A CNN report shows that the broader context is that the U.S. government is processing an estimated $168 billion in tariff refunds across approximately 330,000 businesses.
Walmart’s $2.9 billion slice is among the largest. The decision to pass it through to consumers rather than preserve it in margins reflects the competitive reality Walmart faces right now.
The fuel cost headwind is complicating the Walmart pricing picture
Walmart’s pricing generosity comes with a significant offset.
The company now expects to incur more than $2 billion in incremental fuel-related costs for its fleet and supply chain distribution throughout fiscal year 2027, according to Rainey’s comments on the earnings call and earnings statement.
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That $2 billion figure matters for two reasons.
It directly pressures the gross margin expansion that the tariff refund helped create.
It reflects a broader consumer dynamic that’s weighing on Walmart’s traffic patterns.
Higher gas prices are hitting lower-income shoppers particularly hard. Rainey noted on CNBC that Walmart continues to see consumers stretched thin, especially around fuel costs.
Walmart is lowering prices across categories, including beef, to help offset that pressure. Meanwhile, Walmart’s largest market-share gains this quarter came from higher-income consumers, according to Rainey.
That’s a signal that value-seeking behavior is spreading further up the income ladder. My read on this is that the fuel-cost headwind and the tariff-refund investment are essentially working against each other in the short term.
Walmart is spending its windfall to attract and retain shoppers who are simultaneously being squeezed by costs outside Walmart’s control.
Walmart received approximately $2.9 billion in International Emergency Economic Powers Act (IEEPA) tariff refunds.Joe Raedle/Getty Images
The numbers show Walmart’s flywheel is still turning
Despite the comparable sales miss and the stock sell-off, several underlying metrics point to a business with genuine structural momentum.
Key Walmart Q2 FY2027 highlights:
Total revenue of $187.94 billion, up 5.9% year over year (YoY).
Global e-commerce sales are up 23%, with U.S. e-commerce up 24%.
Marketplace grew 52%, and advertising revenue grew 38% globally.
Membership fee revenue grew 17%, hitting an all-time high.
Sam’s Club U.S. net sales of $25.7 billion, up 8.8% YoY.Source: Walmart Q2 Fiscal 2026 Results & earnings call
Fast delivery in the U.S. grew 48% for the quarter, according to Furner’s earnings call remarks. Walmart also announced a prepared food partnership with Subway and completed the acquisition of Vibe to boost its advertising capabilities.
These aren’t defensive moves. They’re the continuing buildout of what I’ve previously described as Walmart’s e-commerce flywheel. That’s the self-reinforcing loop where delivery, marketplace, advertising, and membership all compound together.
Walmart also raised its full-year FY2027 guidance following the quarter. Net sales growth is now expected to be between 4% and 5%, up from the prior 3.5-4.5% range.
Adjusted EPS guidance was raised to $2.80 to $2.87, from $2.75 to $2.85, according to the Q2 earnings statement.
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For shoppers, the message from the earnings is that Walmart is actively choosing to pass savings through to the shelf rather than protect its margins.
The $2.9 billion tariff refund is here, the rollbacks are expanding, and you are likely to feel it in Q3. For investors, it remains to be seen whether that’s enough to reignite comparable sales growth and calm a nervous stock market.
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