American Airlines CEO Blasts Delta: They’re Using AI To “Trick” Customers—Calls It “Bait And Switch,” A Breach Of “Trust”

American Airlines CEO Robert Isom sharply criticized Delta Air Lines for using AI to manipulate ticket pricing, calling Delta’s approach “bait and switch” and “not appropriate,” pledging American won’t follow suit.

I quite frankly think that some of the things I’ve heard are just not good… This is not about bait and switch. This is not about tricking. And others that talk about using AI in that way, I don’t think it’s appropriate. And certainly, American, it’s not something we will do.

This happened during American’s second quarter earnings call on Thursday morning. It was the last question of the day and also the most explosive: Delta’s use of AI to price tickets, currently at 3% of fares and growing to 20% by year end.

One of your competitors was talking about using AI more for pricing. How do you think about that? And is that something that you’re considering or already experimenting with? Thanks.

Isom lashed out at Delta over it: “I appreciate the question, because I quite frankly think that some of the things I’ve heard are just not good.” He said American will use AI to improve operations for employees and the customer, not to trick the customer calling the approach (that Delta is using, but not naming Delta) “bait and switch” and saying it is not “appropriate.”

For American, we will use AI to improve our ability to operate the airline. We’re going to be more efficient because of it. We’re going to be able to our team members are gonna have an easier time of doing their jobs.

For our customers, it’s going to improve their customer experience. We’re gonna be able to give them the ability to see more of the amenities that we can offer. That we’re going be able to serve them in a way that when they do run into difficulties, that they can recover faster. We have projects underway now that are all aligned in that fashion. We talked about operational difficulties.

One of the big AI investments we’ve made is in a project that we call HEAT that allows us to rebuild the operation as quickly as possible going forward. So for us, of course, we’re going to find ways to get our product in front of consumers. But consumers need to know that they can trust American. Okay? This is not about bait and switch.

This is not about tricking. And others that talk about using AI in that way, I don’t think it’s appropriate. And certainly, American, it’s not something we will do.

Other Key Takeaways From The Earnings Discussion

American reported net income of $599 million for the second quarter – trailing competitors but above expectations. Nonetheless, shares were down significantly on disappointing forward-looking guidance.

I note that the airline continues to lose money looking solely at transporting passengers.

  • Their passenger revenue per available seat mile was 16.90 cents
  • Their operating cost per available seat mile was 17.08 cents (this excludes, for instance, interest expense on $38 billion total debt)

However it’s the AAdvantage program that is driving their profits, and in particular their co-brand credit card. The airline noted in their earnings release that “[s]pending on co-branded credit cards increased 6% year over year as customers continue to value earning rewards for future travel with American.” They reported raising $1 billion backed by the AAdvantage program during the second quarter.

By aggressively courting managed business travel with incentives and discounts, they’ve gotten that segment up 10% year-over-year and expect to get back to their “historical share of indirect bookings” by the end of 2025. (Their historical share isn’t enough and they’ve had to discount a lot to get there, as I understand it.)

They believe they’ll have achieved $750 million in cost cuts from their ‘re-engineering the business’ initiative by the end of year as well. Some of their cost performance was the result of shifting aircraft maintenance out towards the end of the year.

Is United Right About Their Unprofitable Flying?

Jamie Baker of J.P. Morgan asked about United CEO Scott Kirby’s earnings call comments saying that competitors were running a double digit percentage of loss-making flights, what is that percentage at American and what’s the plan to reduce it?

Robert Isom didn’t really answer, but clapped back at Kirby, “we don’t run our airline based on other airlines’ perceptions of our business” and then pointed out that American underperforms United because:

  1. United has been dragging its feet on labor contracts, so had lower costs but that’s going to change.
  2. American is more domestic-focused and domestic has underperformed, but that’ll change too and also American will be growing international.

I don’t think that really explains the variance. In fact the UBS analyst noted, “based on the outlook set all of you provided this year that your margin gap even at the EBITDAR level is likely to widen this year.”

How Bad Is Losing JetBlue As A Partner To United?

After talk about Chicago O’Hare gates, tariffs on Embraer aircraft purchases from Brazil, and premium customer intiatives (that readers of this blog will already be familiar with), Ali Sider from the Wall Street Journal asked about American’s regrets over losing a JetBlue partnership to United?

Isom offered that American still has a plan to grow New York (even though flights there are limited by government slot restrictions) – larger aircraft.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. Well, it kinda is, but, American (and all other businesses) will soon be doing it, too, so… ‘pot calling the kettle black,’ much? If only we could regulate more fairness… oh, who am I kidding. Rich getting richer, poor getting poorer (until…)

  2. It’s hard to accept any moral outrage from Robert Isom, as American Airlines has been confirmed by multiple travel sources as charging Single Travelers a great deal higher fares than Coupled Travelers. At a minimum it is disgustingly unethical, and quite possibly may be illegal as well (to be determined in a court of law). Candidly, the very best outcome for American Airlines would be to fire Robert Isom.

  3. @1990 – “American (and all other businesses) will soon be doing it, too, so…”

    Well, yes, but they’ll give it a completely different name.

  4. The Delta and Hertz using AI to screw customers is doing wonders for my cruise stocks.

  5. Once there enough public outcry this will get some regulatory guiderails around it. May take a different administration or a hodge-lodge of state-level rules that need to be harmonized nationally.

    I know…got to smoking the good stuff today before posting this, LOL!

  6. @Matt ftw!

    Started responding but everyone above already covered what I was going to say. Pretty much agree with all said so far, except about the cruise stocks only because I don’t own any.

  7. @Denver Refugee — Well, I suppose if any CEO were to actually ‘do the right thing’ for stakeholders, other than maximizing shareholder value, they’d end up like Wilem Dafoe’s character in Spiderman, when Norman Osborn ‘sacrificed a lot’ to start Oscorp Industries, but the board is selling it to Quest Aerospace anyway. “You can’t do this to me!!”

    @L737 — @Matt’s still go it! Keep Climbing!

  8. @TexasTJ – I’m not sure why anyone would think it illegal to charge less per person for two people than one. Not much different than “buy one get one for 50% off” offers you see at the grocery store and many other places every day.

  9. Isom is upset that he didn’t think of it first. I’m pretty sure when his key shareholders figure out how profitable AI assistance will be, they will change his tune.

  10. This is going to get interesting, quoting fares significantly above market (regardless of individual-based dynamic pricing) will force smart customers to wait until much closer to the travel date before purchasing a ticket. I mean, who pays 2X or the walk-up fare 6 or 9 months in advance?

    I’m sure Tim believes that Delta commands such a premium that people won’t hesitate to pay another 25-50% more for the same middle seat on an old and tired 737, but c’mon…

  11. @Mike Hunt: The key difference is that price differentiation between different classes of people is vastly different than volume discounting to a single customer. In a Court of Law, for sure they will look at the class (marital status), and quickly confirm that it’s not a “protected class” by law. To better understand this, consider how the courts consider discrimination claims by “overweight people” (the “F” class). Here’s what Google AI says about that: “Yes, there have been successful lawsuits based on discrimination against fat people, though the legal landscape varies by location. While weight discrimination is not universally recognized as a protected class under anti-discrimination laws like Title VII, some jurisdictions and specific cases have provided legal recourse for individuals facing unfair treatment due to their weight” (followed by actual legal examples). This is why my original comment clearly indicated “to be determined in a court of law”. In any case, your assertion would appear to be incorrect.

  12. I agree with Leave it to His Beaver. Having a lower price for buying more than 1 is basically everywhere. not sure what the problem is there.

    As far as the AI trick is concerned, that’s the game, just a different name.

  13. @Captain Freedom — That’s an interesting possibility. After all, in terms of the ‘time-value of money,’ it can be better to purchase last-minute, because currently, booking months or up to a year in-advance, especially for high-end airfare, costs real ‘interest income’ potential. Like, some of these business class tickets are $5-10K/person RT on average. Let’s say you ‘invest’ that earning a mere 4% APY, welp, there goes $200/$5K. For a couple, that’s a $400-800 ‘premium’ lost by booking well in-advance. This is yet another reason why mere refunds (or partial refunds, or credits) are simply not enough when significant delays or cancellations occur under the airline’s control. Yet again, we really should legislate better air passenger rights regulations including compensation under such circumstances, similar to EU/UK261, Canada’s APPR. Yes, this the hill I will die on, every time. It’s an ‘FU, pay me’ situation, yet we just keep getting F’d.

  14. @TexasTJ – Respectfully, your argument is flawed because the airline is not offering a discount based on marital status but rather on the number of seats purchased. Anyone, regardless of relationship status, can access the same fare simply by booking two seats together, whether they are a couple, friends, coworkers, or even a single traveler buying two tickets. Courts would view this as a standard volume-based pricing incentive, not discrimination against a specific group of people. Anti-discrimination laws in the United States focus on protected classes such as race, sex, religion, or disability, and marital status is not federally protected. Even in states where marital status has limited protections, it typically applies to housing or employment, not airline pricing. Businesses frequently offer volume discounts, such as group fares or buy-one-get-one promotions, and courts recognize these practices as legitimate commercial strategies rather than unlawful discrimination. The analogy to weight discrimination lawsuits is irrelevant because those cases involve employment or public accommodations where individuals face unfair treatment due to a physical trait. Airline multi-passenger pricing does not deny service or create an inferior class of customers; it simply charges less per seat when more seats are purchased at once. Saying the matter should be determined in a court of law does not give it merit because there is no plausible legal theory. Solo travelers are not a protected class, and volume-based discounts have long been upheld as lawful business practices.

  15. AA is hypocritical. Last week I was booking an open jaw ticket to Europe. When I got to the checkout screen it said the fare was no longer available. The new business class fare was $1600 higher. Tried again. Same thing. So I turned on my VPN, selected an international location, and tricked the booking. Got the fare at the original price. American can’t throw shade at anyone. They are master grifters themselves.

  16. @DFWSteve — Glad you didn’t give in to their nonsense. Can’t stand when any company attempts to ‘bait and switch’ like that. I believe it was @Gene who prefers to pretend to be based in Romania on his VPN for cheaper fares. ‘How’s the weather in Bucharest?!’

  17. the real motive in Isom’s outrage is to try to gloss over the reality that AA is expected to lose money in the 3rd quarter AGAIN and to be barely break even for the year.

    People love to talk about the failing LCCs and ULCCs but AA is the biggest money pit in the US airline industry; the only reason they keep flying is because so many banks make so much money keeping AA alive.

    Baker is correct to ask about the percentage of AA’s capacity that doesn’t make money esp. given that international was the saving grace between AA and WN’s results.

    Domestic is doing poorly for everyone and the only carriers that are able to overcome it are DL and UA which get enough premium and international demand and, in DL’s case, much more credit card revenue.

    And Isom is absolutely correct that UA hasn’t paid its employees at market wages for years. Their 2nd quarter results were just the first of a return to lower margins as they start paying labor bills.

    AA has yet to articulate a plan to turn itself around.

    and, in the 2nd quarter, DL flew more RPMs and ASMs than AA, carried more cargo revenue, and generated more domestic revenue, all of which are further advancements of DL relative to AA and the industry.

  18. Hope he feels the way about Basic Business or WTF you want to call it. I pay to be up front in part so that I can choose my own seat and get a meal (albeit not a high quality one) on flights that get meal service. If I want to be nickel and dimed I will choose your trailer park $79 basic economy fare and fly in seat 32E.

  19. @ 1990 — Really? If that worked, I would do it. I try to avoid Delta when possible, so I haven’t had the (dis)pleasure of their newest theft yet. Will they stop displaying their prices on GDS? How else will they hide their complete lack of honesty?

  20. @ Mike Hunt’s response is spot on.

    Sorry @TexasTJ, that dog won’t hunt! Volume discounts are more than OK!

  21. @Mike Hunt, I’ll give you credit, you did articulate one issue correctly: “Anyone, regardless of relationship status, can access the same fare simply by booking two seats together, whether they are a couple, friends, coworkers, or even a single traveler buying two tickets”. As it is often said, you needed to know when to stop talking. Your point about “Anti-discrimination laws in the United States focus on protected classes such as race, sex, religion, or disability, and marital status is not federally protected” is false: As I had demonstrated, courts routinely protect classes of people not specifically designated as “protected”. Your point “Even in states where marital status has limited protections, it typically applies to housing or employment, not airline pricing” is false: As I had demonstrated, courts will routinely provide relief in unforeseen ways. Your point “The analogy to weight discrimination lawsuits is irrelevant because those cases involve employment or public accommodations where individuals face unfair treatment due to a physical trait” is false: A huge volume of cases relate to individuals who face unfair treatment due to traits other than physical (for example, nationality where it is unrelated to appearance). In sum, you added a lot of garbage points in an attempt to soundly refute my argument, but in the end you were wrong on all of them. You should have struck to your first point and quit, which I’ll agree is correct.

  22. I am increasingly of the opinion that American and the other Majors are doing this on purpose to goad politicians into bringing back Airline Regulation. Freezing out new entrants and smaller, more nimble competitors in the process.

  23. @Denver Refugee — As if American feels so threatened by… *checks notes* Breeze? Psh. I donno about that… Have they tried painting cute animals on the tail? Take that, Frontier!

  24. @TexasTJ – I enjoy a cordial debate and this one is no exception. Your insistence that courts “routinely protect classes not specifically designated as ‘protected’” overlooks the narrow legal framework in U.S. law: Title VII and related federal statutes protect specific immutable or quasi‑immutable traits (race, sex, national origin, religion, disability) not anything courts might subjectively deem unfair. Take Wilson v. Southwest Airlines (517 F. Supp. 292, N.D. Tex. 1981), where Southwest’s hiring of only women flight attendants to preserve “sex appeal” branding was struck down because Title VII prohibits even seemingly benign stereotypes or marketing rationales. That is precisely where your weight and marital status analogies break down: volume pricing based solely on purchasing two seats is neutral and available to anyone and isn’t a stereotype or a disguised preference about who people are.

    You’re correct that some jurisdictions (like Canada in Miron v. Trudel, [1995] 2 S.C.R. 418) recognize “marital status” as an analogous protected ground under their equality legislation. But this is not the case in U.S. federal law, nor is there any trend in American courts to treat marital status as protected outside a few limited state contexts, once again, pertaining to employment or housing.

    You cited no U.S. case extending protection to weight or marital status in the context of consumer pricing; indeed, courts have routinely rejected such claims. For example, Cynthia Luther’s lawsuit in California against Southwest Airlines (about being asked to purchase a second seat due to size) was dismissed because airlines may lawfully charge based on the number of seats and applicable safety rules.

    Crucially, consumer pricing falls squarely under commercial contract and antitrust law, not anti‑discrimination law. Volume discounts are standard and lawful, as long as they’re not predatory or aimed at excluding competition (see Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. for predatory pricing standards). The fact that your argument conflates volume‑based price incentives with illegal discrimination means it fails as a matter of law: you have no U.S. court that has ever held that airlines may not offer lower per‑seat pricing for two‑ticket purchases on the basis that one of the passengers might be married, overweight, or otherwise non‑protected.

    You were right to concede the threshold point that anyone can access the discount by buying two tickets, and for that I give you credit. But your subsequent effort to stretch that into an anti‑discrimination claim has no legal foundation.

  25. How is this much different from buy five and get the sixth one free? Maybe I only need one or two and don’t want to buy five. Isn’t the other argument that if I buy more I should get a discount? I’m not in favor of this but there’s a counter argument.

  26. @Mike Hunt & @TexasTJ — At least you two are putting what appears to be your legal educations at good use here.

    It doesn’t help that these days everything we may have learned in law school, at least in the Con. classes, is basically worthless now. For the foreseeable future, everything will be appealed up to a 6-3 whatever ‘they’ say it is, no real explanation needed. Ah, the shadow docket.

    Just remember to pay your ‘gratuities,’ don’t literally call them ‘bribes,’ and only imply your ‘quid pro quo,’ like don’t explicitly put it in-writing, and you’re all set. See: Snyder v. United States.

  27. Clearly it’s time to reregulate the airlines. Like children, they need structure and discipline.

  28. @Mike Hunt: Wow, we’re agreed on your first point, but once again you’ve proven to be wrong on the other three. Let’s review: Point 1: Agreed. Point 2: “Anti-discrimination laws in the United States focus on protected classes such as race, sex, religion, or disability, and marital status is not federally protected”. Patently false: Already provided clear evidence, courts routinely protect classes of people not specifically designated as “protected”. Point 3: “Even in states where marital status has limited protections, it typically applies to housing or employment, not airline pricing”. Patently False. A quick review clearly demonstrates marital status protections other areas, such as Education, Public Accomadations, Credit & Lending, and Insurance. Point 4: “The analogy to weight discrimination lawsuits is irrelevant because those cases involve employment or public accommodations where individuals face unfair treatment due to a physical trait”. Patently false: Some classes are protected because of a discernable physical trait, and other classes are protected without a discernable physical trait. The presence or lack of a discernable physical trait has no bearing in the law. Your last comment refuted none of these, feel free to try but it’s hard to argue with facts. It’s too bad, your first point was actually pretty good.

  29. It’s only a matter of time before the out of control airlines force the return of a government agency like what existed in the pre-1978 days. The Civil Aeronautics Board set fares for all carriers between domestic destinations. I have memories of my youth when the one-way New York to Chicago economy fare on all US carriers was $40. It didn’t matter whether the ticketing was a single passenger or 6 people travelling together, it still cost $40 per seat. The fare didn’t vary whether a passenger sat by a window on the aisle or in the middle. Soft drinks and meals were included in the fare. Be careful greedy airlines or those days may soon return.

  30. @TexasTJ – Please cite some case law on point #2 because I doubt that we are ultimately going to agree. As for point #3, while certain states (such as California, New York, Minnesota, New Jersey, Florida, Connecticut, Delaware, Alaska) and local jurisdictions may include marital status protections in employment, credit, insurance, housing, education, and public accommodations, those are state or local laws, not federal law, and they do not extend to airline pricing or consumer transactions. The principle you rely on, that courts routinely provide relief “in unforeseen ways,” doesn’t apply absent statutory authority. There’s no U.S. case saying airlines violating marital status discrimination by offering volume‑based fares. As for point #4, your argument about physical versus non‑physical traits is legally irrelevant. Federal protected classes need not be discernible traits: marital status, religion, familial status, etc. are protected even if not visible. But none of that means courts create new protected categories of their own choosing. The legal standard is statutory, not equitable. Even in weight-discrimination cases, plaintiffs rely on specific statutes (e.g. ADA disability claims) or local public accommodation laws, and not broad judicial activism. And more broadly, U.S. courts enforce discrimination laws only where statutory categories exist. There is no federal or state statute effectively prohibiting volume‑based pricing to two-seat purchasers in airline transactions on “marital status” or similar grounds. And if you find one, I’d love to know about it.

  31. @Mike Hunt: No need to cite case law, what you said was so demonstrably false that it isn’t necessary. Once again, your Point 2 was as follows: “Anti-discrimination laws in the United States focus on protected classes such as race, sex, religion, or disability, and marital status is not federally protected”. In other words, you threw out Point 2 entirely, on the basis that the courts only adjudicate cases on Protected Classes. You and I both know that isn’t true. As for Point #3, here’s what you said: “Even in states where marital status has limited protections, it typically applies to housing or employment, not airline pricing”. In other words, you threw out Point 3 entirely, on the basis that the courts only adjudicate marital status cases related to housing or employment. You and I both know that isn’t true either, there is plenty of case law on the 4 other areas that I cited. You made me laugh on Point 4, your original statement was as follows: “The analogy to weight discrimination lawsuits is irrelevant because those cases involve employment or public accommodations where individuals face unfair treatment due to a physical trait”. I’m the one arguing that physical versus non‑physical traits are legally irrelevant ! As you say, we can agree to disagree, you’ve got your win on Point 1.

  32. @Tampa Jim — I wouldn’t count on that regulation (or those low fares) anytime soon… not with this administration, this Congress, or this Court.

  33. > I note that the airline continues to lose money looking solely at transporting passengers.

    Uh, that’s all accounting malfeasance. If they didn’t fly, they would have zero credit card revenue, so the credit card revenue is 100% attributable to flying and should be added to flying revenue.

    IRL they actually don’t lose money flying – it’s all an accounting fiction!

  34. Total revenue per available seat mile (TRASM) for the June quarter of 2025 was 21.44 cents at Delta, 16.9 cents at American Airlines.

    That’s about right when comparing an airline that added TVs to all their planes (Delta) vs. one who removed all of them, even on those who fly 6 hour stints (American).

  35. @Mary – you’re misunderstanding the point. Nobody says they should just sell miles and not fly. Their data suggests flying without selling miles is not profitable. And no, it is not accounting fiction – in fact, PRASM *includes the economic value of points redemptions* so flying revenue without selling miles is even overstated in the accounting.

  36. @Jake — Thank you for bringing up IFE (which Delta and jetBlue mostly have) and the lack thereof on American (and some of United’s narrow-body fleet). I’d also add the inclusion or absence of ‘free’ WiFi, which carriers like Delta and jetBlue have, but American and United still charge for the most part. It is indeed better to have these amenities than not, and passengers know this. It’s undeniable, yet some on here keep repeating a ‘well, I don’t use it, so it doesn’t matter’ approach, which is silly.

  37. ja,
    really?

    I’m presuming you are drinking something other than coffee when you get out of bed

  38. @TexasTJ – You are mischaracterizing what I actually said. My Point 2 was not that courts never hear cases outside the narrow list of federally protected classes. It was that federal anti-discrimination statutes such as Title VII of the Civil Rights Act of 1964, the Fair Housing Act, the Americans with Disabilities Act, and the Equal Credit Opportunity Act are written around enumerated categories. Courts do not invent entirely new protected classes without a statutory basis. When the Supreme Court expanded “sex” to include sexual orientation and gender identity in Bostock v. Clayton County, 590 U.S. (2020), it did so by interpreting the existing statutory category of sex. There is no federal statute that treats marital status as a protected class for consumer pricing, so it remains accurate that marital status is not protected in this context.

    On Point 3, you are conflating state-level public accommodation laws with airline pricing. Some states, such as California under the Unruh Civil Rights Act (Cal. Civ. Code § 51), extend marital status protections in areas like housing, employment, education, credit, insurance, and certain public accommodations. However, even California courts have not applied those laws to invalidate neutral multi-ticket airline discounts. Airlines are heavily regulated under federal law, and the Airline Deregulation Act of 1978 broadly preempts state laws “related to a price, route, or service of an air carrier.” Because of this federal preemption, state marital status protections cannot override a lawful pricing practice by an airline. There is no U.S. case holding that offering a lower per-seat price for a two-seat booking violates marital status protections. If you have one, cite it. Otherwise, the weight of legal authority supports the conclusion that these protections are narrowly applied.

    As for Point 4, you are arguing against a strawman. I never said physical traits determine whether a class is protected. I said that weight-discrimination cases generally arise under disability statutes or local ordinances focused on employment or public accommodations, not consumer pricing. Whether the trait is visible or not is legally irrelevant. The key issue is whether the category is covered by a statute. Marital status is not covered when it comes to airfare pricing.

    Your assertion that federal courts routinely create new protected classes, or that state-level marital status protections automatically extend to all consumer pricing including airline fares, has no legal precedent. If you want to move this beyond opinion, produce a case where a U.S. court invalidated a neutral multi-ticket airline discount under marital status discrimination laws. Until then, the legal landscape remains exactly as I described.

    At this stage, it seems we have reached a natural conclusion where we simply view the issue differently. I am content to agree to disagree, as further back and forth is unlikely to be productive beyond what has already been discussed. Please have the final word if you wish, and thank you for the spirited exchange.

  39. @Mike Hunt: It’s hard to mischaracterize what you said when I included what you said as a direct quote every time. I’m very comfortable in my position, and will let any fellow commentators that wish to dive into this thread assess my position accordingly. As you say, we can agree to disagree.

  40. @Tampa Jim: I don’t believe that we need a return to complete regulation like it was before 1978, but I do wish that the feds would create and enforce a couple of things such as: minimum dimensions for seat width and pitch; a floor on minimum airfares between any two cities so that a larger/deep pocketed airline can’t flood the route with artificially low fares to drive out the competition.

Leave a Reply

Your email address will not be published. Required fields are marked *