There is growing political momentum to restrict so‑called artificial intelligence (AI) or surveillance pricing, but banning these tools risks overlooking the real issue.
Consumers increasingly worry that companies use data signals—search behavior, device information, location—to infer willingness to pay and quietly adjust prices.
That fear deserves attention.
But banning AI‑driven pricing tools is not the right response. The core problem is not the existence of pricing technology. The problem is the lack of transparency around how prices are generated and why they differ.
If policymakers truly want to protect consumers without distorting markets, the focus should shift from banning algorithms to making pricing intelligible and fair. Unfortunately, regulators appear to be uninformed and prone to influence from big players.
Consumers don’t fear algorithms—they fear hidden discrimination.
Most people accept that prices vary in travel. A Saturday night hotel costs more than Tuesday. A weekend holiday flight costs more than midweek. Booking early is cheaper than booking late. These differences are understood because they are visible and explainable.
Current proposals could reduce affordability
The concern behind current legislative efforts is that personal signals such as device type, browsing patterns or location might be used to charge different people different prices for the same offer. Anxiety over this type of pricing is driving proposals such as Virginia Senate Bill 615, which would prohibit certain device‑ or data‑based price generation practices.
And the consumer intuition here is valid: “If two people buy the same thing, hidden profiling should not determine who pays more.”
This problem is one of transparency, not technology. Travel pricing is inherently dynamic and often beneficial to consumers, but those setting prices need to make the process more transparent and less threatening.
This is not a new concept. Airlines, for example, have long had the ability to apply pricing overrides such as fuel charges. These function much like prices at the pump—quick to rise and slow to fall. Such surcharges often persist even when the original justification no longer applies.
Travel is not retail. Airline seats and hotel rooms are perishable inventory: Once the departure or room night passes, unsold supply is lost permanently. Dynamic pricing, algorithmic or otherwise, exists to manage that perishability. Unlike conventional retailing, unsold product does not go back to inventory. Airlines are more like fruit than they are like Amazon.
Industry groups emphasize that location- or channel‑based pricing tools are typically incentives to manage supply and stimulate competition, not individualized pricing based on sensitive personal data.
These tools create many of the deals consumers rely on, including last‑minute fares, mobile‑only discounts, off‑peak rates and regional promotions. Remove pricing flexibility and those discounts will shrink.
The irony is clear: policies intended to protect consumers could reduce affordability.
Opacity is the real policy failure
The core issue in AI pricing is not that prices change. It is that consumers cannot see:
• Which factors influence price
• Whether personal data is used
• Whether offers are equivalent
• Whether others received different pricing
Opacity erodes trust. And when trust erodes, regulation follows. AI today is suffering a rightful trust deficit.
But targeting the technology itself misses the point. Algorithms can be used fairly or unfairly. Banning them does not guarantee fairness. It simply removes a tool that also creates consumer benefits. Effective policy should regulate outcomes and disclosure, not computational methods.
Why banning AI pricing could backfire
Broad restrictions on algorithmic pricing risk limiting common pricing practices that help travelers access discounts and expand choice. That is why industry stakeholders argued SB 615 could harm affordability and competition if applied too broadly.
When pricing flexibility shrinks, markets generally shift toward standardized fares, reduced discounting and higher average prices.
Consumers may gain some predictability but lose affordability. A rigid price is not necessarily a fair price.
The policy question should not be, “Should AI be allowed to price?” but rather,
“Do consumers understand how price is determined—and is it fair?”
Transparency restores trust without distorting markets. And unlike bans, it scales across industries and technologies.
Three simple transparency principles could transform pricing:
1. Disclose when algorithmic pricing is used: Consumers should know when prices are dynamically generated or personalized.
2. Provide clarity on offer equivalence: If two consumers see different prices, they should be able to confirm whether the underlying offer terms are identical.
3. Explain price differences clearly: Material price differences for equivalent offers should map to understandable factors such as timing, demand and availability rather than opaque profiling.
These principles do not require banning AI. They require explaining price. Shift regulation from tools to outcomes. The consumer harm policymakers fear is not the existence of algorithms but unfair pricing.
Those are different regulatory targets.
A system can allow dynamic pricing while prohibiting:
• Pricing based on sensitive data
• Discriminatory proxies
• Manipulative urgency tactics
• Hidden price steering
Outcome-based regulation can protect consumers without eliminating beneficial pricing flexibility.
Consumers and industry should align on the need for transparency
Transparency alone may not eliminate concern. Consumers ultimately want assurance that they did not overpay relative to others. Policymakers could add a rule that protects consumers against paying more than others for the same offer.
For example, if a consumer purchases a travel product and a lower publicly available price for the identical offer appears within a defined period, the seller could refund the difference automatically. This approach directly protects consumers from unfair price disparities while preserving dynamic pricing tools. It guarantees fairness without banning innovation.
Fairness in pricing should mean:
• No hidden exploitation
• No discriminatory profiling
• Equal access to legitimate offers
It should not mean eliminating price flexibility altogether.
Explain pricing, don’t outlaw it
AI‑driven pricing is now embedded across travel and digital commerce. While banning it is both impractical and economically counterproductive, the opacity problem can be fixed.
Policymakers who genuinely want consumer protection should focus on:
• Pricing transparency
• Disclosure obligations
• Equivalence rules
• Outcome‑based safeguards
Because the consumer problem with AI pricing is not that algorithms set prices. It is that consumers cannot see why.
About the author...
Timothy O’Neil-Dunne is principal of Seattle-based travel and aviation consultancy T2Impact.