By 2026, Airlines Will Use More AI to Determine Fares

Shreya Majumder
11 hours ago
4 min read

By Shreya Majumder

Published: 15 December 2025 | Updated: 15 December 2025

Artificial intelligence is reshaping airline pricing strategies, promising dynamic fares and smarter decisions.

For decades, airline ticket pricing has been one of the most complex and least flexible parts of the travel industry. Fares were locked into rigid structures shaped by filed prices, fixed booking classes and legacy global distribution systems that allowed only limited adjustments. While this approach provided consistency, it left airlines with little room to react quickly to shifting demand or changing market conditions. That model, however, is now rapidly fading.

Over the last ten years, airlines have been steadily moving toward continuous pricing, a system that abandons traditional fare buckets and allows tickets to be priced at virtually any level. This shift has laid the groundwork for the next major transformation in airline pricing: the use of artificial intelligence. By integrating AI into pricing platforms, airlines can now set fares with far greater accuracy and speed, responding in near real time to changes in demand, competition, and customer behaviour.

The conversation around AI-driven pricing intensified after an airline revealed it was using artificial intelligence to support its fare decisions, sparking debate over whether algorithms could push ticket prices higher. The airline, however, is far from alone. Other airlines across the globe are already testing or deploying AI tools as part of their dynamic pricing strategies, viewing them as essential to staying competitive in an increasingly data-driven market.

Speaking at the World Aviation Festival, Vinay Varma, Senior Vice President and General Manager at AirGain by RateGain, offered insight into how quickly airline pricing is evolving. AirGain provides AI-enabled pricing intelligence to airlines such as Singapore Airlines, Air India, Thai Airways, Malaysia Airlines, and IndiGo, giving it a front-row view of the industry’s shift toward more sophisticated pricing models.

Traditionally, airline fares were built around ATPCO-filed prices and a maze of booking classes managed through legacy systems. Today, more carriers are embracing the New Distribution Capability and continuous pricing, where fares are dynamically calculated rather than selected from a fixed price ladder. Airlines like Air France-KLM and the Lufthansa Group were among the early adopters, initially rolling out continuous pricing in select markets before expanding its use more broadly.

“Airline pricing has always been very traditional,” Varma noted. “Now we are moving toward NDC pricing, dynamic and continuous pricing, which is great for the business because you are no longer restricted by old GDS mechanisms.” Once those constraints are removed, AI becomes far more powerful. Algorithms can analyse demand trends, capacity, seasonality, competitor behaviours, and shopping patterns to recommend precise price points. Industry estimates suggest that fully dynamic pricing, supported by rich data, can lift revenues by several percentage points compared to conventional methods.

Despite its clear commercial appeal, AI-driven pricing also comes with challenges. Regulators are paying closer attention, particularly around transparency and consumer protection. There are growing concerns about how customer data is used and whether hyper-personalised pricing could be perceived as unfair or intrusive.

Traveller reactions are mixed. Some passengers worry about privacy and the possibility of opaque pricing practices, while others welcome fares that better reflect real-time market conditions and availability. For airlines, the decision is becoming increasingly strategic: embrace AI and manage regulatory and public expectations, or risk falling behind competitors who do.

The incentive to adopt AI is strong. “Data is gold,” Varma explained, “but airlines have so much data today that they do not know how to interrogate it.” Pricing and revenue teams are flooded with information, from competitor fares and online shopping behaviours to demand forecasts and operational constraints. AI offers a way to process and interpret this data at scale, improving efficiency and enabling smarter, more nuanced pricing decisions.

As airlines accelerate the use of artificial intelligence in setting fares, the industry is entering a new phase, one defined by greater pricing flexibility, sharper decision-making, and closer regulatory oversight. By 2026, AI-driven pricing is widely expected to become the norm, fundamentally changing how airlines price tickets and how travellers experience airfare in the years ahead.

At Brookfield Aviation, we actively support the adoption of new technologies that improve efficiency and enhance airline operations. Artificial intelligence has the potential to transform pricing strategies and deliver smarter, data-driven decisions. However, as passengers ourselves, we believe it is essential to maintain transparency and fairness in how these technologies are applied. Robust oversight and clear communication will ensure that innovation benefits both airlines and travellers without compromising trust or consumer rights.

Key Facts

Airlines moving from fixed fare buckets to dynamic pricing
AI enables real-time fare adjustments based on demand and competition
Continuous pricing adopted by major carriers including Lufthansa and Air France-KLM
Regulatory scrutiny and consumer trust remain critical challenges