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U.S. Transportation Department Raises Concerns Over AI Use in Personalized Airline Ticket Pricing

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U.S. Transportation Secretary Sean Duffy expressed concerns on Tuesday regarding the use of artificial intelligence to set personalized airline ticket prices and announced plans to investigate any such practices. This follows recent claims that some airlines may be using AI to adjust fares based on individual consumer profiles.

Delta Air Lines (DAL.N) clarified last week before lawmakers that it has neither used nor plans to use AI to price tickets on an individual basis. “To try to individualize pricing on seats based on how much you make or don’t make or who you are, I can guarantee you that we will investigate if anyone does that,” Duffy said. “We would engage very strongly if any company tries to use AI to individually price their seating.” He added that he takes Delta’s assurances at face value.

Last month, Democratic Senators Ruben Gallego, Mark Warner, and Richard Blumenthal warned that AI-based pricing could lead to fare increases tailored to a consumer’s personal “pain point.” Delta plans to deploy AI-powered revenue management technology across 20% of its domestic network by the end of 2025, partnering with Fetcherr, a company specializing in AI pricing. Fetcherr lists several airlines, including Delta, Westjet, Virgin Atlantic, Viva, and Azul, as clients.

American Airlines (AAL.O) CEO Robert Isom also expressed concerns that AI-driven pricing could damage consumer trust. Democratic lawmakers Greg Casar and Rashida Tlaib have introduced legislation aimed at banning companies from using AI to set prices or wages based on personal data, including prohibiting airlines from raising prices after sensitive searches such as family obituaries.

Delta emphasized that dynamic pricing—where fares fluctuate based on factors like demand, fuel costs, and competition—has been standard for over 30 years but insisted it does not use personal consumer information to set prices.

U.S. Senators Call for Probe into Data Security Risks of Chinese AI Model DeepSeek

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A group of seven Republican U.S. senators led by Ted Budd urged the Commerce Department on Tuesday to investigate potential data security risks associated with Chinese open-source AI models such as DeepSeek.

The senators—including Jon Husted, Todd Young, John Cornyn, John Curtis, Bill Cassidy, and Marsha Blackburn—requested an assessment of whether applications using DeepSeek collect data that is transmitted back to Chinese servers, and if these AI models are sharing American personal or corporate information with China’s military or military-linked companies.

Their letter also sought information on any improper access by Chinese open-source models to export-controlled semiconductors or breaches of usage terms of U.S. AI models aimed at enhancing Chinese AI capabilities.

Bipartisan legislation has been proposed to ban DeepSeek’s use on federal government devices and networks, as well as prohibit its use by federal contractors in government projects.

Commerce Secretary Howard Lutnick stated in January that DeepSeek appeared to have misappropriated U.S. AI technology and promised to enforce restrictions. The Commerce Department did not immediately respond to requests for comment.

In June, Reuters reported that DeepSeek was assisting China’s military and intelligence services and was attempting to use Southeast Asian shell companies to obtain advanced semiconductors barred from shipment to China under U.S. export rules.

These developments underscore growing skepticism in Washington over DeepSeek’s rapid rise, with officials suggesting the Chinese firm’s AI prowess heavily depends on U.S. technology.

Based in Hangzhou, DeepSeek shocked the tech world in January by claiming its AI reasoning models matched or outperformed leading U.S. models at a fraction of the cost.

Stablecoins’ Mainstream Rise Could Shake U.S. Treasury Bill Market Amid Regulatory Push

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As stablecoins move closer to mainstream acceptance, segments of the U.S. Treasury market, particularly short-term securities like Treasury bills (T-bills), could face increased volatility due to their growing ties with the cryptocurrency world.

Congress is on the verge of passing legislation that would establish a clear regulatory framework for stablecoins—dollar-pegged cryptocurrencies widely used by traders to shift funds between tokens. Proponents say the new rules will legitimize the sector and encourage more stablecoin activity, which could boost demand for short-term U.S. government debt, considered cash equivalents by many investors.

However, some experts warn that this growing crypto footprint could amplify instability in the T-bill market. Cristiano Ventricelli, senior analyst at Moody’s, cautioned that sudden loss of confidence or regulatory pressure could trigger massive liquidations by stablecoin issuers, potentially depressing Treasury prices and disrupting fixed-income markets. A problem in stablecoins could spill over into broader financial markets, affecting institutions relying on stablecoin liquidity.

If enacted, the legislation would require stablecoins to be backed by liquid assets like U.S. dollars and short-term Treasury bills, along with monthly transparency disclosures on reserve composition. This would likely compel stablecoin issuers such as Tether and Circle to buy more Treasury bills to back their tokens. Currently, these two companies hold approximately $166 billion in U.S. Treasuries.

The stablecoin market, currently around $247 billion, could balloon to $2 trillion by 2028 if the legislation passes, according to Standard Chartered. The Treasury market itself has about $29 trillion in securities outstanding, with $6 trillion in T-bills.

JP Morgan analysts estimate stablecoin issuers could become the third-largest buyers of Treasury bills in the near future, raising concerns about tighter links between crypto and traditional finance. The Treasury Borrowing Advisory Committee warned that growth in stablecoins might reduce banks’ demand for Treasuries and impact credit growth.

Experts also caution about potential liquidity risks. If stablecoin issuers are forced to sell Treasuries rapidly, it could cause price drops and credit crunches in money markets, which invest heavily in short-term debt.

While past stablecoin issues—like Tether’s brief loss of its dollar peg in 2022 or Circle’s 2023 peg break tied to Silicon Valley Bank’s failure—did not cause systemic market disruptions, the scale of risk could rise with wider adoption driven by federal regulation.

On the positive side, some see the legislation as a market stimulant. Matt Hougan of Bitwise Asset Management argues that codifying stablecoins will expand the global dollar footprint, strengthening the dollar’s role as the world’s reserve currency. Roger Hallam of Vanguard suggests increased demand for short-term Treasuries could encourage the U.S. Treasury to issue more T-bills instead of long-term debt, easing market tensions and balancing fiscal funding needs.