Delta Betting on Premium Travel for More Revenue
Delta Air Lines in betting on premium travel as it prepares for a possible economic downturn. Chief Executive Ed Bastian told Reuters the U.S. carrier will have premium seats on every plane it flies starting this summer.
Currently, only about 2% of Delta’s fleet, don’t have such seats at all. The airline will offer 15,000 more premium seats a day across its network this year versus the pre-pandemic period.
Ed Bastian said his airline wants to attract travelers who are willing to pay for something other than just a seat. The strategy should drive up profits. “It also takes us out of the commodity trap, where we’re just trying to win this battle based only on price,” he said in an interview.
Delta is hoping that an economic downturn would not heavily impact spending by affluent leisure customers, who have been flocking to premium cabins.
Rivals such as United and American Airlines are also chasing premium revenue. United expects to have 53 premium seats per flight in North America by 2026 – up 75% from 2019. American has plans to increase premium seats by 45% on its long-haul flights by 2026.
At Delta, that share of passenger revenue has risen to 38%, up three percentage points from before the pandemic. Bastian said contribution from premium cabins to Delta’s revenue is expected to increase by 1-2% each year for the next several years. American and United don’t report the share of premium seats.
Premium seats are normally at about double the price of standard economy fares. They can also be up to seven times more profitable for airlines.
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