Chicago –
U.S. airlines doubled down on high-end travel after the COVID-19 pandemic to drive up profits and reduce their vulnerability to economic swings.
The strategy is paying off as the margins of carriers selling premium seats have held up despite a slump in overall travel demand. Strong demand from affluent travelers is helping airlines offset a pullback in spending by price-sensitive customers.
Delta Air Lines last week reported a 5% year-on-year jump in its second-quarter premium ticket revenue, compared to a 5% decline in main cabin revenue. The 10-percentage-point gap was the widest since the pandemic, helping it post a double-digit margin in the April-June quarter. Similarly, premium cabin revenue helped United Airlines mitigate the financial hit from operational constraints at Newark airport near New York City — one of its largest hubs — and increase its earnings in the latest quarter. United’s premium revenue rose 5.6% in the June quarter from a year ago. Its overall passenger revenue grew just 1.1%. The industry saw a similar trend in the first quarter when President Donald Trump’s sweeping tariffs raised the specter of an economic recession, hammering airline bookings.
U.S. airlines reap rewards from premium travel strategy amid demand slump
