NEW YORK — Delta Air Lines is doubling down on its focus on premium travelers and courting customers who are willing to pay for extra services.
The growing wealth of high-income travelers is driving demand for more premium services, according to Delta.
The Atlanta-based airline on Wednesday will unveil more details on how its strategy will evolve during an investor day event in New York on Wednesday. But Delta executives in remarks Tuesday shared insights on their thinking.
To get more, you must pay more
Over the last 15 years, Delta has added more classes of service on its airplanes beyond the typical coach class and first class or business class, including the addition of Comfort+ extra legroom seats and premium economy.
“The more you pay, the more you get,” said Delta President Glen Hauenstein. “I think we’ll continue to add products along the way that will add value to customers in all classes of service and all cabins.”
He said the goal is “essentially building a customized experience for them in their travel journey.”
The changes will likely start in the main cabin next year and are expected to roll out in the premium cabins over several years, according to Hauenstein.
“We’re going to try our darndest not to alienate customers as we move along this, but just provide them more choice,” he said.
Focus on premium
The further shift away from a one-size-fits-all airline may be disappointing to the many travelers who are primarily interested in low fares, deals and free flights using their miles.
But according to Delta, high-income travelers make up 75% of the spending on air travel, and high-income households have grown their wealth more than 40% since 2019.
The airline has been responding to the trends of high-income travelers by adding more and more premium seats on its planes.
In 2010, only about 10% of seats on Delta were premium seats. Back then, Delta was generally a two-class airline, offering coach class and first class on domestic flights, or coach class and business class on international flights.
Now, it’s vastly different to fly on a Delta plane. About 30% of seats are now premium, and there are twice as many classes. There’s the lower tier called Basic Economy, there’s Comfort+ as a step above economy, and there’s Delta Premium Select as a step below Delta One business class.
Along the way, Delta has sought to sell those seats, rather than giving them away as upgrades.
To do that, Delta lowered the cost of first class fares to encourage people to buy them rather than relying on getting upgraded or seeing first class as out of reach.
“We’ve made them more accessible,” Hauenstein said. Delta has increased the share of paid first class seats from 12% to nearly 75% over time – and making more money in the process.
The airline has also added higher-end amenities like Delta One Lounges opened this year for business class passengers in New York and Los Angeles.
By 2027, Delta expects revenue from premium seats to exceed its revenue from the main cabin. As an example, the wide-body Airbus A350-1000 jet, which Delta plans to add to its fleet starting in 2026, will have premium seating making up about half of the seats.
The focus on premium travelers is an approach that Delta hopes will allow it to further stand apart from competition, including ultra low-cost carriers and other airlines that have not developed as much of a premium reputation.
According to Delta, research indicates that in high-income households, leisure travel is the highest priority purchase.
It’s not just baby boomers retiring with hefty nest eggs. Two-thirds of Millennials are willing to spend on luxury travel, and Delta also pointed to research showing Millennials have more wealth than previous generations at that age.
The airline has been targeting those younger customers by trying to get them to sign up for the SkyMiles frequent flier program, making that a condition of getting free in-flight Wi-Fi, for example.
Future growth
The Delta-American Express partnership also continues to grow in significance for the airline, which gets about $7 billion from AmEx as part of its agreement for Delta-branded credit cards that offer miles and other benefits. Delta plans to grow that to as much as $10 billion from the AmEx partnership in the coming years.
Already, Delta gets most of its revenue from premium seats, the AmEx partnership and other sources, which it calls “revenue diversification.”
While some airlines are going through financial struggles amid stiff competition and are pulling back on growth, including Southwest Airlines announcing major cuts in Atlanta and Spirit Airlines filing for Chapter 11 bankruptcy protection this week, Delta plans a 3-4% increase in flying next year and expects to see revenue grow in the mid-single digits.
And in the wake of Delta’s operational meltdown in late July following the CrowdStrike tech outage, the airline said it is modernizing its software and platforms for a more reliable operation.
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