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Delta plans a sharper focus on premium travelers and sells additional services

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Delta plans a sharper focus on premium travelers and sells additional services

Kelly Yamanouchi
| Atlanta Journal-Constitution

New York – Delta Air Lines is doubling down on its focus on premium travelers and acquiring customers willing to pay for additional services.

The growing wealth of high-income travelers is driving demand for more premium services, according to Delta.

More: Delta’s CEO says the Trump administration will roll back government “overreach” under Biden

The Atlanta-based airline revealed more details about how its strategy will evolve during a media briefing Tuesday and at its annual Investor Day on Wednesday.

In short, Delta has made a lot of money over the years by targeting premium travelers, and customers can expect Delta to drive new amenities and service levels on its planes and in airport terminals that will help it make money.

Pay more, get more

Over the past fifteen years, Delta has added more classes of service to its aircraft than the typical coach class and first or business class, including the addition of Comfort+ seats with extra legroom and premium economy.

“The more you pay, the more you get,” said Delta President Glen Hauenstein. “I think we will continue to add products along the way that bring value to customers in all service classes and all cabins.”

He said the goal is to “essentially build a customized experience for them throughout their travel journey.”

The changes will begin in the main cabin next year and are expected to roll out to the premium cabins over several years, Hauenstein said. He said the airline will test in the coming years “what consumers want in their bundles and what they are willing to pay for.”

“We’re going to do our very best not to alienate customers as we move forward with this, but just give them more choice,” he said.

The airline still wants to have economy class fares “for the masses,” Hauenstein said, to attract travelers who start in economy class and then, as they get older, want to pay for more premium service.

Focus on premium

The further shift 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 households – those with annual incomes of $100,000 or more – are responsible for 75% of air travel spending, and high-income households have grown their wealth by more than 40% since 2019.

The airline has responded to the trends of high-income travelers by adding more and more premium seats to its planes.

“We don’t think of ourselves as just a transport provider. We care about the experience,” says Delta CEO Ed Bastian. “That’s what makes people fly us” – and pay more.

In 2010, only about 10% of seats on Delta were premium seats. At the time, 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 very different to fly a Delta plane. About 30% of seats are now premium, and there are twice as many classes. There is the lower level called Basic Economy, there is Comfort+ as a step above economy, and there is Delta Premium Select as a step below Delta One business class.

Along the way, Delta has tried to sell these seats, rather than giving them away as upgrades.

To do that, Delta has lowered the cost of first-class fares to encourage people to buy them instead of relying on an upgrade or seeing first-class fares as out of reach.

“We made them more accessible,” Hauenstein said. Delta has increased its share of paid first-class seats over time from 12% to almost 75% – and made more money in the process.

The airline has also added high-end amenities such as Delta One Lounges that opened this year for business class passengers in New York and Los Angeles.

By 2027, Delta expects premium seat revenues to exceed main cabin revenues. For example, the widebody Airbus A350-1000 aircraft, which Delta plans to add to its fleet starting in 2026, will have premium seats that make up about half of the seats.

The focus on premium travelers is an approach that Delta hopes will further differentiate itself from the competition, including ultra-low-cost carriers and other airlines that have not built such a premium reputation.

According to Delta, research shows that leisure travel is the top priority in high-income households.

It’s not just baby boomers who are retiring with plenty of money to spare. Two-thirds of millennials are willing to spend money on luxury travel, and Delta also pointed to research showing that millennials have more wealth at that age than previous generations.

The airline is targeting these younger customers by trying to get them to sign up for the SkyMiles frequent flyer program, making that a requirement for getting free in-flight Wi-Fi, for example.

Future growth

The partnership between Delta and American Express also continues to grow in importance for the airline, which will receive about $7 billion from AmEx as part of its deal for Delta-branded credit cards that offer miles and other benefits. Delta plans to expand this to as much as $10 billion in the coming years through the AmEx partnership.

The credit cards have become a major source of the airline’s financial strength. Delta says fees on Delta American Express cards are about 1% of total U.S. gross domestic product.

Delta already gets most of its revenue from premium seats, the AmEx partnership and other sources, which it calls “revenue diversification.”

While some airlines are experiencing financial difficulties amid intense 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 to increase flights by 3 to 4%. and expects revenue growth in the mid-single digits. Management expects this quarter to be the best fourth quarter in the airline’s history, and that 2025, Delta’s centennial, will be the company’s “best year ever.”

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