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Japan Times
27 minutes ago
- Business
- Japan Times
U.S. airlines reap rewards from premium travel strategy amid demand slump
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. "Premium capacity remains resilient," said United's Chief Commercial Officer Andrew Nocella. Airline executives have attributed the resilient demand for premium travel to the healthy financial conditions of U.S. households with earnings of $100,000, which account for 75% of air travel spending. While an April selloff in financial markets after Trump announced tariffs raised the risk of undermining that demand, a sharp rebound in U.S. stocks since then has eased those concerns. "Our core consumer is in good shape and continues to prioritize travel," Delta CEO Ed Bastian said last week. Trouble in the main cabin In contrast, lingering uncertainty about the broader economy and rising living costs have taken a toll on demand from less-affluent customers. Bank of America data shows, while spending by middle- and higher-income households held up in June, lower-income household spending turned negative. Low-fare carrier JetBlue Airways last month told staff that it was planning new cost-cutting measures as soft demand made achieving a breakeven operating margin in 2025 "unlikely," according to an internal memo. Summer travel season tends to be the most profitable for carriers. But weak demand for main cabin seats has forced airlines to offer sales to fill planes. Discount carriers such as Frontier and Spirit Airlines are aggressively slashing flights to prevent more discounting pressure. Airline executives say premium cabins have become "the profit differentiator" in the industry. Since premium travelers tend to be less price-sensitive, carriers expect them to be less affected by economic shifts, making their spending more stable and offering a buffer in a downturn. At Delta, premium revenue accounted for 43% of passenger revenue in the June quarter, up from 35% in 2019. It has helped the Atlanta-based carrier become a pre-tax margin leader post-pandemic. The company expects its revenue from premium cabins to surpass that from main cabins in 2027. Diversified revenues, including from premium cabins, have helped shares of Delta and United outperform the broader industry in the past two years. Encouraged by the payoff, carriers are further ramping up investments to make their premium offerings more attractive. United has unveiled new premium suites with privacy doors on its new Boeing 787-9 planes. The suites will have 27-inch screens, luxury skincare amenities, and caviar and wine pairings. Alaska Airlines is on track to increase the share of premium seats on its flights to 29% by next summer from 26% currently. Risk of supply glut Faced with weak margins, budget airlines are now also trying to tap into the high-end market. JetBlue, which has reported a profit in just two of its last nine quarters, is putting first-class seats on domestic flights and opening its first airport lounges in New York and Boston. Frontier is retrofitting the first two rows of its aircraft with first-class seats. Spirit, long known for its no-frills service, is seeking to rebrand itself as a premium airline to turn around its business. The number of premium seats in the U.S. domestic market has increased by 14% since 2019, more than three times the growth in main cabin seats, according to data from Visual Approach Analytics. The rush to add premium seats is hampering aircraft deliveries. It also risks causing a supply glut, hurting pricing power. But Alaska CEO Ben Minicucci downplayed those concerns, saying premium travel is more about an experience than a seat. "We see it as an end-to-end premium experience that people will pay for and people expect," Minicucci said in an interview.
Yahoo
an hour ago
- Yahoo
Delta regional jet pilot apologizes to passengers for ‘aggressive maneuver' to avoid a B-52 bomber
A pilot flying a Delta Air Lines regional jet on Friday apologized to his passengers after making a hard turn to avoid colliding with a US Air Force B-52 bomber, audio from the incident shows. The incident occurred on SkyWest Flight 3788, which was operating as a Delta Connection flight, from Minneapolis, Minnesota, to Minot, North Dakota, SkyWest said in a statement. The flight landed safely in Minot 'after being cleared for approach by the tower but performed a go-around when another aircraft became visible in their flight path,' the statement read. The close call is under investigation by SkyWest Airlines. The tower involved was not a Federal Aviation Administration tower, so the agency does not have a report on the event. The FAA is working to gather information on the incident, the agency said. In the audio of a video posted on TikTok, the pilot can be heard explaining what happened, and that the aircraft was 'kind of, sort of coming at us.' 'Nobody told us about it,' the unidentified pilot is heard saying. He added the tower asked him to report six miles from the airport. After being in communication with the tower, he said he turned right, but saw the aircraft on the right-hand side, so the air traffic controller told him to turn left. He said the speed of the airplane indicated it was a military aircraft. 'I don't know how fast they were going, but they were a lot faster than us,' he said. 'I thought that was the safest thing to do was turn behind it.' At the end, the pilot apologized for the 'aggressive maneuver.' 'It caught me by surprise,' the pilot said. 'Long story short, it was not fun, I do apologize for it and thank you for understanding,' he added before being met with applause. The Pentagon and Delta Air Lines referred CNN to SkyWest Airlines when asked for details about the incident. Passenger Monica Green said the flight was getting ready to land when she felt the plane jerk 'like we did a U-turn,' she told CNN. That's when she heard the pilot come over the intercom and apologize. He said he'd explain everything once he landed the plane safely. Green, who travels a lot for work, said she had never experienced anything like what she did that day. 'I'm just happy with transparency from the pilot. It made me feel better that the pilot said something about it and made the consumers aware,' she said. The B-52 Stratofortress is a long-range, heavy bomber capable of performing a variety of missions, according to the Air Force. It is capable of flying at high subsonic speeds at altitudes of up to 50,000 feet and can carry 'nuclear or precision guided conventional ordnance with worldwide precision navigation capability.'
CNN
an hour ago
- CNN
Delta regional jet pilot apologizes to passengers for ‘aggressive maneuver' to avoid a B-52 bomber
A pilot flying a Delta Air Lines regional jet on Friday apologized to his passengers after making a hard turn to avoid colliding with a US Air Force B-52 bomber, audio from the incident shows. The incident occurred on SkyWest Flight 3788, which was operating as a Delta Connection flight, from Minneapolis, Minnesota, to Minot, North Dakota, SkyWest said in a statement. The flight landed safely in Minot 'after being cleared for approach by the tower but performed a go-around when another aircraft became visible in their flight path,' the statement read. The close call is under investigation by SkyWest Airlines. The tower involved was not a Federal Aviation Administration tower, so the agency does not have a report on the event. The FAA is working to gather information on the incident, the agency said. In the audio of a video posted on TikTok, the pilot can be heard explaining what happened, and that the aircraft was 'kind of, sort of coming at us.' 'Nobody told us about it,' the unidentified pilot is heard saying. He added the tower asked him to report six miles from the airport. After being in communication with the tower, he said he turned right, but saw the aircraft on the right-hand side, so the air traffic controller told him to turn left. He said the speed of the airplane indicated it was a military aircraft. 'I don't know how fast they were going, but they were a lot faster than us,' he said. 'I thought that was the safest thing to do was turn behind it.' At the end, the pilot apologized for the 'aggressive maneuver.' 'It caught me by surprise,' the pilot said. 'Long story short, it was not fun, I do apologize for it and thank you for understanding,' he added before being met with applause. The Pentagon and Delta Air Lines referred CNN to SkyWest Airlines when asked for details about the incident. Passenger Monica Green said the flight was getting ready to land when she felt the plane jerk 'like we did a U-turn,' she told CNN. That's when she heard the pilot come over the intercom and apologize. He said he'd explain everything once he landed the plane safely. Green, who travels a lot for work, said she had never experienced anything like what she did that day. 'I'm just happy with transparency from the pilot. It made me feel better that the pilot said something about it and made the consumers aware,' she said. The B-52 Stratofortress is a long-range, heavy bomber capable of performing a variety of missions, according to the Air Force. It is capable of flying at high subsonic speeds at altitudes of up to 50,000 feet and can carry 'nuclear or precision guided conventional ordnance with worldwide precision navigation capability.'
Yahoo
an hour ago
- General
- Yahoo
Delta Flight's Engine Bursts into Flames Shortly After Takeoff from Los Angeles Airport: Watch
The engine of a Delta Air Lines flight appeared to burst into flames shortly after the plane took off from California earlier this week. On Friday, July 18, Delta flight 446 departed the Los Angeles International Airport (LAX) and then "safely landed" back on the runway around 2:10 p.m. local time, according to the Federal Aviation Administration (FAA). The Boeing 767-400 was en route to Atlanta's Hartsfield-Jackson Atlanta International Airport (ATL) when a reported engine fire prompted its return, the FAA said, adding that it is investigating the incident. Solve the daily Crossword
CNN
an hour ago
- CNN
Delta regional jet pilot apologizes to passengers for ‘aggressive maneuver' to avoid a B-52 bomber
A pilot flying a Delta Air Lines regional jet on Friday apologized to his passengers after making a hard turn to avoid colliding with a US Air Force B-52 bomber, audio from the incident shows. The incident occurred on SkyWest Flight 3788, which was operating as a Delta Connection flight, from Minneapolis, Minnesota, to Minot, North Dakota, SkyWest said in a statement. The flight landed safely in Minot 'after being cleared for approach by the tower but performed a go-around when another aircraft became visible in their flight path,' the statement read. The close call is under investigation by SkyWest Airlines. The tower involved was not a Federal Aviation Administration tower, so the agency does not have a report on the event. The FAA is working to gather information on the incident, the agency said. In the audio of a video posted on TikTok, the pilot can be heard explaining what happened, and that the aircraft was 'kind of, sort of coming at us.' 'Nobody told us about it,' the unidentified pilot is heard saying. He added the tower asked him to report six miles from the airport. After being in communication with the tower, he said he turned right, but saw the aircraft on the right-hand side, so the air traffic controller told him to turn left. He said the speed of the airplane indicated it was a military aircraft. 'I don't know how fast they were going, but they were a lot faster than us,' he said. 'I thought that was the safest thing to do was turn behind it.' At the end, the pilot apologized for the 'aggressive maneuver.' 'It caught me by surprise,' the pilot said. 'Long story short, it was not fun, I do apologize for it and thank you for understanding,' he added before being met with applause. The Pentagon and Delta Air Lines referred CNN to SkyWest Airlines when asked for details about the incident. Passenger Monica Green said the flight was getting ready to land when she felt the plane jerk 'like we did a U-turn,' she told CNN. That's when she heard the pilot come over the intercom and apologize. He said he'd explain everything once he landed the plane safely. Green, who travels a lot for work, said she had never experienced anything like what she did that day. 'I'm just happy with transparency from the pilot. It made me feel better that the pilot said something about it and made the consumers aware,' she said. The B-52 Stratofortress is a long-range, heavy bomber capable of performing a variety of missions, according to the Air Force. It is capable of flying at high subsonic speeds at altitudes of up to 50,000 feet and can carry 'nuclear or precision guided conventional ordnance with worldwide precision navigation capability.'
