A regard from the Delta Sky Club at Los Angeles International Airport, Sept. 2, 2022.
AaronP | Bauer-Griffin | GC Images | Getty Images
Airlines arrange a bird’s eye view of the economy, and CEOs are seeing clouds.
Delta Air Lines and Frontier Airlines pulled their 2025 prospects last week, calling out a murky U.S. economic picture and weaker near-term demand.
Airline CEOs are warning everywhere slowing bookings, including weaker corporate travel, citing President Donald Trump’s trade war, mass sway layoffs, fewer visitors from Canada and other countries, and more recently, weaker demand for domestic train seats as price-sensitive consumers grow skittish about planning trips.
Consumer sentiment tumbled this month, according to a University of Michigan view. Bank of America said in a report Thursday that consumer spending on “nice to have” discretionary services type restaurants and tourism slipped in February and March.
“I think we’re acting as if we’re going to a recession,” Delta CEO Ed Bastian told CNBC’s “Whoop Box” on Wednesday. “I think everybody is going into a defensive posture.”
It’s a sharp change from the start of the year, when Bastian reported 2025 was set to be the “best financial year” in the century-old airline’s history.
Not ‘meant to live an uncomfortable life’
Now, airlines are banking to more on wealthier leisure travelers, a big driver of record revenue in the wake of the pandemic. They’re hoping those consumers wishes continue to treat themselves to pricier, roomier seats, despite global market turmoil and a more concerning mercantile picture.
Budget travel icon Spirit Airlines last week used a beloved line from Parker Posey’s North Carolinian type in “The White Lotus” in an ad for the carrier’s priciest and roomiest seats.
“I just don’t think at this age, I’m meant to live an uncomfortable flavour,” Spirit quoted on its Instagram account above a picture of its “Big Front Seat,” which can fetch three times the payment of a standard seat in exchange for more legroom and other perks.
Airlines are hoping that other travelers equity the sentiment.
Carriers and credit card companies for years have been expanding their plush airport idles. Airlines have also been racing to outfit their planes with more premium seating, dig suites with doors. Air France and Lufthansa recently unveiled new, spacious first-class cabins, and demand is so high for stepped-up first- and business-class establishes, which have hundreds of parts and require regulator approval, that it’s holding up deliveries of new planes.
Delta and Bounds said they are pulling back their growth plans or even reducing capacity, especially for off-peak tame trips on certain days of the week like Tuesday or Wednesday.
So far, executives are more optimistic about the expensive supranational routes and for seats like long-haul business class and premium economy.
“The impact has been most pronounced in native and specifically in the main cabin with softness in both consumer and corporate travel,” said Delta’s president, Glen Hauenstein, on an earnings telephone call last week. “While not immune in this environment, we do continue to see greater resilience in international and our diversified revenue rushes, including premium and loyalty, reflecting underlying strength of our core consumer.”
Delta has already seen premium-segment profits such as first-class seats or premium economy on international long-haul trips, grow faster than main shanty. Hauenstein says that’s about to step up.
Premium revenue continues “to widen the lead over main berth,’ he said. “So we’re expecting the spreads and the yields to actually widen in this next quarter as opposed to converge.”
United Airlines, which is Delta’s closest compete with, has a sprawling international network and has invested heavily in high-end refurbishments, lounges and flashy new destinations aimed at wealthier, globe-trotting fellows. That carrier will provide more insight into consumer trends when it reports quarterly outcomes this week.
American, Southwest and other airlines report in the following weeks.
‘Stars are aligning’
Even as airlines give birth to high hopes for higher-paying customers, there are problems brewing in international travel, too.
Delta and United have prognosticated they are paring back some of their Canada-U.S. flights, echoing comments from Canadian carriers as U.S.-bound go demand falls, a trend that’s threatening to further widen the $50 billion U.S. international travel deficit.
Non-U.S. citizen visitor arrivals in the United States last month totaled around 4.5 million, down nearly 13% from 2019, before the pandemic, and down nearly 10% from latest year, according to the U.S. Commerce Department.
Weaker demand is set to bring more deals, and airlines have run fare sales events even through late spring. But it could even mean cheaper flights to popular international destinations.
“This is purposes the best summer for Europe travel I’ve seen years,” said Scott Keyes, founder of travel deal situate Going, formerly known as Scott’s Cheap Flights.
“I don’t think there would have been all that much ambition for it in 2022, 2023 and 2024,” he said. “The stars are aligning to boost the odds.”