Airlines are making a miraculous recovery by doubling down on premium seats

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Airlines are making a miraculous recovery by doubling down on premium seats

Airlines are doubling down on high-margin premium cabins and even expanding them on new planes.

They’re counting on them to fill the financial ***** caused by a glut of cheap economy seats.

Premium cabin revenue increased at *********, Delta, and ******* in the third quarter.

Airlines are counting on their premium cabins to help recover from the financial ***** created by

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earlier this year.

********* Airlines on Thursday reported an 8% increase in premium revenue in the third quarter compared to the prior year. That increase, when capacity was only up 3%, suggests customers are

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, something the industry badly needs to get out of a rut.

Rivals Delta Air Lines and

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reported similar premium revenue growth in the quarter, at 4% and 5%, respectively.

Andrew Nocella, *******’s executive vice president and chief commercial officer, said on the company’s earnings call that the premium cabin “performed better than the main cabin in all entities during the quarter.”

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********* Airlines’ new Flagship SuiteAmerican Airlines

Delta, for its part, said its premium cabins generated $5.3 billion in revenue compared to $6.3 billion for the economy cabin despite being just a fraction of the tickets sold.

Not all airline recovery is created equal. While ******* and Delta’s stock prices have risen 81% and 34%, respectively, this year, *********’s has fallen 5%.

*********’s lag is due, in part, to a ******* corporate strategy that pushed away high-paying customers and resulted in the ******* of its chief commercial officer, Vasu *****.

“We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community, which we’re confident will improve our revenue performance over time,” ********* CEO Robert Isom said in Thursday’s earnings release.

Premium seats allow airlines to charge a premium

The legacy carriers’ renewed attention to their premium offerings is also due, in part, to their acknowledgment of an

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.

It’s a much-welcome change as airlines have scrambled to compensate for the unsustainably cheap economy seats from

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, which have dragged down their earnings this year.

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A rendering of Delta’s next generation DeltaOne business class cabin.Courtesy of Delta Air Lines

Leaning more into premium seats could fill that financial void.

********* has doubled down on bettering its business class. It plans to launch a new Flagship Suite for future Boeing 787s and Airbus A321XLRs, which will also be retrofitted onto the airline’s existing Boeing 777-300ERs.

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to stoke more demand for its highest-dollar cabin. Meanwhile, ******* is planning to create a new lie-flat business class for its new A321XLRs. Each of the Big 3 have also announced big investments in their

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******* Airlines Polaris Business ClassUnited Airlines

On the budget side,

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have yet to score a profit since 2019 and are making drastic changes to their historic bare-bones strategy. Frontier in March announced “business-class-like” seats that would leave the middle seat blocked, while

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seat options in July.

JetBlue Airways recently announced lounges would be built for its Mint business class, and Southwest Airlines plans to upsell seats with more legroom — ditching its previous egalitarian model.

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#Airlines #making #miraculous #recovery #doubling #premium #seats

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