A Delta executive shared an interesting statistic about the percent of first class seats that the airline is selling, and I think that’s interesting to reflect on in light of the recently announced changes to the SkyMiles program…
In this post:
Delta selling a vast majority of domestic first class seats
View from the Wing notes how during the Morgan Stanley 11th Annual Laguna Conference today, Delta President Glen Hauenstein shared an interesting statistic about how well the carrier is doing with selling first class seats on domestic flights.
In August 2023, Delta had a domestic paid first class load factor of 74%. That means on average, 74% of first class seats were sold, and not offered as upgrades to elite members. Presumably those seats being sold includes mileage tickets, since SkyMiles is basically a revenue based program nowadays.
Honestly, that number isn’t really surprising, and I suspect that last month wasn’t even the month with the highest paid premium demand. Just under a year ago, American executives claimed that the airline was selling close to 80% of first class seats on domestic flights.
The bigger thing to take note of here is the trend. Going back to 2011, Delta only sold 14% of its first class seats. So in 12 years, we’ve seen a more than five-fold increase in the percentage of first class seats sold. It’s clear in which direction things are headed, as complimentary first class upgrades are increasingly becoming a thing of the past.
Are airlines at risk of killing the golden goose?
In the United States, airlines make a large percentage of their profits from their loyalty programs, and in particular from their co-brand credit card agreements. Airlines want their loyalty program members to not just be loyal when they book a flight, but also when they pull out their credit card, book a hotel, etc. Airlines only seem to see upside in this area, and Delta hopes to increase its revenue from Amex by around 50% in the coming years.
I don’t think anyone faults airlines for trying to sell as many first class seats as possible. Delta in particular does a great job with pricing first class fairly, where many people may just splurge to book a first class ticket. That’s a smarter system than charging outrageous first class fares, and then giving over 85% of seats to upgraders (as we saw just over a decade ago).
The issue arises from airlines increasingly demanding more from loyalty program members to qualify for status, while offering them less. With the new SkyMiles program, you can earn Delta Diamond Medallion status by spending $350-700K annually on a premium co-branded credit card. That’s a big ask.
Is there a certain point at which consumers will stop showing more loyalty to companies while receiving less? Will people vote with their wallet, and look at the overall value proposition of what they’re receiving? Call me a cynic, but I actually fear the answer is probably “no.” The reality is that most consumers aren’t particularly savvy, and aren’t doing much to maximize their rewards.
They spend on a credit card that’s connected to an airline or hotel group that they travel with a lot or like, without crunching the numbers and considering if they’re actually getting the best value. When it comes to ongoing spending, a vast majority of people would be better off just using a 2% cash back card or transferable points card and then booking the travel that they wanted, rather than investing in a program to earn status, only to be disappointed when they don’t get upgraded. But that doesn’t seem to be how most consumers approach things.
Bottom line
Delta is selling 74% of its first class seats on domestic flights. That’s not surprising, and is roughly what I would have expected. Airlines have gotten much better at monetizing premium cabins, so we’re a long ways off from just over a decade ago, when a vast majority of first class seats went to upgraders.
There’s nothing wrong with Delta (or any other airline) selling most of its first class seats. The issue is only that airlines keep expecting more loyalty from program members, while offering them less and less. Yet for whatever reason, consumers seem to be fine with that, so…
What’s your take on the number of first class seats Delta is selling, and what it means for SkyMiles?
Delta has finally made me decide to drop their platinum card. No lounge access, annual fees, killing MQD waiver. What is left? I will take USD over sky pesos.
Delta has finally made me decide to drop their platinum card. No lounge access, annual fees, killing MQD waiver. What is left? I will take USD over sky pesos.
Depends who is paying for it. If companies are paying for it people may care less. I think it also depends on the type of plane. If Delta is offering the lay bed seats across the country it may be worth it compared to a sit up seat for first for a flight around the same number of hours.
The top earners got richer over Covid. Are we really surprised they’re splurging to sit away from the riff-raff? The extremely rich have their own jets, sure. But there are plenty who are not quite rich enough for their own jet but won’t bat an eye at a $5k Transcon ticket.
Hi Ben! One story idea in light of all the Delta news:
All the ways Delta is failing as a "premium" airline. Examples:
A vastly outdated Delta One seat on the 767-300 which services SO MANY routes, while United/American have a better seat on all their long haul aircraft.
That same aircraft has very slow, expensive and often out of service Wifi.
Lack of hot towels in Delta One, cheap Amenity kits, etc.
Most people here have drunk the kool aid of whichever airline they are fanboys of. Including bloggers that mostly reiterate airline investor presentations.
Airline stocks are in a bear market because of oil this year - but even otherwise they have not recovered their pre-pandemic highs. Delta is down 33% from its Jan 2020 high.. It's going to be tough slog for all - labor costs are high too. Fares can only go up so...
Most people here have drunk the kool aid of whichever airline they are fanboys of. Including bloggers that mostly reiterate airline investor presentations.
Airline stocks are in a bear market because of oil this year - but even otherwise they have not recovered their pre-pandemic highs. Delta is down 33% from its Jan 2020 high.. It's going to be tough slog for all - labor costs are high too. Fares can only go up so much. They better sell even more first class seats. Frequent flier program changes will continue. Expect AA to raise LP thresholds too.
Fly the product you want. Chasing status has been a fool's game for many years now. This is not the 2000s. The U.S. made it's airline industry an oligopoly a while ago.
Is it any wonder that premium seats sales are up over that period of time when during that same period of time, seat pitch and width has shrunk considerably?
Airlines do what they want because they are monopolies. Flights in the US cost an astronomical account. Nothing will change until it becomes more of a free market and competition is allowed.
This is only a problem for OPM flyers who don't pay for their own tickets, and rely on the bossman's purse to fund their status while only allowing only Y purchases. Zero sympathy.
This is the stupidest comment I have seen on this site in a long time. Yup. I travel the globe to help produce products used by millions of women per year. Do you expect ME to pay for that travel? So yeah, I get to reap a little bit of a reward with some upgrades for the 50% of time I spend away from the family. Don't write anything further in this site, you have zero common sense.
He hit the nerve, though.
It is not your money that is being spent on your tickets. You also do not get to choose when or how you will fly, your employer chooses that for you, so the airline cares little about your "loyalty".
I stopped chasing status since the pandemic. I still fly as much as I did before the pandemic but find the value of status has hugely diminished. PE and J are also often priced within a reasonable delta to Y so I usually just end up paying for it on an airline with the best price / schedule.
Why use 12 years as a metric? But in my own observation, all 3 major domestic carriers are selling First now at reasonable prices, so of course people will just buy them rather than waiting for an upgrade. On some routes it's a complete no-brainer to just buy First from booking.
Are you kidding? I used to fly all over the world in First class lying down with most tickets less than $3K. Nowadays I rarely see a fare under $6K.
Interesting trend!
Just wait for Delta to "simpllfy" away elite upgrades.
I have been seeing AA sell F tickets cheaper than a well discounted coach seat. Pushes up their sold F number.
Does DL publish the average cost per mile for their F seats and compare against coach?
We're also seeing the downside of this. I've been tracking delta premium business class prices between CA and NYC/Boston. They are not even trying to compete in terms of price against UAL or jetblue. There have been premium routes for the latter 2 airlines for well below $600ow while delta have not even budge out of their $999 price on the same route. It's been that way for at least 14 months that I've been...
We're also seeing the downside of this. I've been tracking delta premium business class prices between CA and NYC/Boston. They are not even trying to compete in terms of price against UAL or jetblue. There have been premium routes for the latter 2 airlines for well below $600ow while delta have not even budge out of their $999 price on the same route. It's been that way for at least 14 months that I've been tracking. In fact even delta's non premium and routes with layovers are more expensive than ual/jetblue premium. I'm curious as to why people don't care about the price diff
So everyone but @TimDunn sees this as loyalty programs are on life support. Best price for the seat irrespective of fare class is where we are.
I forget why I got mad at Amex back in the 80's; for long-haul I connect to DL in ATL to avoid AA. It's frustrating that DL doesn't offer benefits from any other Card. Frustrating, but not enough to switch me to AA! Recently on long-haul DL in Premium; if the food is actually an upgrade from Coach, theirs has to be Survival C-Rations. A cardboard box with chicken-something, a cookie for desert. Breakfast is a Sam's Club McMuffin. Identical meal to-and-fro.
The challenge for my colleagues and I is that 90% of our travel is business. Company policy is that we fly least-cost logical (with just enough margin to usually let us pick whichever of the flag carriers we prefer). On international routes we can get premium economy if it’s within a certain price delta from the economy fare. So chasing status with one airline is the only option for ever getting seated forward of the...
The challenge for my colleagues and I is that 90% of our travel is business. Company policy is that we fly least-cost logical (with just enough margin to usually let us pick whichever of the flag carriers we prefer). On international routes we can get premium economy if it’s within a certain price delta from the economy fare. So chasing status with one airline is the only option for ever getting seated forward of the wings.
I’m approaching million miler with Delta but the latest changes do have a few of us eyeing United. We’re not in a hub so they’re all more or less equal domestically. I’d probably still maintain Platinum on Delta with my international schedule but it’ll be just squeaking in there. United looks a little easier, at least until they raise their requirements to follow Delta.
The international lounge situation is what might keep me with Delta though. My most frequent destinations are AMS, CDG, and HND - no United lounge at any of those. Delta has an amazing lounge in HND and the SkyTeam lounges at AMS and CDG are excellent too. As long as I can keep using those (thanks premium economy) then it’s hard to make a switch…
I think it's a bit foolish to chase status anymore for domestic upgrades. Even top tier in each program see wait list 20-50 deep on some routes. All 3 domestics offer cash upgrades after booking if your company won't allow you to spend the fairly small extra they're generally offering F for these days. They're so competitive on many routes that people just book it from the start leaving no upgrades for even top tier elites, let alone mid tier.
Sounds like a pretty pathetic way too spend your 1 life on earth. Full widget in the matrix.
Did we really need another reason why anyone chasing delta status is laughable?
After reviewing the Delta changes and seeing the comment that : "airlines make a large percentage of their profits from their loyalty programs, and in particular from their co-brand credit card agreements. Airlines want their loyalty program members to not just be loyal when they book a flight, but also when they pull out their credit card, book a hotel, etc. Airlines only seem to see upside in this area, and Delta hopes to increase...
After reviewing the Delta changes and seeing the comment that : "airlines make a large percentage of their profits from their loyalty programs, and in particular from their co-brand credit card agreements. Airlines want their loyalty program members to not just be loyal when they book a flight, but also when they pull out their credit card, book a hotel, etc. Airlines only seem to see upside in this area, and Delta hopes to increase its revenue from Amex by around 50% in the coming years." Delta will be doing neither. I am a Diamond on my own dime as a retiree, no corporate travel account to pay my way and I have an American Express Delta Reserve card. Now therre is no need for the Amex card so bye bye Delta to that income. The new changes show what we have all know for years Delta does not care for anyone that is not flying on a corporate account and paying full fare. Amazing to bite the hand that feeds you by making it so there is now no advantage to stay loyal or pull out the co-branded Delta card and charge $65-$70,000 a year. Oh I could get 10 whole visits a year to the SkyClub if I keep the Reserve card which is over $50 a visit. Now no need to be loyal just shop flights. I was just check flights to Spain and Business class was on Delta was $2000 to $4,000 more than other legacy metal. If a llarge percentage of profits come from co-branded cards why did Delta make the changes it did? Any body know?
Yes, that is the real puzzle here. American Express must have approved of this madness. It seems like the only possible next step is for Amex either to reduce the annual fee on the Reserve Card drastically or simply get rid of the card entirely. Or else replace the Sky Club privileges with something else. The status quo is not sustainable. Delta appears to have slain the golden goose. I'm not excited about switching to...
Yes, that is the real puzzle here. American Express must have approved of this madness. It seems like the only possible next step is for Amex either to reduce the annual fee on the Reserve Card drastically or simply get rid of the card entirely. Or else replace the Sky Club privileges with something else. The status quo is not sustainable. Delta appears to have slain the golden goose. I'm not excited about switching to American, but I live in an AA hub and Admirals Clubs seem to be making gains in terms of their food offerings, so it would seem to be time to face reality and end my marriage with Delta. I have been presented with divorce papers, so I might as well accept it and move on. Delta no longer wants my business or my loyalty. I hope those who remain enjoy their empty Sky Clubs.
Wonder if United is benefitting from their prior decision to increase First class space. Likely still challenging internationally but to the extent they had increase first class footprints domestically it would seem to have been the right call.
I have found myself buying up more to First both domestically and internationally when not booked up front in the first place (got a great $500 buy up to Polaris coming back from Milan recently - never...
Wonder if United is benefitting from their prior decision to increase First class space. Likely still challenging internationally but to the extent they had increase first class footprints domestically it would seem to have been the right call.
I have found myself buying up more to First both domestically and internationally when not booked up front in the first place (got a great $500 buy up to Polaris coming back from Milan recently - never would have seen that 10 years ago!).
This move by Delta has pushed me to stop chasing status and just pay for the seats I want. Which serves them and me just fine. I’ll just spend on a card that gives me cash back.
My move as well. I simply no longer travel that much and when I do, I can PAY for First Class and enjoy it.
It’s the attractive pricing. Some of their fares MIA-NYC start in the low $200s, which is a no-brainer. AA doesn’t even get close to matching Delta’s F fares on many routes
Good, now get rid of the free upgrades all together and improve the service levels with more and better meals served onboard and lounge access. I.e., similar to what one would find in Europe but with bigger seats. The excuse for the continued degradation of F service was always that most seats are given away to free upgrades, but pax are clearly willing to pay a premium. So let’s get the service we’re paying for!
Except they don't need to. They are trying to maximize profits - not offer a wonderful customer experience. With only 3 major carriers in the US, as long as they have captive markets or a perceived advantage customers care about (slightly better onboard product with Delta, better international route network with United, or...something else with American?), they don't need to offer anything else.
Lounge access is already something they separately monetize - why would...
Except they don't need to. They are trying to maximize profits - not offer a wonderful customer experience. With only 3 major carriers in the US, as long as they have captive markets or a perceived advantage customers care about (slightly better onboard product with Delta, better international route network with United, or...something else with American?), they don't need to offer anything else.
Lounge access is already something they separately monetize - why would they cause more overcrowding and dilute the monetization they achieve by offering something no other domestic carrier offers today? I can guarantee it would not incrementally drive enough revenue by giving it for free to first class domestic passengers to offset the negative impact it would have to paid access and lounge memberships.
With only 3 major carriers in the US
As opposed to where?
China? Nope: Air China, China Eastern, China Southern, then a bunch of regionals.
Europe? Nope. IAG, Lufthansa Group, AirFrance-KLM, two big LoCos, and a bunch of regionals.
The entire African continent? No.
The entire S.American continent? No.
Australia/NZ? Indian Subcontinent? Northeast Asia? Ha!
....so again, what's with the "only?" It's more or less convergent evolution to markets worldwide.
Impressive results. Just out of curiosity I wonder what the split is between domestic v mid long-haul v long-haul? Just for sake of comparing the economics and also strength of the different business markets.
I don't factor complimentary upgrades anymore; they're a thing of the past. You get what you pay for, simple as that.
However, I do factor lounge access...being based in LAX, I have switched 50/50 from AA to DL for domestic...
Impressive results. Just out of curiosity I wonder what the split is between domestic v mid long-haul v long-haul? Just for sake of comparing the economics and also strength of the different business markets.
I don't factor complimentary upgrades anymore; they're a thing of the past. You get what you pay for, simple as that.
However, I do factor lounge access...being based in LAX, I have switched 50/50 from AA to DL for domestic (other than TransCon) simply because of the amazing LAX SkyClub...though I stick with American when it comes to international on their metal or other oneworld airlines.
I actually question whether the stat is for first class or if they're lumping all non regular coach in? Delta often lumps together Comfort +, Premium Select, domestic First and Delta One when they talk about "premium" sales.
The stat is for all “premium seats”, and remember they’ve added another Tier internationally, and it includes paid, discounted upgrades and RUC & C+ inventory. Many people used Covid ecerts and SkyBonus dollars for upgrading this past year. They’re creating a narrative hoping to change behavior. Non-Rev’s are removed before the calculations, which also skew data.
This is correct. This post is misinformation.
Delta noted during the event they had a “74% paid premium load factor” domestically last month.
This is a very broad statement. Includes extra leg room, comfort+, RUCs, FC award redemptions, etc. Basically anyone not sitting in a regular economy seat.
Consumers are not fine with being given less for their loyalty. The problem is in most cases there are no other viable options left.
There is no Continental, NorthWest, US Airways and so on in the skies anymore. THere is less competition and the airlines can act like monopolies and give consumers the shaft.
Actually, Continental is now called United and US Airways is now called American Airlines.
@Klaus - are you intentionally proving Manny's point?
This is nonsense. There are more airlines and more competition in US aviation than at any point in history. Inflation adjusted prices are also the lowest in history, inflation and seasonally adjusted, which proves this out. Of course some airports will be captive, but pretending that somehow it's worse today is either uninformed ignorance or a bold faced lie.
@Mantis,
THANK YOU.
People keep repeating the "OMG XYZ-airline isn't here anymore, therefore it's less competition and prices are higher!" when in reality, that's simply not the case, particularly relative to inflation over time.
Less competition has nothing to do with this. Stop trying to get something for free if you want a first class seat more than likely you're going to have to actually buy a first class seat. For years people bought some of the cheapest seats in coach and used their status to get upgraded now days that isn't going to fly not because of some major change to loyalty programs but simply because more people...
Less competition has nothing to do with this. Stop trying to get something for free if you want a first class seat more than likely you're going to have to actually buy a first class seat. For years people bought some of the cheapest seats in coach and used their status to get upgraded now days that isn't going to fly not because of some major change to loyalty programs but simply because more people are paying for first class 74% instead of 14%. I laugh now days when I see someone yelling at a gate agent or flight attendant they are never flying this airline again because they didn't get an upgrade. How can you get upset because the airline actually put you in the seat you paid for simply because they are actually selling more first class seats.
Slowly the days of complimentary upgrades are going away replaced by either paid first or an upgrade fee. The airlines are just prepping it's elite flyers for the eventual state.
With the new pilot's contract, aren't pilots in front of elites for premium upgrades?
@Omar Virgin America was merged into Alaska Air, and their fleet footprint was never that big, so I don't think the two are connected at all.
In that same call, Delta execs said they planned to add more premium seats, try different pricing techniques, and increase the quality of the overall premium experience on the ground and in the air in order to create greater incentive to pay in the first place but then to create much more value for those that are able to use loyalty benefits to upgrade and use mileage.
As with many things, the changes yesterday are...
In that same call, Delta execs said they planned to add more premium seats, try different pricing techniques, and increase the quality of the overall premium experience on the ground and in the air in order to create greater incentive to pay in the first place but then to create much more value for those that are able to use loyalty benefits to upgrade and use mileage.
As with many things, the changes yesterday are only part of the story. Delta and Amex are far enough removed from the pandemic that they can make long-term decisions about the future state of travel and their positioning for the benefit of consumers and obviously themselves
I would imagine there is also more demand for Delta first class since Virgin America's first class went away, and Delta is a Virgin Atlantic airline partner
Similar in name, but completely different companies. The Virgin Group makes its fortune my licensing the name but has only minimal equity stake in most of the companies, though it does have 51% of Virgin Atlantic.
is it virgin Atlantic, or Delta Britania?