Airlines bank on splurging vacationers as clouds form on economy

“The impact has been most pronounced in domestic and specifically in the main cabin with softness in both consumer and corporate travel,” said Deltas president, Glen Hauenstein, on an earnings call last week. “While not immune in this environment, we do continue to see greater resilience in international and our diversified revenue streams, including premium and loyalty, reflecting underlying strength of our core consumer.”

Delta has already seen premium-segment revenue such as first-class seats or premium economy on international long-haul trips, grow faster than main cabin. Hauenstein says thats about to step up.

Premium revenue continues “to widen the lead over main cabin,‘ he said. ”So we’re expecting the spreads and the yields to actually widen in this next quarter as opposed to converge.

, which is Deltas closest rival, has a sprawling international network and has invested heavily in high-end refurbishments, lounges and flashy new destinations aimed at wealthier, globe-trotting customers. That carrier will provide more insight into consumer trends when it reports quarterly results this week.

, and other airlines report in the following weeks.

‘Stars are aligning’

Even as airlines have high hopes for higher-paying customers, there are problems brewing in international travel, too.

Delta and United have said they are paring back some of their Canada-U.S. flights, echoing comments from Canadian carriers as U.S.-bound travel demand falls, a trend thats threatening to further widen the $50 billion U.S. international travel deficit.

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Non-U.S. citizen visitor arrivals in the United States last month totaled about 4.5 million, down nearly 13% from 2019, before the pandemic, and down nearly 10% from last year, according to the U.S. Commerce Department.

Weaker demand is set to bring more deals, and airlines have run fare sales even through late spring. But it could even mean cheaper flights to popular international destinations.

“This is probably the best summer for Europe travel I‘ve seen years,” said Scott Keyes, founder of travel deal site Going, formerly known as Scott’s Cheap Flights.

“I dont think there would have been all that much hope for it in 2022, 2023 and 2024,” he said. “The stars are aligning to boost the odds.”