Cheaper Premium Cabins on the Horizon as Delta Cuts Back on Upgrades

Last week, Delta’s incoming president Glen Hauenstein was widely quoted on his strategy for giving away fewer award tickets in the future, saying “We want people to be able to use those miles not to fly for free but to control your experience.”

Hauenstein’s remarks may not bode well for elite customers vying for an upgrade, but for those looking to spend incrementally for a premium experience, there might be a nice silver lining in his words.

Hauenstein’s comments were in line with the general trend that Delta and its loyalty program, SkyMiles, have been following for the last few years. SkyMiles, thanks to a strong economy and good market placement, is contracting, as the airline looks to issue fewer miles and sell more seats. While frequent flyers are apoplectic, the changes that Delta is making to sell more premium seats may actually open up some decent options for budget premium travelers.

Examples of these benefits are already starting to show up in search engines. With Delta aggressively pricing its premium cabins, flights with fuller economy cabins can actually drive main cabin fares higher than premium fares, making it thriftier to buy a nicer seat. Jason Rabinowitz has been regularly annotating the fares on Twitter:

While it may seem strange to sell a business seat for less than one in a lower cabin, the economics in this case make sense. Supply is limited for the main cabin and premium economy, so that price goes up. Since nobody has booked a business fare and since Delta is pricing them aggressively, those costs are staying low.

Other carriers are following on a similar tack and offering more and more discounted premium seats. On and off last year, British Airways and American Airlines offered sale fares in business class from the U.S. to Europe for around $1,300 — not much more than a typical economy fare.

In the end, business class may end up becoming an incremental cost (à la business fares on Amtrak) rather than the enormous investment that it is today, and travelers may end up searching for premium fares in their travel planning along side with those in economy. And while that sea change may well take away from the upgrades that elites are typically used to, the rest of the traveling consumers will realize the benefit.