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If you’ve noticed fewer Delta upgrades clearing of late, you’re not alone. As Delta celebrates a record quarter, it’s also rejoicing over a 10% increase in premium product ticket revenue and double-digit percentage increases in loyalty and mileage-related income. In lay terms, that means more people than ever before are paying up for confirmed seats in business and first class, which means fewer seats than ever are remaining open for complimentary upgrades.
This is a continuation of a trend that shows no signs of stopping. While Delta has one of the most generous free upgrade policies of the major US airlines, top tier elites should ponder just how valuable that perk is given this new reality. As the overall economy continues to thrive and Delta itself makes it ever easier to buy upgrades into premium cabins, we’re edging closer to a world where “want first, buy first” becomes the go-to mantra.
In the airline’s most recent quarter, 52% of adjusted revenue was derived from “premium products and non-ticket sources.” Glen Hauenstein, Delta’s president, noted “record passenger loads and $1 billion in revenue growth for the June quarter.” Additionally, Delta notched a new highest-revenue day on July 7.
In essence, we’re looking at simple math. When more passengers buy first- and business-class seats, Delta has fewer to hand out as free upgrades. It also stands to reason that the airline would make fewer available for use with Global and Regional Upgrade Certificates. Delta made it simple for customers to exchange their SkyMiles for seat upgrades at a value of roughly 1 cent per SkyMile, and while that’s a poor use of miles from a value standpoint, a huge swath of casual flyers don’t know any better.
While there’s no direct mention, one can’t help but compare Delta’s record quarter with American Airlines’ latest guidance that came before its quarterly earnings, scheduled to be released July 25. There, ongoing disputes with mechanics and the impact from the Boeing 737 MAX grounding have caused the airline to shrink for the first time since before its merger with US Airways.
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