Skift hold

At Delta’s investor day Wednesday, executives didn’t reveal many changes but were optimistic about the airline’s ability to grow thanks to a strong economy.

Meghna Maharishi

Delta Air Lines said Wednesday it expects sales to increase in 2025, driven by a strong economy and sustained demand for premium and international travel.

The company expects revenue growth of around 15%, but costs, excluding fuel, would increase in the coming year.

“We are positioned to win like never before. This airline, this brand that we’re seeing momentum is strong and gaining altitude,” CEO Ed Bastian said at the carrier’s investor day.

Millennials and wealthier travelers drive Delta’s growth

Bastian said the company sees the majority of its growth coming from wealthier travelers.

“Households with incomes of $100,000 or more represent approximately 40% of the overall U.S. economy and also 75% of overall travel spending,” he said. “And because Delta is a premium flyer, obviously our numbers are well above 75%. I would say that number is probably closer to 90% of our trips coming from households in this cohort.

He added that Delta also sees millennials – those born between 1981 and 1996 – making up a growing share of air travel spending.

“The secular growth we have seen in the travel industry spans all generations. It’s not just about baby boomers who want to get out and had to stay home for a few years during COVID and were afraid they’d never be able to get out and had to take revenge on travel,” said Bastian. “This is happening more than ever with millennials and all segments of our market are looking for this experience.”

Bastian also highlighted a statistic that Millennials are 36% wealthier than Generation X when they were in the same age bracket and 20% wealthier than Baby Boomers.

“Millennials not only have the desire and ability more than ever, but they also have the ability to execute,” he said. “They are the fastest growing generation, and their travel spending across all generations is up three to four points in every other spending category.”

Delta sees strength in premium products

Premium products have become one of Delta’s most profitable segments, with premium seats and the carrier’s loyalty program generating 57% of its revenue. Main cabin seats now represent 43% of Delta’s revenue. Nearly 14 years ago, the main cabin accounted for about 60% of Delta’s revenue.

In the long term, Delta expects premium seats and its loyalty program to account for more than 60% of its revenue. Delta President Glen Hauenstein said the carrier found that 85% of customers seated in premium seats intend to repurchase such seats.

“What we’ve learned from all these years of experience with these high-end products is that when people fly in these products, they tend not to come back,” Hauenstein said. “There is a cycle of life. The life cycle begins when you are young and rates are the only thing that matters. And then as you get older and you can afford more, you want more, and it’s been really enlightening to unlock that life cycle of a customer and understand it.

Hauenstein said Delta plans to add more premium seats to some of its planes, like the A350-900. The carrier expects premium seat ticket revenue to eclipse the main cabin by 2027.

An optimistic look at President-elect Trump

Bastian told a group of reporters that he thinks the new Trump administration could be a “breath of fresh air” when it comes to regulation, according to CNBC.

He went on to say that the industry had experienced “a level of overkill” over the past four years. The Biden administration has taken a tougher approach to regulating the airline industry, blocking the JetBlue-Spirit merger and the implementation of a series of consumer protection rules such as automatic reimbursements And unwanted fee disclosures.

A court of appeal temporarily blocked the Biden administration’s junk fee rule after major airlines sued, arguing the rule was regulatory overreach by the Department of Transportation.

The DOT is also investigate airline loyalty programs, one of their most lucrative assets. The investigation focuses on mileage devaluation, hidden fees, dynamic pricing and reduced competition and choice.