Delta’s Premium Revenue Approaches Main Cabin Revenue After 14% Quarterly Increase

U.S. competitors, and its premium cabin is about to overtake main cabin revenue for the first time in the airline’s 101-year history, Fortune reported. In the most recent quarter, premium revenue rose 14% year-over-year while main cabin revenue grew 1%.

The shift leaves premium revenue within a hair of matching the main cabin segment. Joe Esposito, who became Chief Commercial Officer in January after 30 years at Delta, was instrumental in developing the premium strategy. He said the next step is to integrate all offerings as a best-in-class retailer.

Ed Bastian, Delta’s CEO, described the approach as “de-commodization” of the air travel experience. Esposito spoke from his office at Delta headquarters in Atlanta. Delta is testing a domestic aircraft configured with 44 first-class seats, nearly double the average of roughly 22.

The SkyMiles loyalty program now counts 120 million members. Delta announced it would end food and beverage service on flights shorter than 350 miles for all but first-class passengers. Those flights represent about 9% of Delta’s total schedule.

Esposito said the change addressed the limited time available to flight attendants rather than cost savings. “We can’t get the service done,” he said. Savings from the cut have been redirected to upgraded beverage service on flights between 350 and 500 miles.

Delta is building or renovating lounges at its hubs in Atlanta, Boston’s Logan Airport, Seattle, and Salt Lake City, and plans its first lounge in Las Vegas. The airline is also adding more Delta One premium lounges that offer fine dining, wellness treatments, and valet service. “you have to reward people who give you the most money,” Esposito said.