Delta Air Lines’ premium cabins could be ripe for “unbundling” — the airline industry trend that’s seen passengers increasingly paying for services once included in the price of a ticket.
For decades, it’s afflicted passengers in coach, from the introduction of checked bag fees in the 2000s to more restrictive tickets rolled out in the 2010s that stripped away free perks like complimentary seat selection, or — on some airlines — a free full-size carry-on bag, in exchange for a cheaper base fare.
Could a similar trend be on its way to first or business class?
Last week, Delta leaders seemed to signal that some sort of “business light” or “basic business” (our terminology, not Delta’s) could be around the corner.
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Delta signals business unbundling possible
To be clear, nothing has been announced yet.
But last week, on the company’s second-quarter earnings call, a Wall Street analyst asked Delta president Glen Hauenstein whether the carrier might ever consider bringing unbundling to its front cabin.
Hauenstein acknowledged those talks are, in fact, in the works. He even went so far as to tease a potential announcement at Delta’s fall Investor Day, the company’s annual shareholder meeting at which executives typically share detailed future plans.
“We’ve talked conceptually about that,” Hauenstein said. “I think we’ll be giving you more details. … But we’re not ready to talk about the details of those plans moving forward. Investor Day this year should be very exciting.”
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As you might expect, Hauenstein’s comments on the topic have generated a lot of buzz among industry followers — and speculation on what this could mean for Delta One, First Class and Premium Select passengers.
While no firm details have been shared, any such changes could introduce an additional layer of decision-making for customers who likely take “all-in” pricing for granted when booking expensive business-class fares.
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An evolution of unbundling
Over the course of this century, airlines have methodically unbundled services in the main cabin.
Following the advent of checked bag fees in the 2000s amid rising fuel prices and the economic crisis, Delta and its competitors rolled out restrictive basic economy fares in the 2010s as a way to better compete with the budget airlines — changes that required passengers flying in coach to look a lot more closely at what’s included (and what’s not) when booking a flight.
Premium passengers typically immune
But passengers purchasing a premium ticket on Delta (and its legacy competitors in the U.S.) can typically book worry-free, with the higher-end tickets generally all-inclusive.
Sure, Delta does already offer an upsell to passengers flying in Delta One to make the ticket fully refundable, as shown on this $3,050 round trip from New York’s John F. Kennedy International Airport (JFK) to Paris-Charles de Gaulle Airport (CDG).
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But this ticket itself would come with two free checked bags, seat selection and lounge access — including, in this specific case, access to the carrier’s new Delta One Lounge at JFK.
Ancillary fees a boon
Wall Street analysts are quick to point out the success airlines have had charging main cabin passengers ancillary fees, which aren’t subject to the same taxes that fares are (a big reason why budget airlines base so much of their business model off of the tactic).
“Unbundling and segmenting the rear cabin has been such a success for Delta,” J.P. Morgan Chase analyst Jamie Baker — who posed the question about premium unbundling to Hauenstein — said during last week’s call.
Collectively, U.S. airlines made more than $7 billion in 2023 just from checked baggage, according to data from the U.S. Department of Transportation.
Business lite fares do exist
Delta wouldn’t be the first major airline in the world to introduce some sort of “business lite” or “basic business product.”
Airlines from Emirates to Qatar, Finnair, Air France and KLM have taken similar steps in recent years.
Depending on the carrier and ticket, the cheaper business fares can strip away some of the perks that help make up the business-class experience.
For years, British Airways has charged for seat selection in its lie-flat international business-class cabin. High-level Oneworld Alliance elites are exempt from the fare, but for others the add-on charges can be an unwelcome surprise after purchasing a ticket that can cost thousands of dollars.
Here’s another example, on Emirates: Let’s say I’m booking a business-class flight from Dulles International Airport (IAD) to Dubai International Airport (DXB).
The cheapest ticket, in this case, starts at $2,747, round trip.
By not paying the additional $574 for the “Saver” fare, though, I’ll lose lounge access, complimentary seat selection, chauffeur services and the ability to upgrade to first class.
Delta’s plans still unclear
It’s not clear what, if anything, Delta might restrict if it ultimately does go down the premium unbundling road.
Today, travelers flying on a Delta basic economy ticket can’t select a seat until after check-in. They’re not allowed to make itinerary changes for flights originating in the U.S., Canada or the Caribbean. They’re last to board, they don’t earn SkyMiles or Medallion status credit and they’re not allowed into SkyClubs, even if they carry a Delta American Express credit card that would ordinarily grant them access.
But that’s basic economy. The carrier would likely want to tread carefully with its premium cabin, regularly touted by company leaders as a focal point of its business model — one that’s helped Delta maintain an edge over just about all of its U.S. competitors in recent years, even as it disappointed Wall Street analysts with lower-than-expected profitability in the second quarter.
The word “premium” was mentioned 37 times on Delta’s call with analysts last week, the event’s transcript shows.
Yet unbundling the premium cabin would undermine that stature, critics argue.
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“This talk of adding fees to the premium cabin demonstrates, to me, an ancillary revenue mantra run wild. Short-term benefits, but long-term warning signs,” said Jay Sorensen, president of the airline consultancy IdeaWorks.
“The global network carriers continue to promote themselves as premium airlines,” Sorensen added. “When you behave like a [low-cost carrier], your brand will eventually become an LCC, and your employees will take on LCC-like habits.”
Of course, Delta executives regularly note the company’s sterling brand reputation, and that’s not without merit: Even after fallout from a SkyMiles crackdown last year, the carrier was a top finisher in both the recent J.D. Power airline rankings and the 2024 TPG Best Airlines report.
Bottom line
If Delta were to unbundle its premium cabin, it’s certainly possible other carriers could follow suit; look no further than all three of the legacy U.S. carriers doing away with change fees a few years ago — or quickly following one another in hiking checked bag fees earlier this year.
Time will tell whether this trend takes hold in the front of the plane. Suffice to say, we’ll be keeping a close eye on Delta’s Investor Day, set for November.
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