Is demand for premium and international travel here to stay? It depends on which airline you ask

05.11.2023 - 16:27 / thepointsguy.com / Robert Isom / Robert Jordan / Andrew Nocella

After a summer of sky-high demand for international travel and premium cabins, the "Big Three" U.S. airlines — American Airlines, Delta Air Lines and United Airlines — all reported record profits.

Now, those airlines are hoping those trends are long-term.

Want more airline-specific news? Sign up for TPG's free biweekly Aviation newsletter.

"Overseas, we think there's just a lot more opportunity," Andrew Nocella, United's executive vice president and chief commercial officer, said at the Skift Aviation Forum in Fort Worth on Wednesday. "And, at the end of the day, it's not that it's just so amazing on average. It's amazing when you have the seven gateways that United Airlines has."

Nocella said he believed the U.S. market has matured due to having many different carriers operating in different markets. He added that he forecasted the industry's domestic growth would be tied to the gross domestic product by the end of the decade, making it difficult for airlines to achieve high growth rates domestically.

American Airlines CEO Robert Isom shared a similar sentiment, saying that the Fort Worth-based carrier isn't necessarily worried about an oversaturated transatlantic schedule next summer and pointing to its partnerships with Iberia and British Airways as part of the Oneworld alliance.

"A lot of our work is done in complement with those carriers, and we're very mindful of what our hubs can support," Isom said at the Skift Aviation Forum on Wednesday.

The Big Three airlines have doubled down on international demand and premium travel since the summer. United has added more routes to Asia and placed an order for 110 more long-haul jets.

Isom said American expects its premium-seating capacity to grow by approximately 45% by 2026 as it receives new deliveries of Boeing 787-9s and Airbus A321XLRs, starting in 2024. These deliveries are also a part of American's plans to expand its presence in Europe for the summer 2024 travel season.

"I think customers view that as something that benefits them; they wanna have access to [it]," Isom said. "So we're gonna be there with them."

However, Robert Jordan, CEO at Southwest — the nation's fourth big carrier — sang a slightly different tune.

Jordan offered a more cautious outlook on the high demand for international and premium travel, expressing skepticism on how long the travel trends will stick.

"We've seen patterns before. I'm not arguing that this won't stick. But I am telling you, if you go back over the long history of the airline industry, there's been a move to premium, there are seats in, seats out, seats in, seats out, as an example," Jordan said at the Skift Aviation Forum, referring to what he believed was cyclical demand for premium seating.

Southwest