Appetite for high-end leisure travel—or just slightly higher-end leisure travel—is booming. Travelers were eager to resume going on trips after the pandemic, and for many, wanderlust remains. People are shelling out for more extras on top of base fares, from the chance to pick a specific seat or board earlier, to mid-level luxuries like premium economy’s extra legroom.
Airlines, who say the strategy works, are shifting their business models and changing the layouts of their planes to take more advantage of these premium leisure seekers.
Delta Air Lines said revenue from premium travel rose 10% in the first quarter from a year earlier, while ticket sales in its main cabin grew just 4%. United’s premium revenue rose 14%. At a recent industry conference, Alaska Air said premium seating now accounts for about a quarter of its seating capacity and 34% of its revenue.
Joanna Shaheen describes herself as “bougie on a budget.” She’ll upgrade when the price seems right, but usually forgoes the most expensive options.
“I’m in my 30s now, I’m not willing to just cram in any old seat,” she said.
Flying home to Florida from a recent work trip, she opted to bump herself up to a seat with four extra inches of legroom on an Alaska Airlines flight. Since her company had covered her fare and the flight was about six hours long, spending $90 of her own cash seemed worthwhile.
But the math doesn’t always work out. A few years ago when she lived near American’s Charlotte, N.C., hub, it wasn’t unusual for Shaheen to be able to snag a first-class seat for $60 when she checked in on her app. These days, premium cabins are so popular she sees fewer of those affordable upgrades, and it’s often harder to justify the extra expense.
“It’s wanting that comfort, but at what cost and how often?” she said.
After a huge upswing in 2022, airline fares have come down closer to prepandemic levels. The airfare component of the consumer-price index, a key inflation measure, decreased nearly 6% in April from a year earlier. Flights to Europe were about 8% cheaper on average in early May than at the same time last year, according to Hopper, a travel-booking app.
“When you as a consumer check out, it may be that your basket is higher because now you’re paying for the two bags that you want to bring on or a specific seat that you want to sit in, in-flight meals, Wi-Fi, all of those things,” said Hayley Berg, Hopper’s lead economist.
Deloitte, the consulting firm, found in a survey that many travelers are willing to spend more than they have in the past. Some 43% of respondents said they would pay more for a more comfortable flying experience, up from 39% last year, the survey found. It also found that many people forgoing travel this summer blame inflation, saying it’s too expensive to take a trip.
Airlines are vying for the customers who are willing to pay up.
American’s Instant Upsell, which it launched in 2019, prompts customers with offers to upgrade for a fee. It recently added the prompts for customers who book with miles.
The airline also changed its website, so that clicking a fare now brings up an array of bundles. The different options are listed for the consumer with a green check if a feature is included in the fare or a dollar sign if it will cost more.
On a recent search for a flight between Chicago and Dallas, for example, a seat in main cabin was the cheapest option at $482. Main plus, for $604, included a free checked bag, a seat with more legroom, and an earlier boarding spot. Main select, for $837, didn’t include a checked bag but did come with even earlier boarding and the option to switch to another flight the same day and route with no fee. The priciest option, First, included the most perks—a bigger, more comfortable seat, priority check-in and boarding, and two checked bags.
Customers value premium experiences, and they also like variety, said Kim Cisek, American’s vice president of customer experience.
Sometimes the result isn’t an upsell, she said: a customer with elite status that entitles them to extra legroom or a free checked bag might realize they have enough status benefits to buy the cheapest, most restrictive basic economy fare and get some extras thrown in anyway.
When travel picked up after the Covid-19 pandemic, vacationers were much quicker to start flying than business travelers. Business class and premium economy seats that road warriors once charged to their corporate cards were suddenly full of leisure travelers treating themselves to a better experience. Many of those travelers now refuse to return to more cramped accommodations at the back of the plane.
Gabriela Canchola doesn’t always treat herself to an upgrade. But in January, flying back to North Carolina from San Diego after a trip to see her mom, she pulled the trigger, an extra $80 or $90 for a better seat.
“That made me think, maybe I should do this more often,” she said. Avoiding the traffic jams that form in the aisle after a flight was a big relief.
“More and more, I’m prone to paying to get a seat that’s closer to the front,” she said. “Especially if it’s a short trip that I’m not in the mood to go on already, I’ll just kind of spoil myself a little bit and just make sure it’s comfortable.”
Airlines have been outfitting planes with added rows of roomier seating options to appeal to fliers like Canchola. On international flights, there are often four tiers with varying degrees of space. United said last year it has close to twice as many premium seats as it did before the Covid-19 pandemic, and American says it is growing premium seating by 30% on its long-haul fleet.
The upgrade arms race and belt tightening among more cost-conscious travelers has left budget airlines scrambling to chase spendy fliers as well. Discount carriers pioneered the strategy of offering cheap, bare-bones tickets and making money charging for everything else.
Denver-based discounter Frontier Airlines earlier this year introduced a more spacious seating option in its first two rows to appeal to upscale customers—guaranteeing a blocked middle seat for those willing to pay to spread out.
But Frontier CEO Barry Biffle said at an investor conference in May that its customers have been less willing to pay for other types of extras recently. To win them back, Frontier just rolled out new types of fares that package together popular add-ons such as a carry-on bag, early boarding, seat selection, and checked luggage. Biffle said the approach is helping Frontier sell a higher volume of extras, albeit at a lower price point.
Southwest CEO Bob Jordan said recently that the airline, which has long eschewed dividing up its cabins by status, is taking a closer look, considering assigning seats and revisiting its seating options. It has also boosted prices of its early boarding options. Executives said they’re taking a cautious approach–flyers shouldn’t necessarily expect luxurious first-class suites to show up on Southwest flights.
Airlines have also found some leisure travelers are willing to pay full price for a higher tier. Alaska said that close to 70% of its first-class seats were filled with paying customers in February and March compared with around 40% nearly a decade ago. Premium economy seats, priced between business class and economy, have become the most profitable real estate on the airplane for some carriers such as United.
A survey United sent to some elite customers in April hinted at more ritzy options for sale. In one question posted on frequent-flier forums and travel blogs, the survey inquired whether a customer who had paid $2,500 for a ticket in United’s Polaris international business class on a 14-hour flight would be willing to pay extra for upgrades to boarding position, in-flight amenities like fancier pajamas and more elaborate onboard meals. One possible feature: a “press for Champagne” button at the passenger’s seat.
Write to Alison Sider at alison.sider@wsj.com