Airline Execs Forecast a Record Summer and a Rise in Demand for First Class

Despite recent negative attention due to safety concerns within the airline industry, executives say that there is no indication of decreased flight demand.

On an earnings call on Wednesday, Chief Commercial Officer Andrew Nocella said that “as an airline and as an industry,” United Airlines will carry record numbers of travelers this summer.

Last week, CEO of Delta Air Lines Ed Bastian said on his company’s call, “Demand continues to be strong, and we see a record spring and summer travel season with our 11 highest sales days in our history all occurring this calendar year.” Both American Airlines and Southwest Airlines are due to report their results on April 25.

Even with inflation impacting consumer household budgets, demand for flights has been strong. Despite recent negative attention regarding safety issues in the airline industry, including high-profile incidents and subsequent congressional hearings, as well as being a joke for late-night TV and TikTok, demand remains resilient.

Increased public and regulatory scrutiny became more stringent after a door plug incident with a Boeing 737 MAX 9 in January. This incident led to a new safety crisis for Boeing, leading to delays in delivering new planes to airlines.

Currently, United Airlines is undergoing a safety investigation by the Federal Aviation Administration as a result of multiple incidents this year, including an incident where a tire fell from one of its older Boeing 777 aircraft.

Airlines, which generate a large portion of their revenue during the spring and summer seasons, are also facing challenges due to rising fuel and labor costs. Recent contract negotiations have resulted in a significant spike in salary for pilots and other employees, following a period of stagnant pay.

Even with these obstacles, global airlines have seen a spike in demand for international trips and a rebound in corporate travel. Both Delta and United have exceeded Wall Street’s predictions in their second-quarter forecasts. Executives have observed that customers are prepared to pay premium prices for first-class seats and other cabin upgrades beyond standard coach seating.

During the earnings call on Wednesday, Nocella mentioned that the airline is considering an additional segment at the front of the plane, similar to what United and other airlines have implemented in coach class. He said, “You have many teams of people working on how to further innovate and provide more and more choice and to monetize that choice on our behalf, obviously, in the future.”