Airport Experience® News - Pre-Conference Issue 2025

AIRLINES

NAVIGATING HEADWINDS Challenges Continue For ULCCs, While Some Larger Carriers Focus On Premiumization

BY JOHN QUINNIES

Left: Demand for air travel has exceeded pre-pandemic levels, but airlines are having mixed performances. High operating costs are crushing some; others are thriving due to increased reliance on ancillary revenues.

s U.S. airlines chart their course for 2025, carriers that have embraced premium services are finding steadiness while others that prioritize low fares are struggling, analysts say. Among the major U.S. commercial carriers, only Delta Air Lines , United Airlines , and Alaska Airlines are demonstrating strong performance. Meanwhile, others are adjusting their strategies to meet evolving market demands against a backdrop of rising operating costs across the industry, according to William Swelbar, chief industry analyst at Swelbar Zhong Consultancy . “Never has the industry been more bifurcated than today in terms of product or performance,” Swelbar says. A

Premium Push For airlines whose model lends itself to premium service offerings, the future appears to be bright. Premium offerings – early boarding, seat upgrades, etc. – are now a key driver for current airline business models and revenue streams. “Premium beneficiaries will continue to shine in 2025,” says Ravi Shanker, freight transportation and airlines analyst for Morgan Stanley , speaking on the company’s Thoughts on the Market podcast. We believe the premiumization trend in the industry is structural and will continue next year. “The premium leaders are building annuity-like business models – think

Above: William Swelbar, chief industry analyst at Swelbar-Zhong Consultancy, says the airline industry is “bifurcated” in terms of product and performance.

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AX NEWS FEBRUARY 2025