Airport Experience® News - Pre-Conference Issue 2026

AIRLINES

HOLDING ALTITUDE Premium Demand Powers Airline Profits While ULCCs Face Headwinds

BY DAVID GORDON

shortages are not going away anytime in the next couple years.” That dynamic is expected to persist through 2026 and possibly beyond, contributing to solid airline margins even as growth moderates. Shabat noted that premium demand has been one of the most reliable aspects of airline performance since 2022. “I can’t remember in the past three or four years a single airline saying anything negative about premium demand,” he says. “2026 may be shaped by the resilience of the premium boom.” Jarrett Bilous, airlines managing director at S&P Global Ratings , echoes that sentiment. He says the momentum in the market is centered on premium offerings, with the focus on access to lounges, more legroom and more value-added services compared to basic economy. “Larger network carriers have been growing that side of the business because it’s higher margin for them,” he says. In fact, airlines are working closely with airports to increase premium experiences for higher-spending travelers, according to Henry Harteveldt, travel industry analyst and advisor for Atmosphere Research Group . “Airlines are working aggressively with airports to find more space to open and expand lounges and add more lounges where they can,” he says. Harteveldt said the shift toward premium demand is driven in part by changing demographics. Reasonably strong passenger demand is coming from a core group of travelers. He says that travel is now concentrated among households earning $150,000 or more, while fewer Americans earning under $100,000 are flying compared to previous years. Bilous said demand was slower than expected early in 2025 but strengthened into the summer. “A lot of airlines reported demand was reflecting positively as of late summer,” he said. “Indications are that demand remains healthy.”

he airline industry heading into 2026 is marked by sharp contrasts in strategy and performance

Above: Growth in premium travel is buoying profitability for legacy carriers in the United States, while ultra-low-cost-carriers are struggling amidst economic uncertainty among lower income people.

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across different business models. Demand for premium seating continues to be a key revenue driver. This has fueled investment in lounges and added-value services across major network carriers. At the same time, ULCCs are working to stay afloat in an environment marked by rising costs, uneven demand and structural challenges. These shifts have direct implications for airport planning, partnerships and passenger traffic. Revenue Trends Jay Shabat, senior analyst at Airline Weekly , says that most airlines are making good money, something that until relatively recently was elusive. He attributes that performance to a combination of strong demand and tight capacity. “One defining characteristic of the post-pandemic era has been a very constrained supply environment because of production bottlenecks with aircraft and engines,” he says. “Aircraft

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AX NEWS FEBRUARY 2026