Fifteen years in, the strategy is paying off. The airline now commands roughly 20% more revenue per seat than its competitors, and premium cabin revenue is on the verge of overtaking main cabin for the first time in the company’s 100-year history.
Premium revenue includes First Class, Delta One, Premium Select, and Comfort Plus seating, while main cabin revenue is made up of standard and basic economy fares.
Bastian described the transformation to Fortune‘s Shontell as a 15-year effort he originally called “de-commoditization.” When he first started pushing the idea, 80% of travelers chose airlines based on which one had the lowest fare. Today, Delta estimates that 80% of its customers choose the airline because of the brand.
But the premium strategy couldn’t come first, he said. Delta had to earn it.
“After about five years of this, customers would come to me and say, ‘I’m noticing something different,’” Bastian told Fortune. “‘Your people seem to be happier. The service levels seem to be better. People are actually enjoying the experience, rather than enduring the experience.’”
That’s when Delta started layering on more premium products: Delta One suites on international flights, upgraded domestic first class, and a fleet overhaul that is reshaping the physical aircraft.
Customers are no longer just “looking at what’s going to get me the lowest price,” Bastian told Fortune. “And we have strategies for people that want the lowest price. It’s called Basic Economy.”
“But people want to get the best experience and want to get the best value for money,” he continued. “And that’s where we went, value for money.”
The credit card portfolio now spans four tiers. The entry-level Delta SkyMiles Gold card carries a $150 annual fee and offers a free first checked bag, priority boarding, and a 15% discount on award flights. The mid-tier Platinum card costs $350 a year and adds an annual companion certificate for a round-trip domestic flight. At the top sits the Reserve card, at $650 a year, which unlocks access to Delta Sky Clubs and Centurion Lounges, an annual companion certificate that includes first class and international routes, and a boost toward Medallion elite status.
Each tier is designed to deepen the relationship between the traveler and the airline, giving cardholders reasons to consolidate their spending and flying with Delta—and making it harder to leave. The cards also serve as a gateway to premium cabins: Cardholders get priority on upgrade lists and perks that make the overall experience feel more premium, even in economy.
“As Delta’s brand started to move and people started to see it as a premium brand, as a differentiated experience, Amex was critical to that, because we see Amex as the premium credit card in the business,” Bastian said. “It has a higher value proposition. Customer loyalty is greater.”
The premium-first strategy paid off in the first quarter. Earnings were more than 40% higher than last year, Bastian said in the earnings statement, despite “significant increase in fuel costs and operational disruptions across the industry.” Delta executives noted severe weather, the conflict in the Middle East, and pilot contract complications as headwinds this quarter. Still, adjusted revenue hit a March quarter record of $14.2 billion, up 9.4%, and earnings per share came in at $0.64, a 44% jump.
Even with those headwinds, Bastian isn’t worried about a customer pullback. “The higher-end consumer, the premium consumer, is candidly immune, or becoming more immune, to the headlines and not delaying their investment in the experience economy,” Bastian said during the earnings call.
Premium and corporate demand are doing a lot of the heavy lifting. Corporate sales hit a quarterly record, with double-digit growth across banking, aerospace, defense, and tech, according to the earnings release. A corporate survey found 85% of respondents expect their travel spend to increase or stay the same in the June quarter.
For Bastian, the company’s recent results validate a thesis he’s been pushing since long before the rest of the industry caught on. While competitors are now scrambling to add premium seats and unbundle their cabins, Delta spent 15 years building the operational foundation and brand equity to charge more—and get it.
