It's Summer Travel Week here at Thrifty Traveler. By the sounds of it, Delta executives are celebrating summer travel right now down in their Atlanta headquarters, too.
Despite widespread fears that a shaky economy and higher airfare prices could lead travelers to skip the airport and stay home this year, Delta executives were practically giddy on Thursday as they looked ahead to the next season, telling investors they're set for a record-setting summer. For the airline, that means nearly sold-out flights at higher fares, pulling in what Delta expects will be a company record in revenue (and profits) over the first stretch of summer from April through June.
“We feel really confident in the summer and what we have on the books,” Delta President Glen Hauenstein said. “We know there’s a lot of anxiety about domestic demand, but we don’t share that anxiety.”
“From what we're hearing from our travelers … this is a very different recovery trajectory than other consumer businesses are experiencing,” CEO Ed Bastian later added.
Translation? It'll take a lot more than some economic headwinds to hold back travelers this year.
It's a major change in tune from just a year ago – let alone the earlier stages of the pandemic – when airlines were still losing money as many travelers stayed home or skipped bigger trips. Delta did report a modest loss of $363 million in the first three months of the year on Thursday, but it chalked that up largely to a massive new raise for its pilots and flying a bit less than it had planned normal due to bad weather and some operational snafus.
Looking ahead to this summer, Delta executives said they see no sign that travelers plan to stay put amid headlines about banks folding, layoffs, or inflation. Domestic travel is booming, exceeded only by travelers booking the international trips they put off for years. Even high-paying business travelers are steadily coming back.
International travel is clearly poised to be the biggest winner in 2023. This time last year, pandemic travel restrictions kept many travelers closer to home. But Europe has been wide-open for many months. Japan is open now, too, and travelers are increasingly anxious to fly there as well as other popular destinations throughout Asia. Testing requirements to fly home after any trip abroad are a thing of the distant past.
Delta said it's adding 20% more seats to international routes compared to what it flew last year – including its biggest summer flying over to Europe in company history. Still, it may not be enough…
Hauenstein said the airline has already sold 75% of seats on its international flights for the summer season as travelers have planned and booked their big trips further in advance. With fewer seats empty left to fill, that means the odds of finding a cheap flight abroad with Delta this summer are getting smaller by the day.
In fact, Delta's biggest problem this summer might be that travel demand is too strong. Bastian, Delta's CEO, told CNBC Thursday morning that the airline plans to proactively trim some of its schedules through the summer, freeing up some wiggle room to avoid the mass delays and cancellations that plagued Delta early last summer and again this spring.
Delta flyers' growing appetite to travel more stretches beyond booking flights. The airline also signed up a record three million new members in its SkyMiles program in the last quarter, due in part to the airline's new free onboard Wi-Fi that launched in February – it requires a free SkyMiles account to get online.
The airline also saw yet another record number of travelers opting to open a co-branded Delta American Express card. That's more money from Amex in Delta's pocket … but as more travelers spring for premium travel cards with more benefits, it also means the long lines regularly forming outside Delta Sky Clubs likely aren't going to disappear anytime soon.
Bastian told CNBC that the airline is on track to continue climbing back from the pandemic “well above anything anyone expects” – economic downturn or not.
“We’re in the experience economy. People want to get their experiences back,” he said.