Delta Will Start Unbundling Fares, Hoping Passengers Will Pay More

Delta Air Lines will start segmenting fares more than it is now, doing so in the hopes its customers will pay more. That’s the core of a new strategy the airline announced Wednesday at its annual Investor Day in New York.

The strategy’s fundamental tenets are selling more premium seats, offering unbundled fares so people will pay to add extra features, and even using artificial intelligence to tailor prices for each individual customer.

“Over the next couple of years, you’ll see us … testing what consumers want in their bundles,” Delta President Glen Hauenstein said at the meeting, according to a report.

That is a big change from today, when all passengers traveling in the same cabin get essentially the same services, like meals and seat assignments, that everybody else in that class gets.

Delta would be the first legacy airline in the U.S. to introduce this kind of unbundling, which is normally associated with low-fare carriers.

Let’s see what might change, and how this affects flyers.

What Delta Might Change and When

Neither Hauenstein nor Delta CEO Ed Bastian, who also spoke at the event, gave exact dates or details on what the fare segmentation will look like in practice.

For example, some international airlines already sell a “basic business class,” in which the price does not include things like the free seat assignment that’s typically included with a business-class ticket. Delta Air Lines will probably introduce something of the sort, plus similar changes, but we just don’t know yet.

However, we can already surmise some of the changes from Delta’s Investor Day presentation and from Hauenstein’s comments.

Let’s have a look.

Delta Is Going Big on Premium Seats

People with high incomes in the U.S. are getting richer and spending more on travel. Delta wants more of their money. That’s the core of the premium-heavy strategy Bastian and Hauenstein described.

Americans with incomes above $100,000 saw their household wealth rise 40% from 2019 to 2023, according to research Delta cited. These people account for 75% of spending on air travel.

Delta wants to sell them more of its premium seats, rather than upgrade passengers into those seats based on their elite status in the SkyMiles loyalty program.

Hauenstein shared a slide showing that the percentage of premium seats sold on Delta jets has been rising over the past 15 years, and he said that more people are paying to sit there.

To intercept more of that travel demand from high spenders, Delta is putting even more premium seats in its newest airplanes. When it gets its first Airbus A350-1000s in 2026, Delta’s new flagship aircraft will have about 50% premium seats (Delta One business class, Delta Premium Select, and Comfort+ economy with extra legroom). That is a very high percentage within the industry.

Domestically, Delta will soon start flying Airbus A321neo single-aisle jets with flat beds in business class, which is a major improvement over the current seating Delta offers to premium passengers on coast-to-coast flights.

Delta Will Start Unbundling Fares

Unbundled fares are generally found among low-cost airlines, where the advertised price buys you a seat and nothing more. Want a meal, an assigned seat, checked baggage, or priority boarding? You’ll pay for each of those separately.

That’s coming to Delta too. Delta confirmed that unbundled business class was coming earlier this year.

The airline now sells 6 products:

• Basic economy
• Main cabin
• Comfort+
• Delta Premium Select (premium economy)
• Domestic first class
• Delta One (business class)

With the upcoming changes, many subcategories will exist within those 6.

Hauenstein framed the changes as “I know if I pay more I get more.” He continued by saying that Delta will test what consumers want in these bundles over the next few years.

There is no set date for the unbundling to begin. Delta is “experimenting with this, not announcing anything today,” Hauenstein said, but he did mention that the unbundling will happen in every class, including business.

No full-service airlines in the U.S. use this model presently, but it’s a safe bet that when Delta introduces unbundled fares, competitors will eventually follow.

AI-Controlled Prices Are Coming to Delta

The third pillar of the Delta strategy to extract more value from customers is to tailor pricing to individual customers.

Right now, the price you find when searching for airfare online is determined by time of day, day of the week, seasonality, and other factors that are tied to demand, not to who you are. Delta wants to change that.

“We will have a price available on that airplane at that time that’s available to you the individual,” Hauenstein said at the investor conference.

It isn’t clear how this will work in practice, but we know that Delta has already been experimenting with artificial intelligence applied to pricing. What it doesn’t yet do is to apply AI to individual pricing.

Regardless of how this is employed, it won’t be soon. “It’s going to be a multi-year, multi-step process,” Hauenstein said.

Final Thoughts

Demand for premium seats on airplanes is rising, and Delta Air Lines wants to make more money from people with high incomes.

To do this, it’s rolling out changes that may not please many of its customers. However, the airline is betting that there is enough demand for high-end travel that people will keep choosing to spend more on Delta flights.