Delta said the percentage of first-class fliers buying a seat, as opposed to using a free upgrade, has jumped from 13 percent to 57 percent, with the company goal of 70 percent. But for frequent travelers, that decreases the chance of upgrades.
Delta executives discussed results with the fare tiers as the Atlanta-based carrier reported a profit of nearly $1.5 billion in the second quarter.
One weakness has been a recent decline in unit revenue, or the amount generated by each seat, which Delta blamed on international pressures and “pockets of domestic weakness.” The airline, which grew capacity by 3 percent in the second quarter, plans to scale back growth in the latter part of the year.
That “should put the business on the right trajectory to stem the erosion in unit revenues by the end of the year,” Delta President Ed Bastian said in a written statement.
The Justice Department recently launched an investigation into whether Delta and other airlines are colluding by coordinating on capacity growth, which can keep fares higher.
On Wednesday’s conference call, Delta CEO Richard Anderson defended the company’s “transparency to investors” in discussing growth plans.
“We are going to continue to comply with the law, act unilaterally and do our best to give our investors visibility into our business,” Anderson said.
Separately, Anderson said Delta will cancel plans to buy 20 Embraer E190 planes and 40 more Boeing 737-900ER planes that had been contingent on a new pilots labor contract, which the pilots voted to reject last week. Negotiations will resume on a deal to replace the current contract, which runs through this year.