October 24, 2018 View in browser

We're roughly halfway through airline earnings season, and since investors don't like to hear executives complain about high fuel prices, many carriers have highlighted better news: Customers are paying big bucks for premium seats.

It's not just flat-bed business class pods. Delta Air Lines reported earlier this month that all of its premium revenues, a group that encompasses international business class, premium economy, and extra-legroom seats, increased 19 percent in the third quarter, year-over-year.

United Airlines and JetBlue Airways had similar news, which is probably no surprise, as consumers feels flush, thanks to to a strong economy, and until recently, robust public markets. In September, the last month of the third quarter, U.S. consumer sentiment topped 100 on the University of Michigan's index for the only third month since 2004.

This is not only an American phenomenon, nor simply a full-service airline development, as my colleague Patrick Whyte, Skift's Europe Editor, explained this week. Whyte covered Ryanair's earnings Tuesday, and noted the discounter improved ancillary revenues by 27 percent, mainly through improved sales of priority boarding and reserved seating. Amazingly, Ryanair CEO Michael O'Leary said the airline is "moving close" to selling nearly half of its passengers priority boarding. (Ryanair caps sales at 50 percent because otherwise, as O'Leary put it, it "wouldn't be priority.")

How long can this last? It'll likely persist for a while. But if there's a recession, more customers probably will be content in coach, even if legroom is less generous than a few years ago.

What do you think?

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LISTEN TO MY PODCAST!

You probably know by now Skift recently acquired Airline Weekly, an aviation-focused newsletter. This has been fun for me, because I can now talk about the business with my newest colleagues: Seth Kaplan, Jason Cottrell, and Jay Shabat.

Earlier this month, Seth and I recorded a podcast about the future of low-cost airlines. We're bullish on short-haul carriers. But we're both skeptical about long-haul carriers, including Norwegian.

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You should listen.

Also, a big thank you to Skift News Editor Hannah Sampson for producing the podcast.

Skift Senior Aviation Business Editor Brian Sumers [bss@skift.com] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send him an email or tweet him.

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