Latest news with #EdBastian
Yahoo
3 days ago
- Business
- Yahoo
Delta's struggles with the airport lounge and the angst of the upper middle class in the age of ‘elite overproduction,' explained
Delta Air Lines is having a good 2025, reporting strong second-quarter earnings and reinstating its April profit guidance, leading to a substantial stock bump (up roughly 16% from June to July). True, its guidance is down from its January projections, but it's weathering the storm of the tricky global economy well, maintaining its status as America's leading premium airline. As Fortune's Shawn Tully reported in March 2025, it has somehow managed the trick of being America's most profitable airline, while giving billions back to employees in the form of profit sharing. At the start of the year, CEO Ed Bastian kicked off a celebration of Delta's centenary by announcing 'a new era in premium travel' with the opening of Delta One lounges, a step above its usual Sky Clubs. The Delta One locations will offer 'amenities for the premium traveler' ranging from fine dining to spa-like wellness treatments and valet services. Bastian clarified that Delta will continue to invest in its Delta Sky Clubs, with more openings planned to come. But there is more to the story for Delta, America's leading premier airline. The Sky Clubs are coming off years of turbulence, with significant customer backlash following several of Delta's attempts to improve a lounge experience that has become overcrowded. These problems date back several years, to the beginning of the 'revenge travel' boom that accompanied post-pandemic reopening. Bastian told Fortune in 2022 that even he was shocked by the level of demand: 'People talk about revenge travel, or pent-up travel—this is beyond anything that people can classify as truly pent-up,' he said, adding that his team calculated a whopping $300 billion burst of travel thirst. 'That gap is $300 billion—with a B,' Bastian emphasized. America's leading premium airline has long offered a standard lounge experience through its Sky Clubs, with free wi-fi, buffets of cold snacks and heated steam trays, and a range of complimentary drinks. The Sky Clubs were no match for the burst of revenge travelers. Bastian's efforts to fix these problems in 2023—barring Basic Economy passengers and capping the number of visits allowed for credit card holders—sparked backlash on customers' part and soul-searching for Bastian. 'We are victims of our own success,' he told Fast Company's Stephanie Mehta in 2024, as he explained changes to benefits including access to Sky Club lounges. 'It's hard to tell someone who's been at a certain status for many years that what they've earned is no longer as valuable.' That's why the declining pleasure of the airport lounge resonates for a deeper reason: it's a metaphor for the declining prospects of the upper middle class in an age of 'elite overproduction,' which argues that certain societies grow so rich and successful that they produce too many people of premium education for the number of premium jobs—or premium experiences—that the economy can actually support. The elites have been so overproduced that you can literally see them—in lines stretching out of airport lounges. The elite lounge overproduction theory Several factors make Delta's overcrowding issue particularly severe, and they have to do with how Delta is really trying—and, as Bastian says, succeeding—in offering a premium service to a large, affluent customer base. Delta offers more comprehensive food and beverage options than many competitors, so travelers linger longer, compounding capacity issues. Indeed, when reached for comment, Delta confirmed that its SkyMiles program has seen 'unprecedented engagement,' and its member satisfaction is higher than ever. Delta said it's committed to continuous investment to further please customers, which includes 'modernizing and expanding our lounges.' Generous lounge access deals with American Express (including non-Delta-branded Platinum Card holders) have greatly expanded eligibility, overwhelming facilities. As more travelers achieve status or purchase high-tier tickets, both due to credit card spending and business travel rebounds, demand for lounge space has increased beyond what legacy facilities can handle. Delta isn't alone in its lounge struggles, as shown by its partner, American Express, which has tried to physically expand many of its Centurion Lounges. Those have gone from the epitome of exclusivity and comfort to another kind of crowded waiting room—albeit with arguably better snacks and Wi-Fi. The root of the problem is the same: too many people now have access. The proliferation of premium credit cards, airline status programs, and paid day passes has democratized lounge entry, eroding the exclusivity that made these spaces desirable in the first place. It is unclear if Delta expanded too far, too fast, or if it was surprised by the number of lounge lovers in its clientele. UBS Global Wealth Management has noted a surprising trend in the upper middle class: the rise of the 'everyday millionaire,' or people whose assets fall between $1 million and $5 million. These are exactly the kind of people who would see themselves as lounge-worthy, and likely frustrated to find their small-M millionaire status doesn't go so far. The consequences for travelers are palpable. Social media and travel forums are rife with stories of travelers paying hundreds of dollars in annual fees only to find long lines clogging, say, New York's JFK terminals on a daily basis. The proof is abundant on TikTok. On the other hand, expectations are heightened. Travel research firm Airport Dimensions has conducted an 'airport experience report' for over a decade and found in 2024 that airport lounges are a contradiction: the definitive democratic travel luxury. This widespread expectation—and dissatisfaction—is not just a matter of comfort. For many, the lounge was a symbol of having 'made it'—a reward for loyalty, status, or financial success. Its decline has become a source of frustration and even embarrassment, especially for those who remember a more exclusive era. There's an emotional trigger behind an unpleasant lounge experience. The theory behind the malaise: elite overproduction The overcrowding of airport lounges is more than a logistical headache—it's a microcosm of a broader societal phenomenon. University of Connecticut professor emeritus Peter Turchin has developed a controversial theory of 'elite overproduction' which posits that frustration and even instability result when a society produces more people aspiring to elite status than there are elite positions. It's an unorthodox theory from an unorthodox academic: Turchin is an emeritus professor at UConn, research associate at the University of Oxford and project leader at the Complexity Science Hub-Vienna, leading research in a field of his own invention: Cliodynamics, a type of historical social science. The catch with Turchin's theory is that his own type of complexity science takes on a pseudo-prophetic quality, similar in some ways to William Strauss and Neil Howe's 'Fourth Turning.' And Turchin has foreseen that the United States has reached a stage repeated in civilizations throughout history, when it has produced too many products of elite education and social status for the realistic number of jobs it can generate. Decline and fall follows, Roman Empire-style. The Atlantic profiled Turchin in 2020, warning 'the next decade could be even worse.' Several writers have expanded on his ideas since then, approaching it from their distinctive and different sensibilities. Ritholtz Wealth Management COO Nick Maggiulli posted to his 'Of Dollars and Data' blog on the subject of airport lounges specifically, writing that the 'death of the Amex lounge' simply shows that 'the upper middle class isn't special anymore,' although he did not specifically link this to the concept of elite overproduction. 'There are too many people with lots of money,' he concluded. In the context of airport lounges, the 'elite' are not just the ultra-wealthy, but the vast upper middle class—armed with a combination of higher degrees, status, and premium credit cards—now jostling for the same perks. But what if much of society has been turning into some version of an overcrowded airport lounge? In an interview with Fortune Intelligence, Turchin said this theory makes sense and fits with his thesis when presented with the similarities. 'The benefits that you get with wealth are now being diluted because there are just too many wealth holders,' he said, citing data that the top 10% of American society has gotten much wealthier over the past 40 years. (Turchin sources this statement to this working paper from Edward Wolff.) Turchin said lounges are not by definition restricted from expansion in the same way that political offices are, with a core element of his thesis being there are too many sociopolitical elites for the number of positions open to them, but 'it's the same thing' in light of the difficulties many providers have in expanding lounge access. 'There is a limited amount of space, but many more elites now, so to speak … low-rank elites.' Turchin said these low-rank elites, or 'ten-percenters,' don't have the status typically associated with elite status. 'The overproduction of lower-ranking elites results in decreased benefits for all.' When asked where else he sees this manifesting in modern life, Turchin said 'it's actually everywhere you look. Look at the overproduction of university degrees,' he added, arguing that declining rates of college enrollment and high rates of recent graduate unemployment support the decreasing value of a college diploma. 'There is overproduction of university degrees and the value of university degree actually declines. And so the it's the same thing [with] the lounge.' Noah Smith argues that elite overproduction manifests as a kind of status anxiety and malaise among the upper middle class. Many find themselves struggling to afford or access the very symbols of success they were promised—be it a prestigious job, a home in a desirable neighborhood, or, indeed, a peaceful airport lounge. He collects reams of employment data to show that Turchin's theory has significant statistical support from the 21st century American economy. Freddie DeBoer largely agrees, framing the issue as 'why so many elites feel like losers.' He focuses more on the creator economy than Smith, but asserts that he sees 'think many would agree with me about 'a pervasive sense of discontent among people who have elite aspirations and who feel that their years toiling in our meritocratic systems entitles them to fulfill those aspirations.' Delta's plan to restore status In its lounge strategy, Delta is trying to walk a fine line: Offering a premium service to a class of consumers that is becoming more and more mass-market. CEO Ed Bastian acknowledged as much on the company's latest earnings call. While touting the fortunes of Delta's target customers, households making $100,000 or more a year, Bastian noted the income cutoff 'is not, by the way, an elite definition—that's 40% of all U.S. households.' Beginning February 2025, Delta implemented new caps on annual lounge visits for American Express cardholders, setting a maximum of 15 visits per year and requiring exceptionally high annual spending ($75,000+) to re-unlock unlimited access. Basic Economy passengers, meanwhile, are permanently excluded from lounge access, further tightening entry. Travelers can only enter lounges within three hours of their flight's departure time, discouraging extended stays and unnecessary early arrivals. Delta is opening and upgrading lounges in key markets: New Delta One Lounges in Seattle, New York-JFK, Boston, and Los Angeles feature larger spaces, exclusive amenities, and new design concepts for premium passengers. Major expansions are under way in hubs like Atlanta, Orlando, Salt Lake City, and Philadelphia, with multiple new or enlarged clubs opening between spring and late 2025—some over 30,000 square feet in size, making them among the largest in the network. Renovations to existing lounges (e.g., Atlanta's Concourses A and C) are aimed at maximizing capacity and improving guest experiences. Delta is also exploring emergency overflow options and flexible staffing to address unpredictable surges, especially during weather and operational delays. Delta executives are optimistic. They predict that by 2026, most crowding issues—aside from extreme disruptions—will be resolved on 'almost all days.' Continued investments in larger, better-designed lounges, coupled with tighter access controls, are expected to restore the premium experience customers expect. However, critics note that crowding still occurs at peak times, especially in flagship locations, and design/layout flaws occasionally undermine even the newest clubs. The success of Delta's fix-it agenda is being closely watched by both rivals and loyal travelers. But Delta may be overmatched in rehabilitating the overcrowded airport lounge as a potent symbol of this broader malaise. What was once a marker of distinction is now a crowded, noisy, and often disappointing experience. The democratization of luxury, while laudable in some respects, has left many feeling that the rewards of success are increasingly out of reach—or at least, not what they used to be. As airlines grapple with how to restore the magic of the lounge, they are also confronting a deeper truth: in an age of elite overproduction, the promise of exclusivity is harder than ever to keep. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on
Yahoo
3 days ago
- Business
- Yahoo
Delta's struggles with the airport lounge and the angst of the upper middle class in the age of ‘elite overproduction,' explained
Delta Air Lines is having a good 2025, reporting strong second-quarter earnings and reinstating its April profit guidance, leading to a substantial stock bump (up roughly 16% from June to July). True, its guidance is down from its January projections, but it's weathering the storm of the tricky global economy well, maintaining its status as America's leading premium airline. As Fortune's Shawn Tully reported in March 2025, it has somehow managed the trick of being America's most profitable airline, while giving billions back to employees in the form of profit sharing. At the start of the year, CEO Ed Bastian kicked off a celebration of Delta's centenary by announcing 'a new era in premium travel' with the opening of Delta One lounges, a step above its usual Sky Clubs. The Delta One locations will offer 'amenities for the premium traveler' ranging from fine dining to spa-like wellness treatments and valet services. Bastian clarified that Delta will continue to invest in its Delta Sky Clubs, with more openings planned to come. But there is more to the story for Delta, America's leading premier airline. The Sky Clubs are coming off years of turbulence, with significant customer backlash following several of Delta's attempts to improve a lounge experience that has become overcrowded. These problems date back several years, to the beginning of the 'revenge travel' boom that accompanied post-pandemic reopening. Bastian told Fortune in 2022 that even he was shocked by the level of demand: 'People talk about revenge travel, or pent-up travel—this is beyond anything that people can classify as truly pent-up,' he said, adding that his team calculated a whopping $300 billion burst of travel thirst. 'That gap is $300 billion—with a B,' Bastian emphasized. America's leading premium airline has long offered a standard lounge experience through its Sky Clubs, with free wi-fi, buffets of cold snacks and heated steam trays, and a range of complimentary drinks. The Sky Clubs were no match for the burst of revenge travelers. Bastian's efforts to fix these problems in 2023—barring Basic Economy passengers and capping the number of visits allowed for credit card holders—sparked backlash on customers' part and soul-searching for Bastian. 'We are victims of our own success,' he told Fast Company's Stephanie Mehta in 2024, as he explained changes to benefits including access to Sky Club lounges. 'It's hard to tell someone who's been at a certain status for many years that what they've earned is no longer as valuable.' That's why the declining pleasure of the airport lounge resonates for a deeper reason: it's a metaphor for the declining prospects of the upper middle class in an age of 'elite overproduction,' which argues that certain societies grow so rich and successful that they produce too many people of premium education for the number of premium jobs—or premium experiences—that the economy can actually support. The elites have been so overproduced that you can literally see them—in lines stretching out of airport lounges. The elite lounge overproduction theory Several factors make Delta's overcrowding issue particularly severe, and they have to do with how Delta is really trying—and, as Bastian says, succeeding—in offering a premium service to a large, affluent customer base. Delta offers more comprehensive food and beverage options than many competitors, so travelers linger longer, compounding capacity issues. Indeed, when reached for comment, Delta confirmed that its SkyMiles program has seen 'unprecedented engagement,' and its member satisfaction is higher than ever. Delta said it's committed to continuous investment to further please customers, which includes 'modernizing and expanding our lounges.' Generous lounge access deals with American Express (including non-Delta-branded Platinum Card holders) have greatly expanded eligibility, overwhelming facilities. As more travelers achieve status or purchase high-tier tickets, both due to credit card spending and business travel rebounds, demand for lounge space has increased beyond what legacy facilities can handle. Delta isn't alone in its lounge struggles, as shown by its partner, American Express, which has tried to physically expand many of its Centurion Lounges. Those have gone from the epitome of exclusivity and comfort to another kind of crowded waiting room—albeit with arguably better snacks and Wi-Fi. The root of the problem is the same: too many people now have access. The proliferation of premium credit cards, airline status programs, and paid day passes has democratized lounge entry, eroding the exclusivity that made these spaces desirable in the first place. It is unclear if Delta expanded too far, too fast, or if it was surprised by the number of lounge lovers in its clientele. UBS Global Wealth Management has noted a surprising trend in the upper middle class: the rise of the 'everyday millionaire,' or people whose assets fall between $1 million and $5 million. These are exactly the kind of people who would see themselves as lounge-worthy, and likely frustrated to find their small-M millionaire status doesn't go so far. The consequences for travelers are palpable. Social media and travel forums are rife with stories of travelers paying hundreds of dollars in annual fees only to find long lines clogging, say, New York's JFK terminals on a daily basis. The proof is abundant on TikTok. On the other hand, expectations are heightened. Travel research firm Airport Dimensions has conducted an 'airport experience report' for over a decade and found in 2024 that airport lounges are a contradiction: the definitive democratic travel luxury. This widespread expectation—and dissatisfaction—is not just a matter of comfort. For many, the lounge was a symbol of having 'made it'—a reward for loyalty, status, or financial success. Its decline has become a source of frustration and even embarrassment, especially for those who remember a more exclusive era. There's an emotional trigger behind an unpleasant lounge experience. The theory behind the malaise: elite overproduction The overcrowding of airport lounges is more than a logistical headache—it's a microcosm of a broader societal phenomenon. University of Connecticut professor emeritus Peter Turchin has developed a controversial theory of 'elite overproduction' which posits that frustration and even instability result when a society produces more people aspiring to elite status than there are elite positions. It's an unorthodox theory from an unorthodox academic: Turchin is an emeritus professor at UConn, research associate at the University of Oxford and project leader at the Complexity Science Hub-Vienna, leading research in a field of his own invention: Cliodynamics, a type of historical social science. The catch with Turchin's theory is that his own type of complexity science takes on a pseudo-prophetic quality, similar in some ways to William Strauss and Neil Howe's 'Fourth Turning.' And Turchin has foreseen that the United States has reached a stage repeated in civilizations throughout history, when it has produced too many products of elite education and social status for the realistic number of jobs it can generate. Decline and fall follows, Roman Empire-style. The Atlantic profiled Turchin in 2020, warning 'the next decade could be even worse.' Several writers have expanded on his ideas since then, approaching it from their distinctive and different sensibilities. Ritholtz Wealth Management COO Nick Maggiulli posted to his 'Of Dollars and Data' blog on the subject of airport lounges specifically, writing that the 'death of the Amex lounge' simply shows that 'the upper middle class isn't special anymore,' although he did not specifically link this to the concept of elite overproduction. 'There are too many people with lots of money,' he concluded. In the context of airport lounges, the 'elite' are not just the ultra-wealthy, but the vast upper middle class—armed with a combination of higher degrees, status, and premium credit cards—now jostling for the same perks. But what if much of society has been turning into some version of an overcrowded airport lounge? In an interview with Fortune Intelligence, Turchin said this theory makes sense and fits with his thesis when presented with the similarities. 'The benefits that you get with wealth are now being diluted because there are just too many wealth holders,' he said, citing data that the top 10% of American society has gotten much wealthier over the past 40 years. (Turchin sources this statement to this working paper from Edward Wolff.) Turchin said lounges are not by definition restricted from expansion in the same way that political offices are, with a core element of his thesis being there are too many sociopolitical elites for the number of positions open to them, but 'it's the same thing' in light of the difficulties many providers have in expanding lounge access. 'There is a limited amount of space, but many more elites now, so to speak … low-rank elites.' Turchin said these low-rank elites, or 'ten-percenters,' don't have the status typically associated with elite status. 'The overproduction of lower-ranking elites results in decreased benefits for all.' When asked where else he sees this manifesting in modern life, Turchin said 'it's actually everywhere you look. Look at the overproduction of university degrees,' he added, arguing that declining rates of college enrollment and high rates of recent graduate unemployment support the decreasing value of a college diploma. 'There is overproduction of university degrees and the value of university degree actually declines. And so the it's the same thing [with] the lounge.' Noah Smith argues that elite overproduction manifests as a kind of status anxiety and malaise among the upper middle class. Many find themselves struggling to afford or access the very symbols of success they were promised—be it a prestigious job, a home in a desirable neighborhood, or, indeed, a peaceful airport lounge. He collects reams of employment data to show that Turchin's theory has significant statistical support from the 21st century American economy. Freddie DeBoer largely agrees, framing the issue as 'why so many elites feel like losers.' He focuses more on the creator economy than Smith, but asserts that he sees 'think many would agree with me about 'a pervasive sense of discontent among people who have elite aspirations and who feel that their years toiling in our meritocratic systems entitles them to fulfill those aspirations.' Delta's plan to restore status In its lounge strategy, Delta is trying to walk a fine line: Offering a premium service to a class of consumers that is becoming more and more mass-market. CEO Ed Bastian acknowledged as much on the company's latest earnings call. While touting the fortunes of Delta's target customers, households making $100,000 or more a year, Bastian noted the income cutoff 'is not, by the way, an elite definition—that's 40% of all U.S. households.' Beginning February 2025, Delta implemented new caps on annual lounge visits for American Express cardholders, setting a maximum of 15 visits per year and requiring exceptionally high annual spending ($75,000+) to re-unlock unlimited access. Basic Economy passengers, meanwhile, are permanently excluded from lounge access, further tightening entry. Travelers can only enter lounges within three hours of their flight's departure time, discouraging extended stays and unnecessary early arrivals. Delta is opening and upgrading lounges in key markets: New Delta One Lounges in Seattle, New York-JFK, Boston, and Los Angeles feature larger spaces, exclusive amenities, and new design concepts for premium passengers. Major expansions are under way in hubs like Atlanta, Orlando, Salt Lake City, and Philadelphia, with multiple new or enlarged clubs opening between spring and late 2025—some over 30,000 square feet in size, making them among the largest in the network. Renovations to existing lounges (e.g., Atlanta's Concourses A and C) are aimed at maximizing capacity and improving guest experiences. Delta is also exploring emergency overflow options and flexible staffing to address unpredictable surges, especially during weather and operational delays. Delta executives are optimistic. They predict that by 2026, most crowding issues—aside from extreme disruptions—will be resolved on 'almost all days.' Continued investments in larger, better-designed lounges, coupled with tighter access controls, are expected to restore the premium experience customers expect. However, critics note that crowding still occurs at peak times, especially in flagship locations, and design/layout flaws occasionally undermine even the newest clubs. The success of Delta's fix-it agenda is being closely watched by both rivals and loyal travelers. But Delta may be overmatched in rehabilitating the overcrowded airport lounge as a potent symbol of this broader malaise. What was once a marker of distinction is now a crowded, noisy, and often disappointing experience. The democratization of luxury, while laudable in some respects, has left many feeling that the rewards of success are increasingly out of reach—or at least, not what they used to be. As airlines grapple with how to restore the magic of the lounge, they are also confronting a deeper truth: in an age of elite overproduction, the promise of exclusivity is harder than ever to keep. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Delta's struggles with the airport lounge and the angst of the upper middle class in the age of ‘elite overproduction,' explained
Delta Air Lines is having a good 2025, reporting strong second-quarter earnings and reinstating its April profit guidance, leading to a substantial stock bump (up roughly 16% from June to July). True, its guidance is down from its January projections, but it's weathering the storm of the tricky global economy well, maintaining its status as America's leading premium airline. As Fortune's Shawn Tully reported in March 2025, it has somehow managed the trick of being America's most profitable airline, while giving billions back to employees in the form of profit sharing. At the start of the year, CEO Ed Bastian kicked off a celebration of Delta's centenary by announcing 'a new era in premium travel' with the opening of Delta One lounges, a step above its usual Sky Clubs. The Delta One locations will offer 'amenities for the premium traveler' ranging from fine dining to spa-like wellness treatments and valet services. Bastian clarified that Delta will continue to invest in its Delta Sky Clubs, with more openings planned to come. But there is more to the story for Delta, America's leading premier airline. The Sky Clubs are coming off years of turbulence, with significant customer backlash following several of Delta's attempts to improve a lounge experience that has become overcrowded. These problems date back several years, to the beginning of the 'revenge travel' boom that accompanied post-pandemic reopening. Bastian told Fortune in 2022 that even he was shocked by the level of demand: 'People talk about revenge travel, or pent-up travel—this is beyond anything that people can classify as truly pent-up,' he said, adding that his team calculated a whopping $300 billion burst of travel thirst. 'That gap is $300 billion—with a B,' Bastian emphasized. America's leading premium airline has long offered a standard lounge experience through its Sky Clubs, with free wi-fi, buffets of cold snacks and heated steam trays, and a range of complimentary drinks. The Sky Clubs were no match for the burst of revenge travelers. Bastian's efforts to fix these problems in 2023—barring Basic Economy passengers and capping the number of visits allowed for credit card holders—sparked backlash on customers' part and soul-searching for Bastian. 'We are victims of our own success,' he told Fast Company's Stephanie Mehta in 2024, as he explained changes to benefits including access to Sky Club lounges. 'It's hard to tell someone who's been at a certain status for many years that what they've earned is no longer as valuable.' That's why the declining pleasure of the airport lounge resonates for a deeper reason: it's a metaphor for the declining prospects of the upper middle class in an age of 'elite overproduction,' which argues that certain societies grow so rich and successful that they produce too many people of premium education for the number of premium jobs—or premium experiences—that the economy can actually support. The elites have been so overproduced that you can literally see them—in lines stretching out of airport lounges. The elite lounge overproduction theory Several factors make Delta's overcrowding issue particularly severe, and they have to do with how Delta is really trying—and, as Bastian says, succeeding—in offering a premium service to a large, affluent customer base. Delta offers more comprehensive food and beverage options than many competitors, so travelers linger longer, compounding capacity issues. Indeed, when reached for comment, Delta confirmed that its SkyMiles program has seen 'unprecedented engagement,' and its member satisfaction is higher than ever. Delta said it's committed to continuous investment to further please customers, which includes 'modernizing and expanding our lounges.' Generous lounge access deals with American Express (including non-Delta-branded Platinum Card holders) have greatly expanded eligibility, overwhelming facilities. As more travelers achieve status or purchase high-tier tickets, both due to credit card spending and business travel rebounds, demand for lounge space has increased beyond what legacy facilities can handle. Delta isn't alone in its lounge struggles, as shown by its partner, American Express, which has tried to physically expand many of its Centurion Lounges. Those have gone from the epitome of exclusivity and comfort to another kind of crowded waiting room—albeit with arguably better snacks and Wi-Fi. The root of the problem is the same: too many people now have access. The proliferation of premium credit cards, airline status programs, and paid day passes has democratized lounge entry, eroding the exclusivity that made these spaces desirable in the first place. It is unclear if Delta expanded too far, too fast, or if it was surprised by the number of lounge lovers in its clientele. UBS Global Wealth Management has noted a surprising trend in the upper middle class: the rise of the 'everyday millionaire,' or people whose assets fall between $1 million and $5 million. These are exactly the kind of people who would see themselves as lounge-worthy, and likely frustrated to find their small-M millionaire status doesn't go so far. The consequences for travelers are palpable. Social media and travel forums are rife with stories of travelers paying hundreds of dollars in annual fees only to find long lines clogging, say, New York's JFK terminals on a daily basis. The proof is abundant on TikTok. On the other hand, expectations are heightened. Travel research firm Airport Dimensions has conducted an 'airport experience report' for over a decade and found in 2024 that airport lounges are a contradiction: the definitive democratic travel luxury. This widespread expectation—and dissatisfaction—is not just a matter of comfort. For many, the lounge was a symbol of having 'made it'—a reward for loyalty, status, or financial success. Its decline has become a source of frustration and even embarrassment, especially for those who remember a more exclusive era. There's an emotional trigger behind an unpleasant lounge experience. The theory behind the malaise: elite overproduction The overcrowding of airport lounges is more than a logistical headache—it's a microcosm of a broader societal phenomenon. University of Connecticut professor emeritus Peter Turchin has developed a controversial theory of 'elite overproduction' which posits that frustration and even instability result when a society produces more people aspiring to elite status than there are elite positions. It's an unorthodox theory from an unorthodox academic: Turchin is an emeritus professor at UConn, research associate at the University of Oxford and project leader at the Complexity Science Hub-Vienna, leading research in a field of his own invention: Cliodynamics, a type of historical social science. The catch with Turchin's theory is that his own type of complexity science takes on a pseudo-prophetic quality, similar in some ways to William Strauss and Neil Howe's 'Fourth Turning.' And Turchin has foreseen that the United States has reached a stage repeated in civilizations throughout history, when it has produced too many products of elite education and social status for the realistic number of jobs it can generate. Decline and fall follows, Roman Empire-style. The Atlantic profiled Turchin in 2020, warning 'the next decade could be even worse.' Several writers have expanded on his ideas since then, approaching it from their distinctive and different sensibilities. Ritholtz Wealth Management COO Nick Maggiulli posted to his 'Of Dollars and Data' blog on the subject of airport lounges specifically, writing that the 'death of the Amex lounge' simply shows that 'the upper middle class isn't special anymore,' although he did not specifically link this to the concept of elite overproduction. 'There are too many people with lots of money,' he concluded. In the context of airport lounges, the 'elite' are not just the ultra-wealthy, but the vast upper middle class—armed with a combination of higher degrees, status, and premium credit cards—now jostling for the same perks. But what if much of society has been turning into some version of an overcrowded airport lounge? In an interview with Fortune Intelligence, Turchin said this theory makes sense and fits with his thesis when presented with the similarities. 'The benefits that you get with wealth are now being diluted because there are just too many wealth holders,' he said, citing data that the top 10% of American society has gotten much wealthier over the past 40 years. (Turchin sources this statement to this working paper from Edward Wolff.) Turchin said lounges are not by definition restricted from expansion in the same way that political offices are, with a core element of his thesis being there are too many sociopolitical elites for the number of positions open to them, but 'it's the same thing' in light of the difficulties many providers have in expanding lounge access. 'There is a limited amount of space, but many more elites now, so to speak … low-rank elites.' Turchin said these low-rank elites, or 'ten-percenters,' don't have the status typically associated with elite status. 'The overproduction of lower-ranking elites results in decreased benefits for all.' When asked where else he sees this manifesting in modern life, Turchin said 'it's actually everywhere you look. Look at the overproduction of university degrees,' he added, arguing that declining rates of college enrollment and high rates of recent graduate unemployment support the decreasing value of a college diploma. 'There is overproduction of university degrees and the value of university degree actually declines. And so the it's the same thing [with] the lounge.' Noah Smith argues that elite overproduction manifests as a kind of status anxiety and malaise among the upper middle class. Many find themselves struggling to afford or access the very symbols of success they were promised—be it a prestigious job, a home in a desirable neighborhood, or, indeed, a peaceful airport lounge. He collects reams of employment data to show that Turchin's theory has significant statistical support from the 21st century American economy. Freddie DeBoer largely agrees, framing the issue as 'why so many elites feel like losers.' He focuses more on the creator economy than Smith, but asserts that he sees 'think many would agree with me about 'a pervasive sense of discontent among people who have elite aspirations and who feel that their years toiling in our meritocratic systems entitles them to fulfill those aspirations.' Delta's plan to restore status In its lounge strategy, Delta is trying to walk a fine line: Offering a premium service to a class of consumers that is becoming more and more mass-market. CEO Ed Bastian acknowledged as much on the company's latest earnings call. While touting the fortunes of Delta's target customers, households making $100,000 or more a year, Bastian noted the income cutoff 'is not, by the way, an elite definition—that's 40% of all U.S. households.' Beginning February 2025, Delta implemented new caps on annual lounge visits for American Express cardholders, setting a maximum of 15 visits per year and requiring exceptionally high annual spending ($75,000+) to re-unlock unlimited access. Basic Economy passengers, meanwhile, are permanently excluded from lounge access, further tightening entry. Travelers can only enter lounges within three hours of their flight's departure time, discouraging extended stays and unnecessary early arrivals. Delta is opening and upgrading lounges in key markets: New Delta One Lounges in Seattle, New York-JFK, Boston, and Los Angeles feature larger spaces, exclusive amenities, and new design concepts for premium passengers. Major expansions are under way in hubs like Atlanta, Orlando, Salt Lake City, and Philadelphia, with multiple new or enlarged clubs opening between spring and late 2025—some over 30,000 square feet in size, making them among the largest in the network. Renovations to existing lounges (e.g., Atlanta's Concourses A and C) are aimed at maximizing capacity and improving guest experiences. Delta is also exploring emergency overflow options and flexible staffing to address unpredictable surges, especially during weather and operational delays. Delta executives are optimistic. They predict that by 2026, most crowding issues—aside from extreme disruptions—will be resolved on 'almost all days.' Continued investments in larger, better-designed lounges, coupled with tighter access controls, are expected to restore the premium experience customers expect. However, critics note that crowding still occurs at peak times, especially in flagship locations, and design/layout flaws occasionally undermine even the newest clubs. The success of Delta's fix-it agenda is being closely watched by both rivals and loyal travelers. But Delta may be overmatched in rehabilitating the overcrowded airport lounge as a potent symbol of this broader malaise. What was once a marker of distinction is now a crowded, noisy, and often disappointing experience. The democratization of luxury, while laudable in some respects, has left many feeling that the rewards of success are increasingly out of reach—or at least, not what they used to be. As airlines grapple with how to restore the magic of the lounge, they are also confronting a deeper truth: in an age of elite overproduction, the promise of exclusivity is harder than ever to keep. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Delta plans to use AI in ticket pricing draws fire from US lawmakers
By David Shepardson WASHINGTON (Reuters) -Three Democratic senators have pressed Delta Air Lines CEO Ed Bastian to answer questions about the airline's planned use of artificial intelligence to set ticket prices, raising concerns about the impact on travelers. "Delta's current and planned individualized pricing practices not only present data privacy concerns, but will also likely mean fare price increases up to each individual consumer's personal 'pain point' at a time when American families are already struggling with rising costs," Senators Ruben Gallego, Mark Warner and Richard Blumenthal wrote in a letter dated Monday and made public on Tuesday. The senators cited recent comments from Delta that the airline plans to deploy AI-based revenue management technology across 20% of its domestic network by the end of 2025 in partnership with Fetcherr, an AI pricing company. They said a Delta executive had earlier told investors the technology is capable of setting fares based on a prediction of "the amount people are willing to pay for the premium products related to the base fares." The airline said in a statement: "There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal information or otherwise." Delta added that dynamic pricing has been used for more than three decades, in which pricing fluctuates based on a variety of factors like overall customer demand but not a specific consumer's personal information. Delta said AI technology for dynamic pricing is being tested to eliminate manual processes while accelerating analysis and adjustments and it emphasized all customers see the same exact fares and offers in all retail channels. Delta said it was testing AI for use in forecasting demand for specific routes and flights, adapting to market conditions in real-time, factoring thousands of variables simultaneously and learning from each pricing decision to improve future outcomes. In January, Blumenthal along with Senators Maggie Hassan and Josh Hawley asked Frontier Airlines and Spirit Airlines to disclose whether they were manipulating seat fees by using customers' personal information to charge different fees to passengers on the same flight. The senators said the airlines were apparently "using customers' personal information to charge different seat fees to passengers on the same flight" despite having the same fare. Frontier and Spirit did not immediately respond to requests for comment on their current practices on Tuesday.
Daily Mail
6 days ago
- Business
- Daily Mail
Fury as Delta rolls out sinister new tool to ensure it gets away with the highest possible fares
Delta Air Lines is under fire from lawmakers who say the carrier's new AI ticket-pricing plans could mean higher fares for ordinary Americans already buckling under rising costs. America's second-largest US airline by daily flights says it's expanding a pilot program that uses computers to help set fares. By the end of the year, 20 percent of all fares will be set AI in partnership with Fetcherr, a pricing company. Democratic senators Ruben Gallego, Mark Warner and Richard Blumenthal fired off a letter to Delta CEO Ed Bastian demanding to know if its AI tools are designed to hike fares up to each passenger's personal 'pain point.' A Delta exec previously boasted the system can predict 'the amount people are willing to pay for the premium products related to the base fares,' sparking fears of a digital price squeeze. Delta insists it isn't using personal data to target individual passengers, saying dynamic pricing has been standard for decades and that 'all customers see the same fares and offers in all retail channels.' The airline says AI is only being tested to forecast demand, factor in thousands of market variables in real time, and speed up manual pricing adjustments. It's not the first AI pricing storm to hit the airline industry. Back in January, Blumenthal and other lawmakers grilled Frontier and Spirit over alleged seat fee manipulation, but the low-cost carriers never answered. Delta said it is using AI tools to figure out how much each customer is willing to pay to get on their flights 'This is a full reengineering of how we price and how we will be pricing in the future,' Glen Hauenstein, Delta's president, said during a June 10 earnings call. 'We like it a lot, and we're continuing to roll it out.' Consumer advocates are warning that the program could be 'predatory' for consumers and could spell the end of 'fair' pricing. If the tech lands smoothly, Delta says it could eventually hand over nearly all pricing decisions to its new digital co-pilot. Hauenstein said the AI is still in a 'heavy testing phase,' and reiterated the company will not rush the program out to its customers if issues arise. Airlines have long offered different prices for consumers, even for the same journey, based off factors including how far in advance they buy the ticket and whether they shop directly or with a comparison-shopping site. But AI is now supercharging changes to pricing models. 'AI isn't just optimizing business operations, but fundamentally rewriting the rules of commerce and consumer experience,' Matt Britton, author of Generation AI, told Fortune. 'For consumers, this means the era of 'fair' pricing is over. The price you see is the price the algorithm thinks you'll accept, not a universal rate.' The AI announcement comes as Delta made some major news about its profits forecast. Delta's CEO, Ed Bastian, said customers cut back on domestic economy seats amid economic uncertainty In April, the company pulled its financial guidance, saying the American economy was going through too much turmoil to determine how much money the company would make. Ed Bastian, the company's CEO, said consumer confidence 'certainly took a big dip in the early part of the year and then again in April, after the Liberation Day announcements were made.' But now the company has reinstated its profit guidance after it beat Wall Street's expectations for the second quarter of the year. Still, the company is facing some customer headwinds. Delta said that domestic economy seat sales fell 5 percent in the previous quarter. It will cut some domestic flights from the schedule in August.
