In the year 2026, a “K-shaped economy of the U.S. aviation industry” is expected to emerge, according to Robert Mann, the president of the U.S. aviation consulting firm RW Mann & Co. Mann stated, “Maximizing the monetization of the high-end market above the ‘K’ and minimizing losses in the low-end market below the ‘K’.”
This means that in 2026, the U.S. aviation industry will be targeting high-end customers. The K-shaped economy refers to economic recovery or development showing a divided trend, where a portion of the population (such as high-income earners, financial markets, and the technology industry) experience rapid wealth growth, representing an upward trend above the K, while another segment (like low-income families and specific industries) faces stagnant income and worsening living conditions, indicating a downward trend below the K.
Currently, the top management of major U.S. airlines is increasingly focusing on customers willing to pay additional fees for tickets in exchange for more space or other amenities (such as early boarding and priority use of overhead bins).
In the first nine months of 2025, Delta Air Lines and United Airlines almost dominated all profits in the U.S. aviation industry. Delta Air Lines CEO Ed Bastian predicts that the airline, a century-old establishment, will have a record-breaking year in revenue in 2026.
This trend has been brewing for years as airline costs escalate, with affluent individuals allocating a higher proportion of their overall expenses to travel, leading to a shift in consumer preferences driving this trend further.
Other airlines are also taking corresponding actions. Low-cost carrier JetBlue Airways has shifted its focus to more profitable routes and premium seats. The company plans to introduce domestic business class in mid-2026 with larger front cabin seats, though not as luxurious as their top-tier lie-flat Mint suites.
American Airlines plans to expand VIP lounges and introduce the Airbus A321XLR fleet in 2026 to catch up in the upscale travel trend. Starting January 2026, their frequent flyer program members can enjoy free in-flight Wi-Fi service.
The company also offers Lavazza coffee to all passengers, and upgrades its brand image by providing Bollinger champagne in top lounges and cabins.
In anticipation of Christmas, American Airlines announced that it will no longer reward frequent flyer miles to passengers purchasing basic economy class tickets, following a similar move by Delta Air Lines.
However, the U.S. aviation industry still faces several challenges including inflation impacting consumer spending caution, oversupply of domestic flight seats leading to discounted fares, and ageing airport air traffic control systems. Despite the federal government allocating additional billions to address some issues, significant improvements will still take years to implement.
Mann emphasizes that airlines need to take more measures to enhance flight reliability. According to data from the U.S. Department of Transportation, the on-time performance of U.S. airlines is at 77%, with on-time defined as flights arriving within 15 minutes of the scheduled time.
He says, “Once a flight is delayed or cancelled, it doesn’t matter whether your seat is in business class or economy class, it’s equally frustrating.”
Additionally, while the overall economy remains resilient, any weakening in 2026 may have a greater impact on price-sensitive consumers, affecting airlines relying more on domestic business class travelers, such as low-cost carriers.
According to a forecast by American Express Global Business Travel released in mid-November last year, ticket prices could remain stable in 2026. Currently, ticket prices are starting to rise after a decline.
Bob Jordan, CEO of Southwest Airlines, stated in December last year that the first quarter of 2026 “looks strong,” but it’s “hard to say” if it will be better than the same period last year.
Southwest Airlines is preparing for a major transformation in 2026. The company’s decades-long policy of open seating will end on January 27th, transitioning to assigned seating.
The airline implemented several reforms in 2025, introducing larger legroom seats at higher prices. Furthermore, they began charging baggage fees for many passengers for the first time.
Southwest Airlines saw the largest increase in stock price among U.S. passenger airlines in 2025. Their stocks rose by nearly 23%, surpassing profit leaders Delta Air Lines and United Airlines, as well as the overall market.
Investors have been optimistic about the company’s transition to a more traditional, segmented airline structure, with investment firm Elliott Investment Management accelerating this transformation.
Low-cost carrier Spirit Airlines faced difficulties, filing for bankruptcy protection a second time in less than a year. Prior challenges included a court blocking their acquisition by JetBlue Airways, flight disruptions due to engine failures, rising costs, and other issues raising doubts about their survival.
Industry insiders and airline analysts state that the airline, known for its yellow livery, is in a critical situation and must take more significant actions.
A report released by financial firm Raymond James on December 19th last year anticipates that the company may not be able to sustain independent operations by this time next year, potentially leading to merger or entry into Chapter 7 bankruptcy proceedings.
Another low-cost carrier, Frontier Airlines, has attempted multiple times to merge with Spirit Airlines, but it remains unclear if both parties will reach an agreement.
(This article referenced reporting from CNBC)