Post like these fascinate me. Don't get me wrong, the C-suite team has probably a lot better insights as compared to us and our shower thoughts, but you make a few very good points.

To your first point about the sift in prices and experiences:
The first one is the industry in general--what was a luxury services industry has evolved into a transportation industry. Granted, I was less than 4 foot tall for most of the 90s, but I distinctly remember my parents having enough status get free upgrades with just a couple of long-haul international flights a year and maybe one or two domestic flights for family vacation/work. Wide-bodies pulled out of the gate with entire rows empty (I distinctly remember on flights when we didn't get upgraded, they would announce that the doors are closed and a whole bunch of people would get up and move to the back of the plane so they'd have a row to lay down on). I glean from this that the profit margins were higher back then. Annual rate of inflation between 1965 through 2023 was 3.983%. (https://www.usinflationcalculator.co...flation-rates/). In that same time airfare inflation was 4.507% (BLS data starts in the year 1965 which is why I chose it, to compare apples to apples, https://www.usinflationcalculator.co...are-inflation/). However, if you look at the last 20 years, overall inflation is 2.56% while for airfare, it is only 0.87% (Same source). I suspect margins are down, and while an extra olive on a salad 30 years ago wouldn't matter much, it now is, as a percentage, saving the company that much more money (or in the case, getting rid of meals altogether).

This article seems to corroborate what I'm saying with the BLS data, but with a more anecdotal evidence that might be easier to conceptualize.

Now, with our country as large as it is, it has become a necessity for some to travel, and I understand the race to get prices to the bottom. But the problem is you have one metal tube going through the air with two classes of people on it--once who are using it as a bus and don't care how comfortable it is to get from point A to B as long as it means it's not a whole day (or more) in the car, and one class of people who do view it as a luxury and want an elevated experience. Over time, those in the back might want to move towards the front, but not all can afford to buy their way up. Since we have extra capacity, we can give it away! But as margins grow thinner, maybe we can find a way to monetize the upgrade (say, an in-app targeted offer to bump to J for $100 which we previously gave away for free. That's a free $100 we didn't have to do anything for!). Truly frequent fliers, who were initially only competing against the other frequent fliers, are now competing against the guys in the back who view the plane as a bus who can spare an extra $100. Long term, people may vote with their feet, but if all of the companies are doing this, moving won't change anything. There are of course still empty seats they can't sell upgrades for, and I'm sure there's a point where the C-Suite has determined there's more long term value to give it to an EXP than to sell it (or else we would see empty seats in J being sold for $10 at 121 minutes before departure), but the majority of seats in the front cabin are now paid for, whether it be through at the time of purchase or a targeted offer. (I suspect the free MCE is similar--at that price point, someone has determined it's of better value to give it away for free to someone with status than to try and squeeze each seat for the $30)

If you look at Asian airlines, they are still often a luxury experience. With a few exceptions, for most countries in Asia, flying is not a necessity and as such, they don't have to cater to those who are willing to fly cattle class. There are also budget airlines over there that are subsidiaries of the larger ones, and I suspect this segregation of class of travel helps with protecting the premium brand from dilution from those who are using it just as transportation and don't care about level of service. These low cost brand don't have fancy seats to walk past on their way to the back.

I agree with your second point that the current demand is multi-factorial and likely unsustainable long term. Post-Pandemic, more people value experiences, whether that be luxury travel aimed at the destination itself, or just traveling more often to visit friends and family. Everyone wants to experience the best service they can, but while most people wouldn't turn down a first class seat, the reality of the matter is most of the flying public cannot afford it. So the airlines devise schemes to sell the seats they can and get as much value out of the ones they cannot. As time goes on, we may experience a paradigm shift where we stay at these high levels of travel demand or we may return to pre-pandemic travel demand, but I agree we will hit another recession and it's unclear what the industry's next move will be to increase revenue or profit margins.

Do you have a source for this? I hear this a lot, but have a hard time believe the planes that cost them 9 figures that they fly around make them less revenue than their CC's where I'm guessing the <2% swipe fee they are having to share with the issuing bank are somehow making them more money. Especially factoring in the lost revenue (my $99 AA card gives me free checked bags so after just two round trips, they are already behind on revenue).

I don't know that it's untenable. The frequency of free upgrades and access to luxury travel has decreased (full lounges, etc.), and they are definitely not as luxurious as before. But there's only so much of the pie to go around. As they try to share the pie more ways, each person's value gets diluted, but as long as every other airline is doing the same, I don't think it will be untenable. The only reason I even remember the luxury of 30 years ago was that I had parents that had family internationally and earned status by flying (not even sure if credit cards were a thing when I was a kid, since I remember them having to do currency exchanges and traveler's cheques). I earned Platinum status about 6 months ago, and have only been upgraded on one flight. (Interestingly, even though I don't live at a hub, the one flight I was upgraded on was between 2 hubs, though it was also early o'clock in the morning). The meal they served on this 4 hour flight was reminiscent of what we got in coach when they still served those meals. More often than not when I've tried to access a priority pass lounge, there's a line, assuming they are even letting anyone get in (the digital) line. I've not flown international, but I haven't set foot in an AC since I was a kid. But once again, for someone just now getting status, they don't know what they are missing from previous decades.