Premium economy and business-class bookings have been propping up airline revenues amid a broader industry slowdown.jeremietardieu / 500px/iStockPhoto / Getty Images
Gourmet meals, fully reclining seats, chaperones to bypass snaking security lines and private jet-sharing. Globetrotters are looking to upgrade parts of their trips in growing numbers, even as global travel faces headwinds.
In North America, air travel demand dipped 0.5 per cent in May, driven by domestic declines across the United States, according to the Montreal-based International Air Transport Association, though global trips spiked 5 per cent overall.
Premium economy and business-class bookings, however, have been propping up airline revenues where they’re otherwise seeing drag. While part of the reason may be the higher price tags for these tickets, there’s also a noticeable uptick in the number of bookings in those segments.
Data provided to The Globe and Mail by Official Airline Guide, a flight analytics provider, showed the estimated number of passengers travelling in premium economy – which straddles the middle ground of business and economy – is growing.
For example, premium travel between London and Toronto rose 7 per cent to 30,919 passengers between January and April of 2025 compared with the same period last year.
Air Canada reported that premium revenue rose 2 per cent in its first quarter, even as overall passenger revenue dipped 3 per cent.
Canadians rethink travel as overtourism crowds iconic destinations
Meagan Smith, who recently flew premium economy with her partner from Vancouver to Bangkok, Thailand, said the B.C. couple could splurge more on airfare by choosing “inherently inexpensive” travel across Southeast Asia.
A fully reclining chair allowed them to unspool and sleep comfortably. With first-class meals, unlimited drinks, a dedicated flight attendant for their small section of the plane and “significantly more leg room,” Ms. Smith said it was well worth the price.
She and her partner, who share outdoor and cost-saving travel tips on social media as FuelForTheSole, each paid $2,500 for premium economy round-trip flights compared with an economy seat ranging from about $800 to $1,500.
In the U.S., several airlines have also seen significant growth in premium segments. Alaska Airlines (Alaska Air Group Inc.), for example, reported a 10-per-cent year-over-year surge in premium revenue in its first quarter, with premium sales accounting for 34 per cent of total revenue.
And these trends aren’t isolated. Globally, passenger growth across cabin classes moved in tandem until August, 2023; since May of last year, the number of premium passengers surged by 43 per cent from January, 2023, according to data from IATA. Economy grew modestly by 23 per cent.
The growing demand for upgraded travel isn’t just concentrated around airfare. “We’ve been seeing an approximately 22-per-cent growth in demand from Canadian clients seeking premium or luxury travel experiences,” said Ralph Crawford, vice-president of bespoke sales and marketing at Tully Luxury Travel, a travel agency based in Mississauga, Ont.
He’s also witnessed a 40-per-cent spike in bookings for “VIP meet-and-greet” services, which include fast-tracked assistance through security and immigration.
Natalie Lum-Tai, Canada lead and general counsel at Fora Travel, a New York-based travel agency, said while the number of “luxury” inquiries has remained stable at their firm, what’s changing is who’s looking.
“We’re seeing more travellers exploring premium travel and investing in one high-quality, experiential trip over several budget ones,” she said.
Her team noticed growing curiosity from “travellers in the $5,000-and-under category, typically non-luxury clients, who are exploring premium options selectively, especially for special occasions or bucket list trips.”
Travel has always been aspirational, said Ilana Valo, the founder and chief executive officer of TWIL Travel, a boutique luxury travel consultancy based in Toronto.
“Even when people might be struggling a bit financially, they’re still using travel as a way to reward themselves,” she said. Today, people are also “working harder than ever, [they’re] more stressed.”
“When you do get time off, you want to make sure you’re maximizing those opportunities,” she said.
Not shy about travelling to the U.S.? Flight prices have dropped to some destinations
Gabrielle Dubois, from Toronto, for example, upgraded for $4,000 from premium to first class on a trip to France recently to celebrate her 30th birthday and wedding anniversary.
After experiencing first class, she said she’d prioritize it on flights longer than seven hours, “even if it meant adjusting other parts of the trip,” such as scaling back on dining out.
At uncertain times, people often prioritize experiences over material things, “putting their dollars towards travel, rather than buying that $1,000 purse,” said Ms. Valo.
Social media also plays an outsized role. “Before it was something people used to just read about, and now it’s in your face all the time,” Ms. Valo said.
Montreal-based Christelle Zanré, who creates lifestyle content on her TikTok as @zxnre, drew 73,000 views and nearly 1,500 likes on a video in February showing her experience flying premium economy, for example.
She said young people are drawn to premium travel experiences because they “value comfort and efficiency” and premium economy offers a sweet spot in between.
Then there’s “the White Lotus effect,” said Ms. Valo, referring to the hit HBO drama about wealthy travellers.
It helps that there’s a growing number of ways to get a taste of luxury travel on – relatively – smaller budgets.
Companies such as Aero now offer private jet-sharing at a fraction of the cost of hiring a plane. Ritz-Carlton and Four Seasons’ boutique luxury yachts provide a private yacht-like experience on a wider scale.
“As the premium client moves to luxury, the luxury client is seeking out ultra-luxury options,” Ms. Valo said.
Those who dip their toes into premium “often want to strive to try more luxurious experiences … they’ve gotten a taste.”
