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Key Takeaways
- Businesses are looking at their wealthiest consumers to compensate for a drop in spending by other consumers.
- Delta and United airlines have said "premium" ticket sales are booming, along with international travel.
- Luxury retailers are optimistic that wealthy households' finances can withstand economic uncertainty.
The companies are relying on their richest customers.
Businesses are hoping affluent Americans' spending will carry them through an economic slowdown. Airlines are relying on “premium” ticket sales, while luxury retailers are optimistic that wealthy households’ finances will hold up—and propel them through the current uncertainty.
“The high-end cohort—in the past four months—we did not see any difference,” said Brunello Cucinelli, founder of an eponymous luxury clothing line. “There is still a lot of openness and desire for good taste and lifestyle," he added.
Delta Air Lines (DAL), and United Airlines (UAL), said in their first-quarter earnings calls this month that sales of cheap flights, such those offered during business hours, had slowed. Executives said that international and first class fares are booming.
Delta President Glen Hauenstein has said that “Premium Tickets” are a larger share of revenue. According to a transcription made available by AlphaSense he doesn’t see the travelers downgrading.
Andrew Nocella, United’s Chief Commercial Officer, says that wealthy global travelers are purchasing premium tickets for international trips. "That’s really good for our business,” he said.
High-end apparel and leather goods sales have been strong, but segments that attract more “aspirational” shoppers, including alcohol and cosmetics, may have been impacted by tariffs, said LVMH Moët Hennessy Louis Vuitton, a French luxury goods company.
Executives stated on a last-week quarterly earnings call that the company may increase production of Louis Vuitton and Tiffany and raise prices as a response to the import tax. It'll also concentrate on wealthy clientele who are less likely to suffer financially, at least initially, CEO Bernard Arnault said at an annual meeting last week.
Arnault stated that this affluent client segment is more sustainable, according to a recording of his remarks on LVMH’s site. “We are inclined towards the view that we should favor growth in the high-end of our product range.”
According to a transcript from a recent earnings conference, Brunello Cucinelli will raise prices by 3% to 4 % in the second half 2025 as a response to tariffs.
