Behind the Gauze Curtain: Why Class Wars Between Airlines Will Intensify in 2026

Airlines entered 2025 optimistically: Delta Airlines CEO Ed Bastian predicted a record year for the century-old airline. But concerns about President Donald Trump’s trade war, skittish consumers and an oversupply of domestic seats caused U.S. airfares to fall and weighed on industry profits.

“It’s the airline version of the K-shaped economy. Monetize the top of the K and minimize the deficit at the bottom,” says Robert Mann, who has worked at several airlines and is president of aviation consultancy RW Mann & Co.

Now the leaders of the nation’s largest airlines are placing even more emphasis on customers paying extra for their tickets in exchange for a little more space or other perks, such as earlier boarding and access to never-enough overhead space.

They still face persistent problems, such as a shortage of air traffic controllers and aging infrastructure. Despite billions in additional federal spending to fix some of the problems, major improvements will take years.

Mann said airlines need to do more to improve reliability. According to the Department of Transportation, U.S. airlines had an on-time rate of 77%, which defines “on-time” as arriving within 15 minutes of schedule.

“If the flight is late or canceled, it doesn’t matter if you’re at the top of the K or the bottom of the K,” he said.

This is how the coming year will develop for the aviation sector:

During the first nine months of the year, Delta and United Airlines accounting for almost all of US airline profits.

It’s an industry divide that has been developing for years, further fueled by a rise in costs and changing consumer tastes as wealthier travelers have increased their share of overall spending.

While the economy has been largely resilient, any weakening in 2026 could have an outsized impact on more price-sensitive consumers and therefore on airlines more exposed to domestic coach travel, such as lower-cost carriers.

Those airlines have taken their own steps. JetBlue Airwaysfor example, has shifted focus to more profitable routes and premium seats. It plans to introduce a domestic business class in mid-2026 with seats at the front of the cabin that are more spacious, but not as expansive as the first-class lie-flat Mint suites.

Airfares are likely to remain stable through 2025 next year, according to a forecast from American Express Global Business Travel in mid-November.

Demand has recovered after a decline during a A record-long government shutdown, but it is not clear whether 2026 will be a blockbuster.

Southwest Airlines CEO Bob Jordan told CNBC in December that the “first quarter looks strong” but that “it’s hard to say” whether it will be better than a year ago.

Struggling budget travel icon Spirit Airlines is in trouble second bankruptcy in less than a year after a court-blocked takeover by JetBlue, an engine grounding, a rise in costs and other problems, raising questions about the company’s ability to survive.

Industry insiders and aviation analysts have said that the yellow airline will have to make much bigger moves with this bankruptcy.

“We don’t expect it to remain a standalone company this time next year, with a merger or Chapter 7 outcome likely to boost our earnings forecast,” Raymond James said on December 19.

Analysts expect this to be a merger partner Border airlinesthe fellow budget airline that has repeatedly tried to combine with Spirit since 2022, but it is not clear whether the two sides will reach an agreement. Spirit said earlier this month that it is in “active negotiations” regarding a standalone reorganization or a transaction. Frontier and Spirit declined to comment further.

Southwest is preparing for a big change in 2026. The airline’s decades-long cattle call ends on January 27, when assigned seating begins.

It follows a whole series of changes that were already implemented last year. It debuted extra-legroom seats that command higher prices and for the first time began charging many customers to check bags, a service that would earn its U.S. rivals more than $7 billion in 2024, the last full year of available data, according to the Transportation Department.

The airline’s shares are the biggest gainers among U.S. passenger airlines. Shares of Southwest rose nearly 23% in 2025, compared with the 5% gain of the NYSE Arca Airline Index, beating earnings leaders Delta and United and the broader market.

Investors were optimistic about the company’s transformation into a more traditional, segmented airline, which was accelerated by a stake from activist investor Elliott Investment Management.

American is expanding its lounges and launching a fleet of Airbus 321XLR will fly in 2026 as the company aims to catch up with the growth of luxury travel. Starting in January, free Wi-Fi will also be available on board for loyalty program members, American said last spring.

The airline has already made smaller changes, such as adding Lavazza coffee for all its passengers and Champagne Bollinger for its first-class lounges and cabins, to also strengthen its brand, but it still has a long way to go to reach the profitability of Delta and United.

Just before Christmas, American also announced that it will no longer reward customers with frequent flyer miles on its no-frills basic economy tickets, following a similar move by Delta several years ago.

American has not yet announced any changes to its elite status requirements for 2027, but the airline is under pressure as Delta and United have said they will keep the status thresholds stable.

The airline is also making some changes aimed at improving reliability. It recently announced that it will expand the number of so-called banks, or clusters, of flights at its largest hub, Dallas Fort Worth International Airport, from nine to 13.

American also said it is testing two electronic gates there, where passengers on domestic narrow-body flights scan their own boarding passes, in hopes of getting travelers on board planes faster, and in September it said it will remove bag sizers from the gates.