Beyond the Upgrade: Building a Premium Strategy That Actually Works

The Decision Brief Mark Galardo, EVP & Chief Commercial Officer, and President, Cargo, Air Canada Kunal Shah, Managing Partner, Travel & Hospitality, ZS Moderated by Jeremy Kressmann, Vice President, Skift Studio Sponsored by ZS THE VERDICT Every travel company is expanding premium offerings. The question is whether premium is just a product upgrade or a more holistic company strategy. Galardo and Shah both said it should be structural. Shah said premium strategy “cannot just be layered on top of what you do today. It really has to be infused into how the business operates.” Galardo said premium revenue share at Air Canada has grown from about 20% a decade ago to 30% today, with a target of 35% by end of decade. PATHS FORWARD Treat premiumization as a culture. Shah said the most successful luxury brands believe in the value they deliver “from senior leadership all the way to new employees.” Companies that add a better seat or a nicer room without changing how the organization hires, trains, and recognizes customers are competing on amenities rather than a brand experience. Apply premium thinking at every price point. Shah said the industry too often equates premium with upscale. Even midscale and economy properties can capture significant value using pricing and personalization strategies that drive incremental revenue. He said premium travelers actually prefer digital-first experiences over human interaction unless they need help. The opportunity exists across chain scales, and the technology that delivers it is the same. Invest in fleet and network based on premium demand signals. Galardo said Air Canada is flying nonstop from Montreal to Sicily and is the only carrier with nonstop service from North America to Thailand — routes that only work because of premium demand. He said once customers try premium, “the likelihood to repeat is overwhelmingly positive. Once you try it, you ain’t going back.” He also warned against moving too fast — “there’s so many cautionary tales of airlines that have flipped the pendulum too quickly.” WHAT TO WATCH Galardo said premium demand is “directly correlated to the health of the economy, and especially the strength of equity markets globally.” If the macro turns, the premium thesis gets tested. Companies that treated premiumization as a cycle rather than a culture shift will feel it first. Shah said loyalty and premium overlap but are not identical — a traveler can be premium without being loyal, or loyal without being premium. Companies that assume their best loyalty members are the same people buying premium are running two different commercial strategies as if they were one. Access all the Skift Takeaways from this event, as well as full session videos, presentation documents, and more editorial coverage at our Skift Global Forum attendees hub.