Happy New Year, everyone. I’ve been looking through my old drafts, and I realized there were a couple of posts that never got published last year, and here’s one of them. It’s an Ask Cranky question . . .
I knew from reading your blog that premium economy was something that lots of airlines had been experimenting with (BA’s Open Skies, etc.), achieving extremely varied levels of success. However, I would love to know more about the rationale for beefing up premium economy on multi-class aircraft. Are airlines making money on customers who choose premium economy? Are [Business] and [First Class] passengers expressing any concern that some of their traditional “territory” (lounges, preboarding, etc.) might be devalued by expanding its availability to non-[Business/First] customers? What is the outlook for premium products, say, over the course of the next ten years?
-Zach in Chicago
I would say the outlook for the expansion of premium economy is good over the next decade. This is a direct result of the gaping hole that has opened between coach and the premium cabins that are out there today.
Think about how it used to be. There was coach and there was first class. As first class started to gain greater distance from coach in price and comfort, airlines began rolling out business class to fill the gap. The problem is that first and business class have continued to get better and more expensive while coach has, well, stayed coach.
These days, the flat beds you find in business class are far superior to anything that used to exist in first class. But coach seats are still just coach seats. If anything, they’ve lost a little legroom. Some airlines decided that first class was a waste of time and simply went with a two-cabin approach of business and coach. But these are all just names. The business class on, say, Virgin Atlantic, would have been worthy of the first class moniker just a few years ago.
So you end up with a funny situation where you can buy a coach roundtrip from the US to Europe for $600 but if you want any more comfort, you’re going to be paying $4,000 to $10,000 for business class. Further, as companies cut back their travel budgets, business class becomes a no-no. So what to do?
Well, the airlines started rolling out premium economy. This has two benefits. One, you can fly it for $2,000 to $4,000 roundtrip, so it provides an in-between price point. Two, it’s a coach seat so some people can still take advantage of it under their corporate contracts.
I don’t count United’s Economy Plus as a true Premium Economy cabin. That’s really just coach with a little more legroom. But the likes of British Airways, Virgin Atlantic, Air New Zealand, Japan Air Lines, EVA Air and more recently, Air France and ANA, have put in a better seat, somewhat upgraded service, and branded it under this new name.
The reality, I think, is that you can look at an airline like Virgin Atlantic and it seems the same as things used to be. Sure, they may call it coach, premium economy, and “upper class” but it’s really just coach, business, and first from the old days.
I would expect to see more airlines do this, especially as travel budgets go down for premium class travel. They may have too many seats taking up too much space in business, so the premium economy cabin may grow.