American is the First US Airline to Introduce True Premium Economy, But Others Will Likely Follow

In the last decade, it’s been incredibly rare to hear about American being first, but this is a different American these days. Yesterday, the airline announced it would add a true premium economy section to its international fleet. This isn’t innovative on a global scale, but within the US, American is the first. What American is rolling out now might have been called a great business class years ago, but times have changed. Business class has gone so upmarket that it left room for a new cabin to come in and fill the gap. That’s what we have here, and I bet we see others follow what has already become standard elsewhere in the world.

Before we get into the strategy, let’s look at the seat, shall we?

American Premium Economy

Looks pretty nice to me, though this is a bit misleading. That nice leg rest is only in the first row. Rows behind have foot rests that drop down from the seat in front. Unlike extra legroom seating (American’s Main Cabin Extra, United’s Economy Plus, and Delta’s Comfort+) which is just coach with some more space at your feet and a couple of frills, premium economy is a whole different class of service. As you can see here, the seats are very different from regular economy. They’re wider, have leg rests, and have substantial armrests with storage and power in them. Meals are upgraded, you get priority boarding, etc.

For those who are used to flying European and Asian airlines, this won’t look like anything revolutionary. Premium economy took hold years ago with some carriers, and others (like, most recently, Singapore) have been racing to add the cabin. But in North America, Air Canada has been the only airline to really put forth a true premium economy offering. The airline has been really happy with it, so it was always surprising to see American carriers shun the product.

The Evolution of Airline Cabins
If you think about the evolution of classes of service, then this move makes a great deal of sense. Many years ago, the difference between first class and coach was more about service than anything else. Yes there was more personal space as well, but for the most part it wasn’t how we think of first class today. As coach continued to get squeezed, first class got better and better. It got to a point where airlines realized there was an opportunity for something to wedge in between, and that’s when business class cabins were born. Just take a look at the Continuum of AwesomenessTM for a visual representation.

Continuum of Awesomeness

Over the the last decade, first class has gone more upscale to the point where most airlines that have widespread first class products have created suites with physical walls. At the same time, business class has been a race to see who could install the best flat bed with direct aisle access. Business class has become so good that first class has become obsolete for many airlines. On the lower end, however, coach is still coach and the product has been stripped down further over the years.

Fifteen years ago, United stumbled onto the idea of Economy Plus. But it wasn’t for about 5 years that United realized people would be willing to pay more to sit in those extra legroom seats. This served as a good enhancement to coach, but the gap between coach and business continued to widen. American is simply following in the footsteps of international airlines in seeing the need for a true premium economy to fill the gap. What was once economy, business, and first is now economy, premium economy, and business.

As international carriers have learned, providing something closer to economy than business in price will allow economy travelers to upgrade without breaking the bank. It will also prevent most business class passengers from downgrading because the product difference is still enormous. (Couldn’t have said that with American’s old torturous angled flat beds.)

The Roll-out Schedule
American will start rolling this out next year when it takes delivery of its 787-9s, but it’s going to take a long three years before the roll-out is done. While regular coach is 3-3-3 across on that airplane, premium economy will be 2-3-2. This will also roll out to the 787-8s, A330s, A350s, and 777s. In other words, it’s the entire long haul fleet except for the 757s and 767s. With the roll-out taking so long, those 767s may be gone by then. Main Cabin Extra will stay on all these aircraft as well. That means the 777-300ER will have 5 different product offerings: First, Business, Premium Economy, Main Cabin Extra, and Main Cabin. That’s a lot to choose from.

Are you wondering why this isn’t going on the domestic fleet? It’s because it’s already there. These types of seats look a whole lot like domestic first class with a leg rest. This resemblance isn’t lost on many. When Delta rebranded its cabins, the rumor was that it would roll out a true premium economy and then change domestic first class to be premium economy as well. That hasn’t happened, but it would certainly make sense if it did. Product consistency is key, and nomenclature matters for setting expectations.

Many have assumed Delta had designs on adding a true premium economy product at some point, and I wonder if this might just accelerate those plans. Then if Delta does it, United is bound to follow.

I personally think it can’t come soon enough. A successful, modern, global airline should be all about providing a variety of choices to cater to different passenger needs. There has been a very big gap in the US carriers’ product offerings for some time, and it only continues to widen. This helps to fill it.

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34 Responses to American is the First US Airline to Introduce True Premium Economy, But Others Will Likely Follow

  1. AJ says:

    Can’t believe it’s taken US airlines this long to get on the premium economy bandwagon – here in the Asia Pacific region it’s old school (SQ notwithstanding). People will pay for premium, particularly on long haul; even
    leisure travelers if they’re going more than 4 hours (or thereabouts). I expect AA will see good returns once it’s finally implemented.

    PS: Love the Continuum of Awesomeness.

  2. Gary Leff says:

    “Many have assumed Delta had designs on adding a true premium economy product at some point, and I wonder if this might just accelerate those plans.”

    In fact one credible rumor over the past week was that Delta was on the verge of adding premium economy which is why American moved up their announcement, to get ahead of Delta. Much in American’s announcement seemed rushed. They don’t have answers on some of the soft product details like meals (I’ve heard informally about 3 meal choices, a dessert choice, but nothing official yet) and they don’t have answers on how this affects upgrades. This may be because they weren’t ready with all the final details, and may be because they’re waiting to see what Delta does…

    • Brian says:

      Gary, I suspect you’re accurate. I would say that DL will now move up its timeline as well.

    • Gary – I’m not sure if American rushed this or not, but it wouldn’t surprise me if this was the timeline and they just didn’t have all their info together. (Certainly wouldn’t be the first time.) Now the question is… when will Delta finally make it official? I don’t know for sure, but I might put my money on Dec 17 when it has its investor day.

  3. Josh G says:

    Interesting AA is the first mover here but was the last of the major network carriers to install extra-legroom Y section (standalone USAIR didn’t of course)

  4. A says:

    What I want to know is the price point for these seats and how easy will it be to move up to these with status? When pricing international flights I’ve been astonished at how much airlines charge for the lame economy plus. 4″ of legroom isn’t worth $400 on a BOS-LHR roundtrip. It’s as if the airlines are doing what they used to do with domestic F where it was priced so ridiculously high that only a fool would pay that and instead they gave the seats away to their elites. My hunch is that’s their strategy here. Give away the premium economy to elites and get people to pony up for the really nice seats.

    • Orcair says:

      Air Canada usually charges about 2x the lowest economy fare for Premium Economy, however, there are often sales where Premium Economy is the same price/less than a Flex fare (mid-level economy fare). Air Canada requires upgrade credits to go from Economy to Premium Economy, and I imagine that AA will follow that philosophy. It also stops elites from upgrading straight into Business Class…

    • A – I would think pricing would end up leaving closer to what BA puts out over the Atlantic today. The lowest fare for next summer in coach is $938.30 all-in, roundtrip. In premium economy it’s $2275. Of course there are always discounts and the lowest fares aren’t always available in each class. So the spread might not be as large. But a premium like that seems reasonable for what’s being offered.

  5. AAflyerORD says:

    As a Chicago-based flyer, this is great news! I’ve long avoided AA metal over the ocean as I’m frequently in the back of the plane and BA and Finnair offer much better coach products. I’m not in the position to routinely pay $5,000 for a flight to Europe but would gladly pony up an extra $500-$800 for a true premium economy offering. Unfortunately, as most of AA’s transatlantic fleet seems to reside at O’Hare, it might a few years before I get to enjoy this.

  6. Zack Rules says:

    Very interesting, pity they weren’t more imaginative with the name, AdvantagEconomy anyone? On the 77W’s, the Main Cabin Extra seats are already slightly wider because they’re 9 across instead of 10 across. I wonder where they’ll take away seats? Business, coach? Or do anyway with first?

    • Zack Rules – I wonder if the days of 9 abreast are gone soon. They didn’t do that on the 777-200s or any other fleet. This was a holdover from the last management team. It might be good to eliminate that to make the different between Main Cabin Extra and Premium Economy bigger.

      They said specifically they aren’t getting rid of First, so I’m not sure how they’ll handle.

  7. HovA says:

    Love it!!! I’m curious to see how points upgrades will be organized in this new lineup.
    And was hoping to see where economy plus fell on the continuum of awesomeness :)

  8. David SF eastbay says:

    Could just be the photo, but those seats don’t look comfortable to me. They look hard and boxy.

  9. JayB says:

    Pardon my skepticism, but you say this is “…all about providing a variety of choices to cater to different passenger needs.” I would submit it probably is more about marketing manipulation and deception, more ways to pick your pocket.

    Of course, airlines should be able to do whatever they think will keep them competitive and make money. But, why stop with just 5 classes of service, First, Business, Premium Economy, Main Cabin Extra, and Main Cabin. Just preface everything with “premium,” and add on “extra,” use a hundred other synonyms for “premium,” and the marketing departments can have a field day!

    How many of us rated our staff on the basis of each person being, “Exceptional, outstanding, above average, fully successful, needs improvement, unacceptable, etc.” How we tried to explain why so and so was better than someone else, when there really was little, if any difference between folks.

    Of course, there should be something between service that is “unbelievable” and something that is “steerage,” $5000 vs. $99, but having more than one type of service in-between, something that is what the average passenger would call “fully acceptable,” is all that is needed. Anything more, is nothing more than a revenue-grabber, a manipulative and deceptive means to separate the passenger from his money.

    But, if one airline offers 5 classes of service, expect the next one to do the same and then it will soon announce it is adding a 6th class, “meeting passenger needs,” you know!

    • Jeffery says:

      Sure there is marketing-speak in the labels, but excluding Y+ there are significant product differentiation between Y/W/J/F that’s a legitimate choice at different price points. There is real value in that for consumers and the airline (in revenue management) so I’m with cranky on this being good for all.

      On the upgrades I’d hope AA does an option to upgrade from Y->W and Y&W->J where pax booked in W would have the higher priority into J without fully blocking access to J from the back

    • JayB – Manipulative and deceptive? I couldn’t disagree with you more. This is a serious investment in a completely different product offering. It’s most certainly not just a marketing exercise. This is an airline offering something that people like. Good on them.

  10. Eric C says:

    Any chance we’ll ever see a 2-3 configuration on a 3-3 narrowbody? The extra 2.5″ width per passenger would be fantastic. If I’m paying for an extra 1/5th of a seat, I’d much rather pay for it in width than length.

    • Bob says:

      That’s what she said

    • I read elsewhere that the argument against this is the aisle jags needed to make it happen take up too much space. (You’d have two, one from FC to PE then one back to E+) since the aisle would not be in the center.

    • Eric C – I just don’t think there’s enough demand for something like that on domestic aircraft. Consider how airlines price first class domestically today. That really is the premium economy offering. It’s not the insanely high premium it used to be, so people can pay up for a better product. There isn’t much room for something in between.

      • Eric C says:

        Domestic first is much more space inefficient. It either puts 8 seats in the space of 18 economy, or 12 in the space of 24. A 2-3 config with 34″ pitch would yield 20 seats in the space of 24. That’s a much lower premium. Actual first class desperately needs to move down the awesome scale, this could backfill behind it.

    • Darkwater says:

      Gulf Air used to have that setup on its A320s: 4-wide “F”, 5-wide “J”, 6-wide “Y”. It looked odd, as the third J seat jutted out into the aisle between the two balanced first and economy sections.

  11. Vinay says:

    “Continuum of Awesomeness”–another great Cranky-ism! I’m going to have to use that for some of my presentations!!

  12. Richard says:

    CF,
    Are you sure the back rows won’t have the extending foot rest? Doesn’t make sense to buy 2 different seats for the same cabin. Maybe the extension foot rest works when the seat reclines and the seat back rests are available when the passenger does not want to recline?

    • It’s standard practice that bulkhead seats are a different variation of the seat that goes behind it. Usually the only difference is the tray table in the arm rest area, but it’s still different.

    • Richard – Well, I won’t be sure until I actually see it installed in an airplane, but that’s my understanding. It’s also the way BA does it in World Traveller Plus.

  13. StevefromCVG says:

    Doesn’t solve the problem if your company refuses to pay more than the cheapest seat on the plane. If the out of pocket isn’t too high or miles for upgrade isn’t too high, it sounds like a win.

    I may start flying AA to build miles for international upgrades.

    • StevefromCVG – Well that’s where Main Cabin Extra comes in. Passengers can pay up for more legroom if they want more. It’s a separate transaction from the ticket, so it’s easy to break apart.

  14. Maarten says:

    I flew an AA B777 last night from JFK to LHR. I was upgraded to Main Cabin Extra. It wasn’t those new prem econ seats, but they were 2-3-2 seats that were different from economy: wider, more legroom and – obviously – a less cramped seat it (and slept!).

  15. southbay flier says:

    It would be funny if DL announces it next week and then completes the installation before AA. Three years is a long time for not that many planes.

  16. Andrew says:

    This is good news from AA for a change but hardly earth shattering. AA had three cabin international aircraft for years. I see it as a relaunch of a “Business Class” product under the name of “Premium Economy”. AA has only ever allowed upgrades to the next cabin. You won’t be able to go from Steerage to Business Class. I’m sure a lot of corporate travel managers are going to be rethinking travel policies.

  17. UAFlyerORD says:

    I am just happy to see some great news coming from our U.S. carriers. Seems to have been a positive news week. Looking forward to more.

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