The Airlines’ Money Maker: Premium Economy

Jun 23, 2019

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With economy class becoming tighter as airlines move to higher-density seating configurations, and the luxury elements once only found in first class now becoming the ‘norm’ in business class, the industry has created quite the gap between economy and business. The demand for for an in-between option has soared on the basis that a cabin class can improve the comfort for passengers without having to spend a small fortune.

This in-between option is known as premium economy, a premium twist to the airlines’ economy class product. And the cabin concept has taken off to become one of the most lucrative innovations in modern-day flying.

Premium economy was first introduced by EVA Air and Virgin Atlantic in 1992 as an offering to passengers seeking more comfort. Fast-forward to 2019 and nearly all of the world’s major carriers — most recently, the US carriers having adapted — have realised that passengers are increasingly looking for, and willing to pay for, a better flight experience.

Photo by Ben Smithson/The Points Guy.
Photo by Ben Smithson/The Points Guy.

Airlines have an abundance of flexibility when it comes to deciding how ‘far’ they go with premium economy. For some, premium economy is more of an economy plus product — slightly more spacious seating with minor differences to the presentation of food. While some, like Virgin Atlantic and Singapore Airlines, have invested heavily in a product that doesn’t resemble their respective economy class, instead focusing on more luxurious elements like footrests, generous recline, larger screens and a substantially different service offering.

For the airlines, premium economy is generally incredibly cost effective. On average, an airline is able to charge two to three times the cost of a lower-fare economy class ticket, yet its increased costs are very minimal. Premium economy seating doesn’t significantly reduce the seating capacity in the cabin, and for most wide-body jets, airlines are able to retain a 2-3-2 configuration. In addition to this, the catering is often more similar to that of economy class (albeit better presented), meaning the airlines aren’t spending too much more on the food.

If anyone had any doubt over whether or not premium economy is a successful product, look no further than the airlines flocking to introduce this cabin class on their aircraft. Emirates, known for its luxury cabins, confirmed that its new A380s will feature a brand new premium economy product from 2020. American Airlines became the first US carrier to introduce the product in 2016, followed by Delta in 2017 and United in 2018.

Interestingly, the demographic for premium economy is very broad. It appeals to and is a frequent cabin of choice for families with young children, just as much as it appeals to business travellers. With such a wide target market, it’s no wonder the demand for premium economy continues to increase.

Filling the gap between economy and business has enabled large companies to amend staff travel policies to premium economy only, but it’s also given individual passengers a cost-saving alternative. When booking flights and assessing business class or premium economy, many passengers now consider: “Do I really need a bed for a five-hour daytime flight?”

Will more airlines make way for more premium economy seats? It’s very likely. Ultimately, as passengers, we are potentially overvaluing a product that isn’t too different from economy class but feels like it is. It’s the feeling of comfort passengers are chasing, and as cramped cabins close in on us, they’re pushing many of us farther forward into premium economy.

Featured photo by JT Genter/The Points Guy.

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