What began as a niche offering for passengers willing to pay for comfort, premium economy seating has established itself as a unique class of travel, helping to guide the competitive strategies of airlines.
Long-haul airlines such as Qantas, Singapore and United Airlines have embraced the premium service, which has proven more popular than business and more profitable than economy class.
Premium economy on a Qantas A380. Credit: Brent Winstone
From 2017 to 2022, the number of international airlines offering premium economy jumped from 42 to 63, according to industry research group Cirium. At the same time, there was an 84 per cent surge in the number of commercial aircraft offering the class.
Premium economy seats can command double and even triple the price of an economy seat – still far less than the cost of business class. At the same time, the cost of a premium economy for the airlines is not tremendously greater than the cost of an economy seat. They typically don’t require the space or intensity of in-flight service that business class and first class seats require.
Air Canada’s premium economy.
“Premium economy has really consolidated its position as a real feature,” says author and analyst Peter Harbison, particularly as the share of corporate travel remains weakens.
United Airlines reported “great success in the premium economy cabin where revenue has outpaced capacity growth since its introduction in 2019,” the carrier said.
For United, the benefits of its “premium plus” class begin before departure, allowing customers facing the boarding obstacles so common in US airports a priority check-in, luggage drop, and dedicated security lines. On the plane, they get bigger seats, a deeper recline and legroom, better meals.
Singapore Airlines has been a major provider of premium economy seating.
A Sydney-Changi premium economy round trip can be purchased for just over $3739. The seats include calf rest and footrest and the meal is “accompanied by a seasonal appetiser, bread, dessert and cheese and crackers” with champagne.
Singapore Airlines even allows premium economy passengers to book a specific meal on the flight.
Qantas doesn’t release a breakdown on premium economy revenue, but estimates suggest it can be at least 20 per cent over comparable economy seating.
Qantas CEO Vanessa Hudson says customers are willing to pay for premium economy.Credit: Airbus
In half-year results released in February, Qantas said it “experienced an increase in demand for premium cabins across its international network, with a 2.5 percentage point increase in load factors across first, business and premium economy cabins”. Almost three years after the lockdowns ended, demand shows no sign of slowing.
“If you look at it as real estate, it doesn’t take up a lot more room than economy and in terms of service it’s not that much more,” Harbison said.
Qantas seatback screens in premium economy class.
Qantas chief executive Vanessa Hudson says the airline hears from customers a greater desire to fly from “point to point”, rather than through hubs.
“Doing that in a premium and a comfortable seat is also something that customers are saying that they value and they’re prepared to pay … for,” Hudson said.
Premium economy will have a place on the coming Project Sunrise flights – due to start in 2027, which will link Australia to the UK and US on world-leading non-stop flights.
The specially made A350s to be used in Project Sunrise will have more than 40 per cent of their seats as premium (first, business and premium). Of the 238 seats on the plane, a full 40 of them will be premium economy.
An irony of premium economy’s success is that airlines long resisted it, said Harbison.
“There was a lot of resistance to it because there was a question of whether people would buy up or buy down,” he said. At the time, people who didn’t want to fly economy were forced to pay three, four and five times as much to fly business class.
Emirates resisted premium economy class seating for a long time. Credit: Bloomberg
“The argument went – and airlines resisted for a long time – that if you put something in the middle, that’s really going to dilute your business class traffic.”
Instead, once given the option, economy passengers “bought up” into the enhanced, premium economy seats.
Emirates is a case in point. The airline, whose reputation is built on luxury, if not opulence, feared that offering a downgraded form of first class or business class would cannibalise their existing business.
Emirates president Sir Tim Clark, speaking in January, said that after the seat class launched in August 2022, “90 per cent of the people in premium economy had traded up from economy”.
In turn, premium economy is emerging as a profit centre for airlines.
“I have to say it has surpassed all expectations in the mathematical factor that we had to get, to achieve, to justify its inclusion at all.”
The post-COVID travel revolution, meanwhile, is slimming other segments of the seats.
Harbison says corporate travel as a share of total travel is thinning.
Experts interviewed suggested that the deeper adoption of remote meetings during the COVID-19 pandemic may have helped reset corporate behaviour around business travel.
Today, Harbison said: “You’re seeing a steady transformation of the profile of premium travellers – moving away from business to leisure.”
He noted that the corporate travellers didn’t always fly business class – but they did pay higher prices, even in economy, because of their need for flexibility.
“Now the airlines are going after the premium tourist traffic,” Harbison said. The “economy” part of the label also appeals to business travellers required by their employers to book “economy”.
Dublin City University assistant professor in aviation management Cathal Guiomard chalks up the rise of premium economy to a broader shift.
“As living standards improve, people’s sole concern is no longer just value for money,” he said. “It’s no longer just minimising the cost of the flight. And people are prepared to pay a bit more to get a bit more comfort.
“Coming from Australia, where the distances are far longer, that factor probably plays a greater role.”
Indeed, the geography does play a part.
Taiwan-based EVA airlines is credited with creating the premium economy class in 1992. It debuted on trans-Pacific flights from Taipei to Los Angeles. The growth of premium economy in Asia reflects in part the region’s requirement for long-distance travel.
Director general of Association of Asia Pacific Airlines Subhas Menon said that because Asia is not “a contiguous continent, air travel and transportation are social-economic necessities”.
This fact has really “expanded opportunities people can take for travelling” – including premium economy.
“What we have seen is the downsizing of first class – and business class remains pretty much untouched. But there have been more premium economy seats added on most of the flights.”
As an airline built on long-haul flying, Qantas has been an enthusiastic adopter of premium economy.
It first rolled out premium economy on its then-new A380s in 2008, and Boeing 747s, and in 2017, it added premium economy to Boeing 787-9 Dreamliners.
The lure of premium economy is so strong, Qantas won’t rule it out one day for the soon-to-be delivered Airbus 321XLR.
The initial role of the XLR will be to replace Qantas’ domestic backbone of 737s. Given the 321XLR’s range of 8700 kilometres, Qantas is also earmarking the plane for use on flights to and from Asia.
“Premium economy is more of a long-haul product,” Qantas’ Hudson said.
Accordingly, Qantas would “make an assessment on an XLR with an international configuration”, Hudson said. It’s possible in the future, premium economy “is part of that” offering, she said.
The lure of premium economy is so strong, no long-haul airline can afford to ignore its potential.
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