Space by space basis

btlogo1It used to be that the lucky ones with generous expense accounts or cash to spare flew business class, and everyone else endured the cramped and uncomfortable world of coach. But today, a new middle ground is emerging. More and more airlines are adding a premium economy service to their lineups, providing customers with more comfortable seating, better in-flight services, and other perks. Airlines see premium economy as a way to increase customer loyalty and generate additional revenue, at a time when corporate travel budgets are being squeezed, and planes are flying fuller than ever.

Mark Ashley, writer of the popular Upgrade: Travel Better blog, says the term premium economy is often used to describe very different products. “Sometimes, it means extra legroom, and not much else,” he says. “But in other cases, premium economy comes with a range of additional services. You need to know what the airline you’re flying offers before you can decide if premium economy is worth it.”

The one thing all premium economy cabins have in common is a somewhat roomier ride. Seat pitch (the distance between rows of seats) tends to be four to six inches greater in premium economy than in standard coach – which means more legroom – and seats are also usually one to two inches wider. “For lots of travelers, those extra six inches of space are incredibly important,” says Jorgen Holme, director of marketing for the Americas for
SAS. “Whether it’s for comfort or for productivity, people are willing to pay for the extra room and other extras.”

Two U.S. airlines currently offer premium economy products. Midwest Airlines’ Signature Service provides 21-inch seats with 34 to 36 inches of pitch in a 2-2 configuration. “Midwest doesn’t offer business or first class – Signature Service is simply a different option within coach,” says Randall Smith, the airline’s vice president of sales and distribution. He says
customers booking full-fare tickets are automatically assigned Signature Service seating, and that other customers can pay $60 on the day of flight to be upgraded. “Though we don’t call it an upgrade,” he says. “Because it’s technically the same cabin.”

United Airlines launched Economy Plus in 2004, and the service is now available on its entire mainline fleet and some regional jets. Economy Plus is a section within United’s main economy cabin, and uses the same seats, which are 17 to 18 inches wide, depending on aircraft type. But Economy Plus is configured differently, allowing for a seat pitch of 34 to
36 inches (compared to 31 inches in United’s standard economy). United takes care of its elite frequent fliers first: they’re the only ones able to book Economy Plus at the time of reservation. For others, space available upgrades can be purchased on the day of travel, and are priced based on flight length. (An upgrade on a recent Vancouver to Chicago flight cost $44.) A $349 annual Economy Plus Access membership (available to any Mileage Plus member), allows customers to reserve Economy Plus when making reservations.

The international carriers have taken the concept of premium economy to a higher level. In addition to roomier seating, international premium economy often includes better food, complimentary liquor, dedicated cabin staff, and in-seat laptop ports. Some airlines, including Air New Zealand and SAS, offer premium economy customers business-class check in. “When you’re traveling through a busy airport like LAX or Sydney, this is a huge benefit,” says Air New Zealand’s Vice President of the America’s Roger Poulton.

Singapore Airlines’ Executive Economy is available on ultralong-haul routes between Singapore and Newark/Los Angeles only. “Due to the extreme length of these flights
(over 17 hours),we don’t offer standard economy, only Executive Economy,” explains the airline’s James Boyd. Executive Economy seats are 19 inches wide with 37
inches of pitch in a 2-3-2 configuration.

Airlines see premium economy as a way of rewarding elite customers, and better serving business travelers grappling with limited budgets. “You’ve got lots of frequent flyers out there who can no longer book business class,” says Forrester Research’s Henry Harteveldt. “Upgrading them or selling them a premium economy ticket is a good way to recognize them. “ANA’s Damion Martin agrees. “We see lots of travelers who can’t book in business, but want some of those perks,” he says. “In ANA’s case, premium economy is definitely geared toward the business traveler.”

Things are slightly different at Air New Zealand. “We do have some uptake from the business market, but we see premium economy appealing primarily to leisure travelers,” explains Roger Poulton. “We’re a long-haul airline, and our customers are a bit older – they appreciate a product like this when they’re on a vacation.”

But customer appreciation is just one consideration. “It’s a money-maker for the airlines,” says Harteveldt of premium economy. “They wouldn’t be doing it otherwise. “He says that United expects Economy Plus to generate $100 million in incremental revenue this year, and that airlines see 10 percent more revenue from premium economy passengers than
those flying standard economy.

Airlines price premium economy differently, and fares can vary widely depending on day
and time of travel and other factors.An online search for British Airways flights between New York and London showed a nearly $900 price difference between economy and premium economy, for example, but the price jump to premium economy can sometimes be as low as just a couple of hundred dollars. And SAS allows customers to book different classes on the same trip. “If a customer wants Economy Extra on the outbound and business on the way back, they can do that with our flexible fares system, and get the lowest fare available in each direction,” explains SAS’s Jorgen Holme.

More and more airlines are getting into the premium economy game. Qantas’ A380 super-jumbos will feature premium economy when they go into service next year, and Japan Airlines is adding premium economy to some of its Boeing 777 fleet, offering 20 percent more room than its regular economy class. JAL is to start rolling out the new class on flights between its Tokyo Narita hub and London Heathrow on December 1. It will be extended to Tokyo Narita routes serving Frankfurt and Paris during 2008, and then onto other European and U.S. flights. Virgin Atlantic, which launched the industry’s first premium economy product in 1992, recently announced a $22 million premium economy expansion and overhaul.

Despite its growing popularity, purchasing premium economy can sometimes be a challenge. While the seats can be purchased from most airline Web sites, they’re not currently available from big travel sites like Orbitz and Expedia. “You can book our premium economy seats at ana.com, but on the travel Web sites, you cannot,” says ANA’s Damion Martin. “That’s because we classify premium economy as an economy product, and these sites aren’t set up to search for different products within the same class.”

Orbitz’s Jim Cohn admits that premium economy creates a booking challenge. “There’s a lack of consistency among carriers about exactly what this fourth cabin (premium economy) is,” he says. “For some, it’s a virtual cabin within economy, for others it’s a separate physical cabin.” Cohn says Orbitz hopes to offer premium economy booking functionality at some point in the future.

The premium economy strategy seems to be working for the airlines, and while few passengers would mistake it for business or first class, it does offer another option. “Let’s face it,” says Forrester’s Harteveldt. “No one gets too excited about flying economy these days. Give passengers another choice, and they’re going to take it.”

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