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Premium economy divides passengers like no other airline seat class. Fans prize every extra inch. Detractors suspect airlines make the seats at the back worse to push them to pay up. Either way, the cabins are proving a profit sweet spot, and airlines around the world are refreshing and expanding their offerings. Financially, at least, it’s probably a better deal for providers than passengers.
Airlines have been encouraged to look again at the space between lie-flat business and upright discomfort at the back by the post-pandemic splurge on premium travel. Leisure travellers, in particular, appear to be prepared to pay for perks such as more legroom or priority boarding. Delta, for example, said in July that its premium revenues were growing 5 per cent year on year — faster than economy.
American Airlines this summer introduced a redesigned premium economy and has plans to increase its premium space — business class and upright — by 50 per cent by 2030, while British Airways is upping its premium economy seating by a fifth by 2027. Korean Air is introducing premium economy for the first time, which is something that Emirates only did three years ago.
It is not just full-service carriers either: Southwest Airlines, the US flag-bearer for one-offering-fits-all, low-cost flying, began selling pricier seats with extra legroom this year. A couple of weeks ago, boss Bob Jordan even mused about premium lounges.
This should be a boon for those who like their creature comforts but consider themselves somewhere short of loaded. Business class costs more than four times economy, based on a scan of transatlantic flights between Europe and the US east coast being offered by seven carriers on a single day next month. Yet premium economy’s detractors would seem to have a point about the cost: seats there averaged almost three times the price of basic economy.
Exactly how profitable premium economy is for airlines and their shareholders is difficult to say as each carefully guards its calculations, which will vary by aircraft model, staff costs, cargo load, seat weight, route — the list goes on. Still, some back-of-a-business-class-menu sums while squinting at seat maps for the same transatlantic carriers suggest that assuming full cabins, airlines rake in about 50 per cent more from premium economy for the same floor space as they do from the cheap seats behind.
That extra income should show up in airlines’ profitability per mile flown at some point. In the meantime, premium economy passengers continue to shrug off the glares of those shuffling to the very back — they’re used to it. Value is in the eye of the credit card holder, after all.
jennifer.hughes@ft.com