Is premium economy the next business class?
Premium economy class — a hybrid service that offers a slightly larger seat than coach class, with an upgraded meal — is coming to a plane near you. So is the directive from your company’s travel manager to sit in it.
Airlines spent the last decade or so bulking up their business class offerings, giving the business traveler a simply wonderful experience if they are lucky enough to fly one of these new sections. Lie-flat seats, power ports, on demand video have all become almost standard for international business class. Some airlines, like Continental, have even gone so far as to remove their First Class sections and offer Business First.
All of this was in response to the multitude of companies’ travel policies that required travelers to forgo first class and fly on the more reasonably priced business class. The thinking then was that they could afford the smaller upgrade in price to business class from coach, but the leap to first class prices was too much.
With the business class product being enhanced, so have the airfares. This rise in fares has caused corporate travel departments to re-examine the price of a business class ticket.
Over the last year, I have had the opportunity to fly to Australia on business twice. My company’s corporate travel policy is that for flights exceeding six hours, business class is permitted. On each trip, I found business class airfares to be very high, in excess of $12,000. Coach class tickets for the same flights hovered between $1,800 and $2,200. The frugal part of me has a tough time justifying $10,000 for 30 hours of travel.
In comes Air New Zealand with its new premium economy section. It offers some of the perks of business class, but at a sharply discounted fare.
The cost per person last year was about $3,200, this year around $3800. This year’s trip even included an open jaw itinerary; we went from New Jersey to Brisbane (Had to visit the Australia Zoo) and then home from Sydney to New Jersey.
With premium economy, you get priority boarding and ticket handling at the airport, a better meal and service on board that would make any American domestic passenger smile. The seat, while not much wider than the coach offering, had a great deal more leg room than coach, it also had a retractable footrest. I am 6’-4” and was quite comfortable.
No, it wasn’t the lie-flat seat of business class, but it also wasn’t the cramped seat of coach.
The best part of this was that I was able to buy three tickets for the price of one business class seat. My wife is a white-knuckle flier; she told me time and again she would not be willing to tough out 30 hours traveling in coach. But with this new class of service, she was willing to try. She managed to sleep through most of our flights.
Other airlines are jumping on the premium economy bandwagon, too. Qantas has started selling seats in its new international premium economy. Virgin Atlantic has introduced a new premium economy service as well.
Reading the various airlines’ offerings, it seems that premium economy is becoming the next business class. What I mean is that it is an offering of more comfort and service compared to coach, at a reasonable increase in cost. The airlines all love to copy success; I can see where more airlines are going to follow this path.
But this airline success story may have an unintended result for the airlines. While it may seem that corporate travel policy makers have never set foot in an airport, they are not blind to the chance to cut their company’s airfare costs.
This new class of service will soon become the only choice for business travelers.
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