Feature: Premium Economy
The new Business?
Virgin Atlantic trail blazed Premium Economy some 20 years ago and renewed interest, chiefly from Cathay Pacific and American Airlines, seems to be increasing its popularity, reports Colin Ellson
very cloud has a silver lining, they say. But the International Air Transport Association (IATA) report for 2012, failed to find much light amid the encircling gloom that has beset the aviation sector in recent years. IATA director general and CEO Tony Tyler said: “The air transport industry is fragile. Airlines made a profit of $7.9 billion in 2011. That is half the $15.8 billion realised in 2010. And on 2011 revenues of $598 billion, that translated to a net profit margin of just 1.3%.” All of which will come as no surprise to the world’s airlines as they seek solutions in an economic climate that has impinged harshly on air travel. Business travel in particular has suffered, with budgets often slashed or burned as corporates seek to stem the haemorrhage of precious funds in the face of ever-rising procurement costs. Forced to be ever watchful to pick up and follow a trend in today’s highly competitive environment, airlines have found something of a silver lining in the shape of the ‘inbetween’ cabin, Premium Economy.
E
The cabin is a hybrid – a money-saving compromise between Economy and Business. As a general rule, it offers up to seven inches more
legroom than Economy, wider seats, Business amenities such as power ports for laptops and often a premium meal service.
The biggest incentive to please the bean counters, however, is price: booked in advance, Premium Economy is generally 85% more expensive than standard economy, booked nearer the departure date it can be just 35% extra. These are ball park
“The spread of the Premium Economy concept speaks volumes for its acceptance as a standalone product”
figures, which can vary widely from airline to airline. While carriers will not pretend to have found the Holy Grail in terms of much greater revenue, the spread of the concept over the past few years speaks volumes for universal acceptance of Premium Economy as a standalone product with a useful role to play.
The majority of major airlines now provide such a cabin, although the idea has yet to find favour in the Middle East. The region’s philosophy is explained by
www.onboardhospitality.com 55
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