"What we're picking up from our side of the business is that there are some freezes going into place on travel in general," says John Ash, president of Washington, DC-based InterVISTAS, a respected airline consulting firm.
"What we're picking up from our side of the business is that there are some freezes going into place on travel in general," says John Ash, president of Washington, DC-based InterVISTAS, a respected airline consulting firm. Ash says the retrenchment, when it's not keeping people on the ground altogether, is "pushing [them] away from first and business class, and into ... premium economy."
"Our client base has taken that approach," echoes Will Tate, vice president of Management Alternatives. His clients are pursuing a trifurcated approach to cutting costs: trimming trips, changing their carrier mix and "downgrading or changing [class] tiers," says Tate.
The Cost/Value Proposition
Depending on the carrier, there's a vast gulf between the price of a business class seat in the pointy end of the airplane, and one in premium economy. Consider: a recent search of one-way, non-negotiated rates 'twixt Hartsfield-Jackson Atlanta International and London Gatwick found British Airways would sell you a seat in its World Traveller Plus cabin (premium economy) for $1,803. Sit a bit further toward the front of the 777 and a seat in Club World (business) class ran $6,179.
The price difference is profound — better than three-to-one. But how about the service? If room per se is what you're after, the price/value relationship is a slam-dunk. World Traveller Plus' seats are wider, sport decent recline, are fitted with footrests and adjustable lumbar support, and come ensconced in their own cabin. While amenities vary from carrier to carrier, that's the international template: more personal space.
Here's the rub: if it's a good night's rest that you're after, no premium economy class we've ever heard of offers lie- flat beds.
But the gap between PE and business class is narrowing on almost every other front. Virgin Atlantic is a prime practitioner of premium economy. It helped pioneer the class, and recently subjected the cabin to a major makeover.
The airline started by tweaking the basics. Seats offer 38 inches of pitch, 21 inches of width (comparable to some carrier's business class), and an additional two inches of recline. The lumbar support is adjustable and so's the headrest. There's laptop power and a meal service that offers china dinnerware, stainless steel cutlery, pre-flight drink, after-dinner liqueur and a selection of fruit from the fruit bowl.
You don't get access to the Virgin Clubhouse lounge as Upper Class flyers do, but there is dedicated check-in.
(Almost) All The Trimmings
The apotheosis of PE just might be OpenSkies airline's product. Flying narrowbody Boeing 757s from New York Kennedy to both Paris Orly and Amsterdam, OpenSkies' PREM+ cabin is a lot like business class. PREM+ seats offer 52 inches of pitch, and recline 140 degrees. The wines are bottle-poured, the entertainment system serves up all sorts of options, and the whole product "qualifies for use by business travelers whose corporate travel policies would otherwise restrict business class travel," says the airline.
While the epicenter of premium economy is arguably the Atlantic, across the other ocean there's ferment too. Air New Zealand's Pacific Premium Economy, depending on the seat, goes Virgin one or two inches better — offering 38 to 40 inches of seat pitch.
The in-flight entertainment is on-demand. If you want to work, most seats sport in-seat power. Long-haul transpacific sojourns serve up a special PE menu, replete with New Zealand wines.
Qantas' massive new A380s offer a separate 32-seat PE cabin, with a dedicated cadre of flight attendants. Seats are arrayed 2x3x2, recline nine degrees, and offer anywhere from 38 to 42 inches of precious pitch. Because of that kind of room, there's an integrated leg rest. The footrest is a foldout affair.
While most premium economy products, the video is seatback, Qantas' is in the armrest, just like business class. And, just like business class, you don't have to cram your coats in the overhead bins. The flight attendants pick them up and hang them for you.
The food is upscale, inspired by chef Neil Perry, and comes on premium tableware. Pre-takeoff, there's Champagne, OJ, or water; in-flight, the wines are Australian.
And so it is that the international PE product morphs, segueing ever so subtly into the business class mold. So similar is the concept that Japan Airlines' recently redone Premium Economy cabin offers Sky Shell seats, seats with 38 inches of pitch that ensure the seat in front of you won't intrude into your personal space. Shell seats debuted a couple of years ago in the international business class arena. There's an integrated rest for the upper parts of your legs, and — given the Japanese passion for cleanliness — an anti-bacterial, deodorizing cover for the seat itself.
In some instances, even the name of the PE product reflects the upscale migration of the species. Once-upon-a-time, EVA Air's offering was called Evergreen Deluxe. Now, it's unabashedly forthright: Elite Class. The seats sport ergonomic cushions, movable seatbacks and coat hooks. The food is served on bone china.
Bargain Hunting
All of this international interest in premium economy started bubbling long before the economy went bust. The idea was to nab corporate flyers whose firms' travel policies forbade flying in business class — and lure some leisure travelers (those who wanted to get to where they were going in a bit better shape) from the very back of the bus.
But now that Wall Street MBAs are meandering about looking for ways to fill their day, the demand for PE is shifting. "You're getting some major downsizing," says InterVISTAS' Ash. He made the comment days before Citigroup announced it was cutting 53,000 more jobs. That sort of activity can put a decided dent in premium demand between Heathrow and Kennedy.
Bad news, certainly, for a lot of folks. But potentially good news when it comes to negotiating rates in business class and PE. Ash believes even as seating capacity comes out of the system, there still remain enough empty seats up front that corporations "are going to be able to drive some better deals" in business class. Premium economy too. There's a certain elemental ecology about economic hard times, with some sectors feeding upon the woes of others. "You're still going to have the big law firms out there doing bankruptcies and restructuring," says InterVISTA's president. And lawyers are loathe to fly coach.
While negotiable, Management Alternatives' Tate says PE isn't as amenable to discounting as traditional business class. That's because of its already bargain-priced positioning. "[With] the higher-priced [business class] tickets you obviously have more room for carriers to discount," says Tate. The lower-priced the bucket, the less opportunity to reduce prices without cutting into the quick of carrier's profit margins.
Still, Tate indicates there's a danger in becoming too fixated on discounting per se. Better, he believes, to focus on the bigger picture. "There's a trade-off between the effective yield of a discount program vs. the cost per mile that you actually pay," he says. "You can buy an inexpensive ticket, which will have zero effective discount percentage." But — and here's the reason PE could shine in the right circumstances — that ticket "might be at a lower cost per mile than a ticket with a bigger discount."
Domestic Premium
Compared to foreign airlines, US carriers were slow out of the blocks to innovate new business class product. They're catching up now, but it's taken a while. And so it is with premium economy.
There is no domestic airline equivalent to premium economy, not in the classic sense. United's Economy Plus essentially just offers more legroom, up to five inches of it. You pay for it based on length of trip. Chicago O'Hare to Detroit runs $14 more than regular Economy, for instance; and Los Angeles to Tokyo $119.
JetBlue too sells space. Even More Legroom seats (38 inches of pitch) go for as little as $10 extra per segment, based on the length of the flight.
Given the increasing popularity of PE internationally, it will be instructive to see how long it takes US legacy airlines to make major moves in the arena, or whether they just abdicate the specialty cabin altogether. Despite the lack of lie-flat seats, and the absence of a latchkey to airport lounges, PE seems to satisfy an increasing number of folks. "They're pleased by what they see out of premium economy," asserts Will Tate, "because of the cost-value relationship."
Perhaps it's the energy US carriers have just made in re-making their business class offerings that's holding them up. "A number of airlines recently have invested a great deal of money into making their business class their primary class of service for the frequent flyer," says Ash. "Having made those investments, I don't see them tearing that up."
Probably not — at least not now. But the fact remains, an increasing number of corporate travel managers are tearing up the business class upgrade lists many employees once presumed to be their privilege. You've got to put them somewhere that offers some degree of comfort. PE just might be the prescription.