Continental’s announcement this morning that they will begin charging non-elite members for the seats with the most legroom has raised a number of questions. The company released an internal memo to all employees explaining some of the details behind the program. Here’s what it had to say:
Questions and Answers about CO’s Premium Seat Program
Why not just continue giving the better seats away for free? It has worked for years.
CO is focused on making money, and we aren’t going to be able to do that by doing the same things we have done in the past. There is additional revenue from new products, like extra legroom seats that are already in our coach cabin, that we have not effectively unlocked in the past. It makes no sense to give away the best seats in coach to non-Elites for free. So we are changing that, and will bring in new sources of revenue we’ve not tapped in the past.
Will our customers be willing to pay for extra legroom on the aircraft?
Yes. Certain customers strongly value having more space on the aircraft. On the other hand, some customers don’t value extra space. Customers will pay for the things that they value, and extra legroom is one of those things. Many other airlines like United, Virgin America, Singapore and British Airways have successful programs selling extra legroom.
Which seats on our aircraft are classified as premium seats with extra legroom?
Initially this program is focused on selling seat assignments for exit row seats that have extra legroom. We expect to start selling bulkhead seat assignments in the future. The exact seats that will be available for sale will vary by aircraft type. For example, not every exit row seat has extra legroom, and those seats would not be included in the program.
How much will the premium seats with extra legroom cost?
Pricing will vary based on numerous market characteristics, including length of the flight. We’ll experiment with various prices, and that will give us solid data upon which to base future pricing decisions. For example, extra legroom seats between IAH and EWR might be offered at $59. Certain days like holidays or weekends might get discounted pricing. All check-in applications like continental.com and kiosks will have the prices of seats at check-in.
If the only seats left on the aircraft are premium seats, will we force passengers to pay extra for them?
This is a pretty unlikely scenario, but if it happens, we won’t require a passenger to pay extra to obtain a seat assignment.
Will pass riders have to pay in order to obtain a seat with extra legroom?
No. Pass riders will be given these seats for free when they are available. Charging non-Elite revenue passengers for these seats should increase their availability to pass riders, as there will be customers who don’t value the extra legroom enough to pay for it.
None of the answers are particularly surprising – except for where they expect folks to pay $59 for an exit row from Houston to Newark – but the tone of the email definitely is. Continental’s inclusion of British Airways and Singapore Air in the list of companies that sell extra legroom is also quite interesting considering that those airlines actually have a wholly separate product that they are selling, not just a couple seats on the plane, and their Premium Economy product comes with other benefits as well. And while the bulkhead seats generally offer extra legroom there are also compliance issues with selling those seats. Continental will need to be very careful about that while ensuring that they can meet their obligations for passengers with limited mobility.
Also of note is the comment about bringing in “new sources of revenue” that have not been previously tapped. This leaves the door wide open for the airline to start charging for even more individual benefits than they do today. From the complimentary “meals at mealtime” to carry-on baggage, it is hard to take anything off the table at this point.
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Actually I think BA counts now even without considering WTP-I beleive BA just starting charging extra for premium (exit row) Y seats. SQ no longer has a premium economy product now that they 345s are all business.
$59 for more legroom from IAH to EWR? I’ll pass.
I wonder if CO is considering “aligning” with UA and offer an entire E+ section. It certainly is a major reason that keeps me booking United even when there are other/cheaper alternatives.
I think there are some misunderstanding on upsell seating on some airlines.
Singapore Airlines does not have premium economy – they really are selling the exit rows in economy (only) for an extra fee.
British Airways does have a premium economy cabin, available at substantially higher fares. They also have a seat selection fee to enable people to pre-select some good seats. Some elite/premium passengers are exempt from this fee, and some good seats (eg upper deck exit row) are not available for advance seat selection by those who need to pay for it.
Qantas is another example of an airline with premium economy and also a policy of pay for exit row in economy longhaul.
Air New Zealand doesn’t offer more legroom for a fee, but does allow booking a second seat on longhaul flights for a nominal fee at check-in, subject to availability.
Unlikely scenario to have premium seats left? Riiight. It’s happened on every flight that I’ve flown since the policy has been implemented. The results? Some folks pay extra for the seats, others get them for free, and frequent travelers without status get screwed. Nice going.
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