The long-haul market for US carriers has entered the next stage in its evolution. Even as the major carriers prepare to offer more fares and options for customers who want only the cheapest seat possible there is a glimmer of hope for those who want – and are willing to pay for – more. American Airlines announced that it will offer a proper Premium Economy cabin on its 787-9 aircraft starting with their delivery in 2016. The product will expand to the carrier’s 777, 787-8, A330 and A350 aircraft over the following three years.
American’s Premium Economy will offer upgraded dining – the company’s photo shows a small extra appetizer and service on real plates rather than foil/plastic – and other benefits like noise-cancelling headphones and an amenity kit. Every seat will have power and USB ports and, most importantly, more space. Only the bulkhead row will have a leg rest; the others get a drop-down foot rest. On the 787 the cabin will be a 2-3-2 layout compared to the 3-3-3 in economy, including Main Cabin Select seats. Presumable the same layout will fly on the A330s while the 777s and A350s will be 2-4-2, comparable to other carriers.
American will continue to offer its Main Cabin Extra product with additional legroom (and, on some 777s additional seat width), meaning that an aircraft could have as many as five different seating options on board. Between the large number of products and the slow conversion of the existing fleet there will definitely be challenges for American to work through as it begins selling the premium economy cabin. No doubt the carrier believes those complexities are offset by the increased revenue many premium economy cabins demand for the incremental decrease in seats versus a traditional economy class.
It also appears that American is going with a product which appears to be much more a stock solution from B/E Aerospace than something highly customized for the airline. Given the significant challenges it saw with the very customized business seat – so much that it killed the contract – this seems a prudent choice. That said the product does look mightily boring. Nary a hint of color anywhere. No special nooks and crannies for storage at the seat and it is unclear if the IFE screen will tilt to keep a decent viewing angle when other passengers recline, a feature missing on the company’s economy 777-300ER seats. Yes, more space is the most important factor. But that doesn’t mean it cannot have just a little bit of flair in the design.
We need to know!
Also still unclear are many details like upgrade paths. For other carriers which have implemented a premium economy cabin there has been variability in what economy fares qualify for upgrades to business class or only to premium economy or how upgrade instruments function. American has some precedence in how it processes upgrades for travelers in the World Traveller Plus premium economy product on its partner British Airways but there are still plenty of specifics which remain open questions today.
Another interesting question is where the space for the premium economy seats will be coming from. As more and more long haul aircraft are removing the first class cabin it is clear that flat beds in business are the new first class. Economy is getting better entertainment but not much else. And the “something better than the worst option on the plane” is, once again, a recliner option with extra space and a few other amenities. Just like business class was 20ish years ago before the flat bed revolution took hold. So, does it begin to cannibalize business class rather than economy class?
Looking across the market the real question is “Who’s next?” Delta has been positioning for such a move with its Comfort Plus product and I have previously suggested that I expect an announcement by the time the new domestic C+ seats are actually in operation, but that’s not for a few months yet. Similar to American, Delta has an opportunity to introduce the new product on a new aircraft type; it is scheduled to take deliveries of the A350 in Q2 2017 which means a mid-2016 announcement is not out of the realm of reasonable. For United Airlines the next new type is the 777-300ERs set to be delivered in 2016. Those will feature a new business class product but no premium economy per several prior reports. After than United will also be taking the A350-1000 in 2018. Waiting an extra year longer may put it in a disadvantageous position. But if the company really is planning to retrofit its other 777s with the new business class seat as it has suggested that could be an opportunity to also add premium economy to the layout.
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The biggest issue is indeed upgrades. If they go the BA way and only allow PE-to-J type of upgrade (for all 3 carriers), that’ll really suck.
That issue is number 3 or 4 for me on the list. I know some people are obsessed with the upgrades but that’s just not me. I’m willing to pay a fair price for a decent product. AA’s version seems to be “phoning it in” a bit on that front.
I think it’s actually an admission that F/J sales are not as strong as hoped. It’s always fun to talk about “premium cabin integrity” but lots of AA longhaul J cabins are mostly empty till T-24 and suddenly fill up with non-revs and upgrades.
The 77W is a very premium heavy plane and is deployed on routes like GRU where AA must be taking a massive beating given the state of the Brazilian economy.
The main concern though is at what cost to regular Economy and Main Cabin Extra will this come. I guess AA has already gone 10-across in Y on the 77W and will be converting all 772s to 10-across Y even in MCE so not sure how much more they can squeeze in.
If you look at the AC 77W HD you can see that airlines are realizing there are few routes where there’s genuinely that much paid premium cabin demand especially when you calculate how much real estate premium cabins take up.
For example, on the 77W, assume 50% of the real estate is premium cabin (J/F). That’s 60 seats vs. 250 in Y (incl. MCE). Assume that LF in paid Y is 85% and in J/F its 65%. Now you need 5.5x revenue even excluding all the things like you’re awarding far more miles in J/F (and many Y pax will never care about miles and you’ll get lots of breakage there), add the costs of priority lane real estate at the airport/check-in, the costs of lounges, the costs of better catering, etc. and then you realize that there just aren’t that many routes where this can work.
I think PE is going to mean compression of F/J cabins. If it’s reducing Y seat count on all but a few select routes (e.g. LHR, NRT/HND, HKG), I think AA will be making a massive mistake.
If AA has to reconfigure the main cabin to relocate MCE, they could just take out the 1st non exit economy row to make room for MCE the 1st few rows of the main cabin. They did that same tactic when they debuted MCE on the: 737, 757, 767 and MD80. Since the coach seats on the 777 and A330 currently have 31-32″, they could also push the 32″ seats to 31″ to make room in the 1st few rows for MCE without reducing seats in the cabin itself.
Delta has new domestic comfort plus seats coming out?
Delta will be selling its extra legroom seats as a separate product domestically for flights starting in May 2016. I believe this is a precursor to a similar announcement from for the international fleet in the very near future.
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