This story is produced in partnership with PaxEx.Areo - The Business of Passenger Experience
United Airlines remains relatively reserved when it comes to releasing details on its upcoming Premium Plus premium economy product. Virtually no new details have appeared since the initial news announcing the Premium Plus product slipped out in mid-January. Today, however, company President Scott Kirby injected an interesting comment into his presentation at the J.P. Morgan Aviation, Transportation and Industrials Conference. Kirby reiterated that the international premium economy product is expected to take flight at the end of 2018; the slides say “fall” while Kirby said “Q4” was the launch timing. More significantly, however, Kirby indicated that the company is also considering a domestic version of a premium economy offering.
— Seth Miller (@WandrMe) March 13, 2018
Alas, much like the initial Premium Plus announcement there are scant details available here to fill in the gaps.
With the company remaining tight-lipped on this theoretical new offering we are left to imagine what this version of Premium Plus might look like. There are two main directions it could go, each with distinct benefits to the airline. Not surprisingly only one presents real benefits to passengers.
Kill off first class in order to save it
Delivering a true premium product on board the company’s domestic fleet presents both a market segmentation challenge and a real estate challenge. With a 2-2 seating arrangement up front and a 3-3 layout in the back there isn’t much of an option to bring premium economy’s main benefit – more personal space on board – to bear without destroying the domestic first class offering. The good news is that it is ready to die.
Domestic first class stopped being about luxury a long time ago. It is, quite frankly, a premium economy product today. Certainly when matched with various international premium economy products it fits quite nicely. The seat dimensions are roughly the same, though generally the international version offers a bit more pitch and recline adding comfort to the longer travel times.
Combine the comparable space argument with the recent transition by the US3 legacy carriers to aggressively price the domestic first class product – often only incrementally more expensive than economy class – and the opportunity exists to rebrand and rebuild the offering in a way that the pricing and market positioning blends smoothly across markets and price points. For the premium transcon markets a premium product is still viable and could still be sold. Plus there would be less confusion about the branding of those markets. But for the rest of the flights the option to deliver premium economy as a proper replacement for “first class” is very real.
It is also almost certainly not what United will do.
From Economy Plus to Premium Plus
United’s Economy Plus extra legroom product remains a huge source of ancillary revenue for the company. It also sits nicely in a position between the current domestic first class and economy seating options that could be relatively easily converted to a “premium economy” product so long as license is taken with that term. And there is precedent to do so.
With the extra leg room on offer United can claim that Economy+ seating already meets the “extra space” aspect of a premium economy product. No extra width compared to the regular economy seats, of course, but the carrier likely won’t struggle to claim that’s not an issue to contend with here. The other aspect of premium economy – upgraded food & beverage – is also relatively easy to deliver to these few rows on board. The company already does it on its “Coast” transcon flights. Plus there’s the part where Delta Air Lines made a similar decision over a year ago to start selling its “Comfort+” product as a premium economy offering. It is a separate booking cabin now system wide rather than just an ancillary fee to get the extra legroom on board.
This does create a problem in the international markets. When Delta sells both Comfort+ and Premium Select (its “real” premium economy offering) both as premium economy there is real risk to the passenger of getting a substantially different product on board. Only Delta’s direct sales channels address that potential confusion. Even more complex is that on a domestic segment connecting to a Premium Select flight Delta offers the traveler a seat in first class. Because it is comparable to the true premium economy international offering. But if only flying Comfort+ across the ocean the domestic feed is also only a Comfort+ seat.
This offering creates more confusion and delivers a lower quality premium product to passengers. It is also easier to implement and United can claim better segmentation of the market with three “cabins” on board. It is much more likely to be the path chosen. It is low risk but also lack creativity and the potential to really shake up a market that, quite frankly, could use a little shaking.
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