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Question in: Aviation & Aerospace

"Premium Economy" sections vs. Business Class

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With the addition of new "PREMIUM ECONOMY" sections, how can companies entice customers to pay the additional cost of Business Class when so many of the features are similar?

Airlines
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airline customer services
Lisa Hendrickson
8 days ago

4 answers

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Although there are simiilarities between Premium Economy and Business Class, there are some key differences.
"A Premium Economy fare is generally 65% less expensive than a Business Class fare. In terms of space and amenities, these two classes are VERY different with Business Class offering up to 50% more legroom, significantly greater recline, more substantial legrests and headrests, and superior food and wine offerings."
The link below provides a handy table of details-
https://www.seatguru.com/charts/premium_economy.php
But to answer your question, perhaps what might entice customers to pay for the business upgrade is to provide certain discounts to the most loyal frequent fliers of a given airline and allow them to accummulate additional perks or air miles.
From an enterprise/business to business perspective, perhaps airlines can give their corporate customers a bulk introductory discount to get their employees to upgrade and then once everyone's used to it. they'll demand that standard from their employer.

Philip Tuet
8 days ago
Agree there is a big difference in the amount of legroom and the seat design; and the food/drink are of a higher level in Business Class. But is there enough of a price - value equation between the two for customer's to pay the high cost difference? On a recent flight to London, Economy Plus was totally full and BusinessClass was a ghost town. I like your ideas on providing some additional perks. - Lisa 7 days ago
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I think to drive more purchases of Premium Economy you have to look at why people might not be buying it:

  1. Cost
  2. Perception of the value (compared to the cost)

Often people purchasing economy are traveling with families, are low- or medium- level employees, or they work for a thrifty employer. All of these are cost conscious consumers. Also, I think international travel vs regional matters. Personally, I am more likely to pay for a bit more leg room for a very long flight and not likely at all to pay extra on a short flight.

Premium Economy is a hard sell because, as you said, the benefits are not that significant compared to economy and much less compared to Business Class. I agree with Philip Tuet that your best bet would be to offer additional incentives like extra points (maybe 1.5X points for Premium vs Economy) for loyalty customers.

I suspect in the long run Premium Economy will not be a profitable product for airlines. They will either need to charge a higher fare and move all the economy seats to a Premium size, or charge a lesser fare and move all the economy seats to the smaller size. Too many product choices are confusing for consumers and have muddled results, in addition to the costs associated with varied seat footprints.

Katie Switzer
7 days ago
Premium Economy may be a hard sell for people on a budget (is it worth the additional cost when traveling on vacation or with a family. But it is not a hard sell for businesses who are trying to save costs, but want to make sure their employees are well rested when traveling to meetings. Agree that adding another class makes it harder for airlines to created focused marketing and stay profitable. - Lisa 7 days ago
Lisa, good points. I have noticed in the last five years a big reduction (at least by my employers) in willingness to pay for business class upgrades. Oil & Gas is the industry that most influences my employers. I have been offered Premium Economy as an alternative, so I am sure you are right that is a driver. I have never had an employer be concerned about my rest however, I often travel late. - Katie 7 days ago
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Agree with the above comments. I feel that Premium Economy is associated with a slight increase in comfort (i.e., additional room, better position on the plane), while Business Class is still associated with a better caliber experience overall. That said, the price differntial is often too significant to justify personal expenditure on Business Class fares -- and many companies that I know of aren't spluring for Business Class anymore. I like the suggestion to offer corporations bulk discounts or extra incentives.

Stephanie Korszen
6 days ago
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i fly a ton and on flights where I cant get upgraded, the airilines using these premium seats for incremental income from economy class also realize that frequent flyers like me will reserve these seats at no additional cost. We and the airlines know that except on very full flights where the premium disappears upon boarding for standbys that frequent flyers can reserve an aisle seat knowing the other seats will likely be empty, giving them the additional room most desire.

For those who want first or business fir sure, they pay for it. beyond the above, only a few actually pay for premium and they are from economy. It's not the business or first class folks paying so that id not a question.

Adam Malofsky, PhD
4 days ago
I agree on domestic flights. But on overseas flights, many businesses are now having employees who used to fly business class switch to Premium Economy class to save on travel costs. I believe by adding this new class it will hurt the airlines ability to sell Business Class seats. - Lisa 3 days ago
International Premium Economy delivers a completely different experience - its much like business class with similar entertainment, better food included, free entertainment in not quite as big or as reclining a seat. It's nothing like Economy. I can see why some firms would use it. As a CEO, I generally had staff fly business or first over 4 hours as the work they did required fresh minds - Adam 3 days ago
Again, I think it's a bit of a game being played to keep bus and first open for purchase overseas and have a free upgrade or purchase option for frequent flyers to placate them if the other upgrades are not available. If folks buy them, great but it's not a big deal to them. - Adam 3 days ago

Have some input?