Will American Introduce Premium Economy?

Many non-US airlines offer a premium economy product, which has become considerably more popular over the years. As economy seats keep getting tighter and business class seats keep getting more spacious, there’s room for some middle ground between the two cabins.

Cathay-Pacific-777-Business-Class-10
Cathay Pacific’s Premium Economy

Premium economy typically consists of wider seats with more legroom, and in many cases extra amenities and better service.

Interestingly no US airline has adopted a true premium economy product, though. Instead US airlines largely have “extra legroom” seating, whereby you can pay extra for seats with additional legroom which are otherwise identical (except for Delta, which is slowly differentiating their extra legroom seating).

American-Main-Cabin-Extra
American’s Main Cabin Extra

Could American introduce premium economy?

AusBT has a post with a quote from American’s CEO, Doug Parker, about the possibility of them adding a premium economy cabin:

“We’re looking at it,” American Airlines CEO Doug Parker told Australian Business Traveller earlier this month, after a pause to carefully choose his words. “We think there’s a lot of opportunity there.”

I wouldn’t read too much into the quote, personally. It seems to be said in the same way airline executives respond to just about any question with no 100% certain answer, of them saying that they’re looking into it.

Why I doubt US airlines will adopt premium economy

I highly doubt we’ll see American introduce premium economy. But let’s look at the pros and cons.

From their perspective, why should American introduce premium economy?

  • American has joint ventures with British Airways, Japan Airlines, and Qantas, all of which offer premium economy products. In order to streamline product offerings as much as possible, it could certainly make sense to offer the cabin as well, especially due to the revenue sharing arrangements in place.
  • Premium economy has big revenue potential, as it can cost considerably more than economy.
  • It could be a further way to limit upgrade potential, as they could have a policy whereby you can only upgrade one class of service, meaning you’d have to book premium economy in order to upgrade to business class, for example.

Why shouldn’t American introduce premium economy?

  • It would mean the death of Main Cabin Extra, as they can’t feasibly have both premium economy and extra legroom seating. American is earning some revenue from Main Cabin Extra and is also appeasing elites by offering it.
  • Delta and United don’t offer a premium economy product. If Delta isn’t doing something, surely American wouldn’t take a risk and do it either. Delta doesn’t seem like they’re at all considering getting rid of it, as they keep investing in the product.
  • It would be tough for American to offer the product consistently. As it stands, American has Main Cabin Extra throughout most of their fleet, both domestic and international. Premium economy would presumably only be offered throughout their longhaul fleet, so it would be tough to maintain product consistency (not that this has been a huge focus for American).

Qatar Airways’ CEO chimes in

Perhaps the best quote about premium economy, though, comes from Qatar Airways’ CEO:

“We won’t roll out premium economy” affirms CEO Akbar Al Baker in an interview with Forbes.

“I don’t think there is any room for premium economy in our region” Al Baker says, adding that in the airline’s current economy cabin “we give you a premium economy seat with an economy class price.”

The first and second quote from Al Baker are fine. The third quote is hilarious, though you’d expect no less from him. It’s especially funny that he makes this claim at the same time that Qatar Airways is transitioning to 10-across seating on the 777.

Qatar-Airways-777
Qatar Airways 777

Bottom line

I certainly could be wrong, though I highly doubt we’ll see any of the “big three” US carriers introduce a true premium economy product. Much like Delta I suspect they’ll keep improving their extra legroom seating, but there are just too many barriers for a true premium economy product.

And that’s good news, because the implications of premium economy wouldn’t be good for those of us looking to upgrade, in my opinion.

What do you think — is there any chance American will introduce a true premium economy product?

Comments

  1. Having flown American and Air Canada a lot in the past two years, here are my thoughts:

    I have flown Air Canada TATL in Premium Economy and in Business. There is a huge added value to flying PE over E, and while not as luxurious as J-class, definitely has its perks, and its value in the industry.

    Transatlantic AC PE offers better service than North American Business on AA. I find it hard for AA to introduce an PE class when the J class is so lacking, compared to other carriers. PE TATL on AC is almost the same as North American J for AC, in terms of food, seat, comfort and perks (except lounge access… add 25$ for that!), and is miles ahead of AA Domestic First or North American Business class.

    How American could introduce a PE class that is better than E and yet below J to tap into that market is beyond me at this point. There is certainly a benefit to having PE, not sure if the corporate minding of AA would ever allow or acknowledge it.
    (You aren’t even given J-Class lounge access in US on AA unless connecting from business to business, i.e. Canada to LATAM or non-US Caribbean, or flying overseas!)
    Unless Delta introduces PE first…

  2. The thing is that American’s long-haul Economy is so dismal nowadays there may well be a market for PE. With seat widths reduced to 17″ (even in Main Cabin Extra) and seat pitches down to 30″ – 31″ it wouldn’t take much for American to be able to create a PE product for which they charge a premium but that doesn’t really cost them much at all – make 3 rows 8 across seating , give them 6″-7″ more legroom and you have a PE cabin.

    I disagree with JohnnieYUL regarding the state of J. First of all the gulf between the new AA Business Class and regular Economy Class is so vast that it would be easy to fit a PE product in between. Secondly, in terms of hard product, AA’s new Business Class is vastly superior to most cabins I’ve seen heading across the Atlantic so I don’t understand the argument about AA’s J class “lacking”. Sure, the FAs can be atrocious but the seat is great.

    As I posted elsewhere, Doug Parker told a news conference in Auckland that American would offer improvements to Economy Class…well, PE could be what he was referencing. I don’t think it’s as unlikely as you think Lucky…although, as an EXP, I really hope you’re right.

  3. There’s been an ongoing rumor, actually, that when Delta’s A350s arrive in 2017, they will feature a new J product as well as a real PEY.

  4. With AA adding flights to New Zealand and Australia, and generally increasing TPAC flights considerably in the past few years, adding PE could definitely put them above DL and UA for these long flights where Y is essentially a torture chamber with 17.2″ wide seats and 30″ pitch. Europe in Y, whatever. But there’s a reason that Qantas, Air New Zealand, Virgin Australia, and a vast majority of the major TPAC carriers offer a PE product. Not having one puts AA and other US carriers at a distinct disadvantage.

  5. Virgin Atlantic offers both real premium economy and an extra legroom section (not just exit rows) in economy so there’s no reason AA would have to get rid of Main Cabin Extra if they added Premium Economy.

  6. I won’t pay for MCE because it offers nothing of value. There’s no extra width or recline at all. You don’t get a leg rest or foot rest. It does nothing to promote sleep or comfort TPAC.

    But Y+ would be worth it. CX is charging $400 extra rt ex Asia and JL is charging $700 extra ex JP. I’d pay that for certain. Both charge $1000 or more extra for the same service ex US on the same flights so OW partners see the US market for Y+ as an extra fat sheep to be fleeced.

    So why should AA be leaving billions on the table instead of flying Y+? So far, it’s because AA is incapable of innovating anything DL isn’t doing. But AF seems to be eating DL’s money TATL with their product so maybe there’s hope. DL’s Y+ is still the only US3 product that offers any hard product improvement with its 5cm extra recline.

    Here’s what you’d get on JL or CX: 18.5 inches, 15cm extra leg room, foot rest, leg rest, head cushion or pillow, 20-25 cm recline, and a power outlet. It’s not a lot but the comfort is worth paying for because propale over 35 will actually be able to sleep and relax without pain.

    Plus think of all the revenue when EXPs have to pay to upgrade and eVIPs only go Y->Y+, Y+->J, J->F! It’s a big win all around.

  7. Also, when abandoning F on all but a few jets, Y+ restores the old status quo with J the new F and Y+ the new J.

  8. There is a huge opportunity there for Premium Y. And yes, you are right: by introducing a Y+ product, AA could limit upgrades from Y to J, which are a big drag on AA revenues I am sure. That would also align AA with BA – its biggest partner – and would also mean further improvements to a premium product that nowadays sees little investments because, well, nobody buys it and everyone uses it through upgrades.

    I would not be surprised at all to see this happen.

  9. AA will probably go the way of their BFF, Qantas, and introduce PE at some point. They are trying to be competitive with Qantas on the T-Pac routes although they still have along way to go to get to Qantas’ high levels of service.
    Worrying for Lucky though, they would grasp the opportunity to restrict upgrades to just the next class (ie Y to PE, not J) as Qantas have always done. So if you enter the J upgrade lottery, you need to buy a PE fare.

  10. The possibility of the U.S. domestic airlines transitioning to a proper Premium Economy product reminds me of a trend in the automotive industry observed in recent years. Let’s use Ford (the car company…not the boyfriend) as a perfect example: years ago they introduce the Explorer SUV which was a huge sales success, so Ford expands their SUV lineup with bigger offerings: Expedition and Excursion. That’s Medium, Large, and Extra-Large. Meanwhile with every new redesign their products get just a little bit bigger and a little more expensive than the outgoing model until the Explorer is as big as the Expedition used to be, and customers can’t justify the minor difference between the Expedition and the Excursion, and the Excursion goes away. Now Ford is left with Large and Extra-Large, with a gap in the Medium market once occupied by the Explorer. So Ford introduces the Escape and we’re back where we began with Medium, Large, and Extra-Large.

    Something very similar appears to be happening in the airline industry. Years ago we had Coach and First, which consisted of wider seats with more legroom, a bit more recline, and better service. As years progressed air carriers continually improved and refined the First Class hard and soft product until there was a sizable rift between Coach and First, thus Business Class was born. Initially most biz cabins bore a striking resemblance to old First products: wider seats with more legroom, a bit more recline, and better service. Over the years the biz class product was continually improved until it was becoming a challenge to distinguish it from their First Class product, and we find ourselves back in the present where most First products have been eliminated and there is a huge rift between Coach and Business Class. Now there are rumors of Premium Economy coming to the domestics, which will consist of wider seats with more legroom, a bit more recline, and better service.

    It’s a brilliant marketing ploy. Let’s theorize for a moment that the airlines come up with a new class of service that slots below economy – we’ll call it Steerage Class. Passengers flying Steerage ride on hay bales or are stuffed into lockers and stacked in the cargo hold, or something along those lines. Now fast forward 15-20 years. The aircraft cabins look exactly as they do today but the classes are called Steerage (what we consider Coach), Coach (what we’d consider Premium Economy), and Premium (what we consider Business), and Business has gone away. Same guts, different names. But in the mean time the airlines get to brag about how much they have improved their cabins and service because they care so much for their customers. But in reality nothing’s changed…at least in the long run.

  11. The fact is that premium economy is the most profitable cabin on most airlines that offer it. Simple arithmetic, since it’s often twice the cost of economy but certainly doesn’t use up that much more space. By contrast, those aisle-access lie-flat J seats do use up quite a bit of real estate. I can definitely see AA heading that way. And with delta introducing a special fare class and curtains for eco+ they seem headed that way, too.

  12. I would love AA adding a great PE cabin! I originally started flying CX and QF PE so I would earn full (more than full, actually) EQM/EQP with AA for my 3-4 times yearly runs to Australia. After experiencing it, I just can’t fathom doing longhauls in standard economy ever again. While I like the new prospect of being able to buy the cheapest AA tickets to Australia and using my SWUs, I would be severely disappointed if they didn’t clear. I would be in favor of having to buy PE fares to clear SWUs, because I would know that even if it doesn’t clear I’ll still be happy and comfortable in PE. Plus, it seems like it could be more favorable to EXPs clearing SWUs to Australia than the current climate, and potentially give us somewhat of a better chance at op-ups since PE is a smaller cabin to sell out.

  13. On International flights there is a clear need for seats wider than Y, but at a price point closer to Y than to J. I can not be loyal to an airline that gives me the choice of being packed in like sardines or paying the premium required by flat bed seats, and nothing in between. The system Europeaon airlines utilize for domestic J where J is created by leaving the middle seat empty could be utilized as an interim PE if the airline is not ready to commit to a major cabin reconfiguration.

  14. Would be nice to have another PE offering on TATL routes.

    I regularly check prices between LHR – LAX/SFO and J tickets are usually around £3500 ($5250) on BA, Virgin Atlantic and AA with PE at £1200.That is a considerable difference. When I can get from LHR to most place in Asia in J for £2000 which includes a chauffeur to and from the airport on either Etihad or Emirates, it makes the TATL routes look a total rip off by comparison.

    PE is a good product at the right price point for paid TATL travel.

  15. As a regular to DFW with Qantas, I am always happy too pay extra for the PE. 15 hours from Sydney to DFW in economy even in a A380 is gruelling. If AA offered this on their service to Sydney then definitely would try it.

  16. Just go with Delta. Better service and more comfortable seating (even in first) with AA is a joke. The only reason to use AA is their now non-existent FF program.

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