Details Of American’s New Premium Economy

Last night I posted about the rumor of American announcing a premium economy cabin very shortly. Speculation began when American’s CEO, Doug Parker, was quoted a few weeks back as saying that he “saw a lot of opportunity” with such a cabin. Initially I didn’t think it would happen, but I’ve received a lot of information lately suggesting that it’s on the way.

American premium economy details

Well, as expected, American has now announced that they will be introducing premium economy on their longhaul flights. Here are the two websites with the details:

American-Premium-Economy-1

Here’s how they describe the new cabin:

We’re the first U.S. airline to introduce Premium Economy on international routes — raising the bar even higher for global travel. Enjoy spacious seating with extra leg room, wider seats, enhanced dining, personal on-demand entertainment, amenities such as eye shades and more.

Premium economy will be available on American’s international fleet starting in late 2016 with the delivery of the 787-9 aircraft. It will then be phased in on all 777, 787, A330, and A350 aircraft. In other words, the only longhaul aircraft which won’t get the new product is the 767, as presumably they’ll be phased out at some point in the not-too-distant future.

Here are the features American is advertising for premium economy:

American clearly is trying to offer more than just extra space, with amenity kits, enhanced dining, and more. The virtual tour gives a pretty good representation of what premium economy should be like.

American-Premium-Economy-5

There will be foot rests at every seat.

American-Premium-Economy-2

And the amenities look quite nice.

American-Premium-Economy-3

As does the food, which looks very similar to what American serves in domestic first class.

American-Premium-Economy-4

Come to think of it, the entire experience looks very similar to American’s domestic first class. The seats basically look like domestic first class seats with leg rests, the food looks similar, and it seems like the amenities will be slightly better. So I’d say it’s an all around solid product.

In terms of the product itself I’m impressed, if this is what it ends up being like when it’s actually introduced. It’s better than I was expecting from a US airline.

What does this mean for Main Cabin Extra and upgrades?

So far I see nothing which suggests that American will be eliminating Main Cabin Extra while adding these cabins. It could very well be that American sees this as an opportunity to increase their revenue per seat, and that they can come out ahead while having fewer seats. And that may very well be true. American will have five cabins on their 777-300ERs (First Class, Business Class, Premium Economy, Main Cabin Extra, and Economy), so presumably their goal is to be able to squeeze as much revenue as possible out of each passenger.

American-Main-Cabin-Extra
American Main Cabin Extra

Since premium economy isn’t yet for sale (and probably won’t be on sale for a while), we don’t know what this means for upgrades. Yesterday I expressed my biggest concern with this change, which is that I bet upgrades will only be available for one cabin, as they are now.

Unfortunately I think we already know how this will end, in the sense that American will keep the same policy they have now. Per American’s webpage for systemwide upgrades:

If you’re traveling on most Business and Economy Class fares and an upgrade is available at the time of booking, you or anyone you choose will enjoy a confirmed upgrade to the next class of service.

I’d love to be wrong, but I’d bet with near certainty that systemwide upgrades will continue to be valid for an upgrade of one class. In other words, if you paid for economy, you can use it to upgrade to premium economy, and if you pay for premium economy you can use it to upgrade to business class. Keep in mind that the fare difference between economy and premium economy isn’t low.

Presumably American’s primary motivation for introducing premium economy is their joint venture partners, including British Airways and Qantas, so you can expect their pricing to match.

Just to give an example of off-peak travel dates, British Airways is charging ~$935 roundtrip between Los Angeles and London in economy:

British-Airways-Economy

Meanwhile they’re charging ~$2,118 roundtrip between Los Angeles and London in premium economy:

British-Airways-Premium-Economy

Similarly, looking at the pricing for Qantas premium economy between Los Angeles and Brisbane in June (which is an off peak travel period), economy is ~$1,300 roundtrip, while the “premium economy sale” price is ~$3,264 roundtrip.

Qantas-Sale

As you can see, premium economy isn’t priced like extra legroom economy seating, but rather is a substantial upcharge over economy (which is fair enough, since it’s a substantially better product). But the implications of that for upgrades can be extreme.

The potentially positive news here is that you’ll likely be able to redeem miles not only for premium economy on American, but also for premium economy on partner airlines, which wasn’t previously possible.

Bottom line

I’m surprised to see a US carrier introduce a true premium economy product. While Delta has been headed in that direction with their Comfort+ cabin in terms of the amenities and adding an additional fare class for Comfort+, I wasn’t expecting to see a real cabin like this.

On one hand it’s probably good for the average consumer, and I certainly can’t blame American. On their 777-300ERs, American will have five classes of service, so they’ll be able to offer something for every budget.

My fear is that this is terrible news for frequent flyers looking to upgrade. In the coming year, American Executive Platinum members are going from earning eight systemwide upgrades to earning four systemwide upgrades. If those four systemwide upgrades are suddenly only valid from economy to premium economy, or from premium economy to business class, well, that would be quite sad. I’d love to be wrong, but I think the writing is already on the wall for this one.

What do you make of American’s new premium economy product, both in terms of the product itself, and the implications for frequent flyers/upgrades? 

Comments

  1. Hi Lucky,

    Does this mean that we will finally be able to redeem AAdvantage points for Premium Economy travel on partners?

    Best,
    Phize

  2. I can see AA changing award chart again for 2017 international travel increasing mileage requirement for premium cabin

  3. @Phize

    Lucky specifically speculates that you may be able to redeem miles for Premium Econ in the future, especially since OW partners offer that cabin of service.

  4. Old first class is now called business class. Old business class is now called Premium Economy. What will happen to AA so called first class (which is a joke)? Are they going to have planes with first class, business class, premium economy, main cabin extra and cattle class? BTW, I really want to see the logistics of how they will manage the “enhanced” dining experience. How different will than be from business class? Will they serve the same stupid ice cream from business class but you don’t get the chocolate sauce on premium economy? Sorry but US airlines are FA’s are do not have the culture to offer anyone an enhanced experience.

  5. Since AA handed out ExPlat status with that challenge earlier this year, it had to figure they would devalue SWUs at some point.

  6. So Business is the new First, Economy Premium is the new Business, Main Cabin Extra is the new Economy Premium, and the back is still the back.

    Got it.

  7. Welcome to the age of carriers earning a profit and winnowing down that humongous bank of FF miles out there. While it may, currently, still be easy to accrue FF miles, the spending side of things has been getting more and more expensive and at a quicker pace than we’ve seen in previous years. Not to mention shorter cycles between devaluations…sometimes with little to no notice.

    Re: the upgrade SWUs, it may be a way to actually reward their high mileage flyers…they use a SWU to upgrade to business…their status gets them a further upgrade (yes, I know currently that isn’t in the rules/guidelines). That’s the bright side of things (if it happens). Or perhaps they can get “prem. econ” for ‘free’ as an elite and their SWU gets them into Biz, while coach paying non/lower-level elites don’t get that option and can only SWU-grade themselves/friends to prem econ.

    @ben: do int’l carriers have a SWU equivalent? How do theirs work?

  8. As a MSP based traveller, I certainly hope this forces Delta to make the leap to international P.E. They’ve left the door open to that idea (in the sense that they didn’t include int’l in the recent C+ changes), and I’d say that in some ways, the adjustments to domestic C+ (particularly the fare class and the addition of hanging dividers) position Delta to create P.E. for longhaul.

  9. I find the true premium economy product to be an affordable and comfortable option for long-haul flight. I did BA WT+ ORD-LHR-NRT and at 6’1″ enjoyed plenty of leg and shoulder room for the nearly 20 hours in the air. I see this as a way for AA not only to become more on par with the hard products offered by their Oneworld partners, but also as an improvement to markets such as S. America direct from the U.S.

  10. On AA’s twitter account, they responded to complaints about SWU’s and said that until PE is assigned a fare class, SWUs are still good from E to Business. Sounds like our fears of the SWUs forcing us to buy PE to get upgraded to Business will be valid. Have one more flight this year to get to EXP, then booking out my flights with SWUs so they can’t block me out of business on a coach ticket.

  11. This is great news. True PE for long haul is actually pretty good and something that is affordable. There is no way the US airlines cannot have it when all their major European and Asian partners and competitors offer it. And yes, eventually upgrades will be from PE to Business. What will be interesting to see is what the Gulf airlines do.

  12. $100 says Lucky won’t review this cabin because it’s not biz class or higher.

    Any takers on this action?

  13. When Air Canada introduced premium economy, Aeroplan mileage redemption became possible on AC metal only for premium economy, and not on partner airlines. It is not possible to redeem Aeroplan miles for premium economy on Lufthansa, for example.

  14. Though, as a long-suffering emerald member of BA’s executive club, this limitation to one class upgrades simply puts AA in line with each and every one of its oneworld partners that offer premium economy. I don’t think there are real grounds for complaint here.

  15. Great news! I don’t know why it has taken so long for a US legacy carrier to do this. I love premium economy as I think it offers value at a price people can afford. Though based on your examples that last sentence may not seem true. My favorite premium economy is on EVA – it used to be called Evergreen Deluxe, but now they are calling it Elite Class. It is, bar none, the best way to get to Asia if you can’t wrangle a seat a the pointy end of the plane (and don’t want to spend a fortune). Unlike BA and Qantas, EVA has always priced their product reasonably. A random search for dates in February came up with these prices: JFK -TPE in economy $1280 in Elite Class $1586. Even Cathay Pacific’s pricing seems to me a lot more real than the examples you give: JFK-HKG $845 in coach $1987 in premium economy. You probably are right in thinking AA will charge as much as they can for these seats, but I just wanted to point out that successful money making airlines like EVA are able to offer a competitive product for a reasonable price. If it starts to cost in the $2000-$3000 range it seems to me to stop being worth it. Hell you can often nab a business class seat for that! Still it is a good option to have and I am glad AA is leading the way. If a little late 😉

  16. As was said above, this basically has the effect of being about a 20-year rebranding process. Companies would no longer pay for first class internationally when business class was available (which looked pretty darn close to what American’s new PE seat looks like in the mid 90s. What to do? Slowly get rid of first class, make business class look and feel like international first class (and charge accordingly), create a new premium economy that I’m sure a lot of companies will now mandate employees travel in (which is basically 90s business class), coach remains crap–I mean coach.

  17. From AA Twitter:

    American Airlines ‏@AmericanAir 57m57 minutes ago

    @Aero0729 Yes, at this time. Until Premium economy is assigned a fare class it’s too soon to say what the upgrade policies will be.
    0 retweets 0 likes

  18. @Mark – The PE pricing you note has more to do with the region. I find PE on European routes to be much more expensive than to Asia (relative to the cost of Economy and the overall distance you are flying). This has more to do with the economies of the respective regions. For example, PE NYC-LHR on Virgin is generally around $1,500 but PE NYC-DEL is generally around $1,900 even though the LHR-DEL flight is longer!

  19. Having recently flown premium economy on Qantas, I can tell you this is NOT the “new” business class, or anything close to what business class was like.
    While it’s better than economy, it’s a far cry from a lie flat business class seat, with room to set up a laptop and get some work done. PE seats are quite narrow, and really not that comfortable. If you think spending 2x as economy is worth it, you’ll be disappointed.

    If they only allow upgrades to J from PE, I will take my business elsewhere (maybe to United). Or just shop for the cheapest business class fare and take that. I’m tired of jumping through hoops to be loyal to AA, and this may be the last straw. In a way, it feels really good to be potentially be free agent.

  20. I think you get a bit of good and a bit of bad here….potentially. Sure, the systemwide upgrades might become even weaker. But if I’m paying cash for my own travel, Premium Economy is not a bad value. Or for companies paying for premium economy as a compromise who otherwise wouldn’t pay for Business, I’d take it.

  21. once AA installs PremY on all aircraft, it wouldn’t surprise me if they put fare restrictions on SWUs. SWUs for Business class upgrades only valid for higher Y fares. While lower Y fare (discounted/deeply discounted) would only let you use SWUs for PremY.

    Overall, really curious how all this will play out.

  22. Yes, this has potential bad news for FF.s But lets be honest, this will probably be worse for economy passengers, since they’ll probably squeeze the space in economy even further to fit those seats in.

  23. Lucky,

    I hope you and TPG are banking the money the blog is generating. You should invest it wisely because what these changes mean, 5 years from now, is that booking a flight and playing the miles game will be as interesting as booking a Megabus ticket. I don’t see a lot of blogs out there writing about Megabus v. Boltbus.

    The reality is they are cannibalizing the game and the hobby. Today I got an e-mail in my inbox…. $170 all in JFK-CPH one way on Norwegian. Oh and I do not even need to book a return when I buy the outbound. How much more do you think I will pay to fly OW?

    Wake up guys!

    Lifetime AA Plat, 10 year EXP, lifetime SPG Gold.

  24. For revenue ticket buying, I’m excited to see the premium economy option. I’m 6’2″ and economy is torture. Business class is increasingly unaffordable, as the lie-flat seats are priced at quite a premium. While “main cabin extra” has been tolerable for long-haul, I’d pay more for a true premium economy seat, more akin to CX or BA (MCE on a 787 is TIGHT).

    As for the implication for SWUs, I think this is another example of reversion to the mean in terms of the AAdvantage program. They’ve had far and away the most generous upgrade policy for elites with the 8 SWUs that can take you from an $800 rt excursion fare US-HK to the best business class seat out there on a 16-hr flight. For the commenter considering UA, consider that their upgrades already require buying more expensive fare classes that don’t even come with the benefit of better seats if the upgrade doesn’t clear.

    Obviously this is bad news for those of us who’ve taken advantage of the current swu system, but can’t say I’m that surprised.

  25. I have to say that I am impressed.
    Not only is the seat stylish, and comfortabld, but the food looks excellent, and those headsets looks fairly good.
    Despite that, they do look a little tight on the legroom side, although it may just be the angle.

    I know, I know, nothing as bad good old coach.

    However, we’ll have to see what it is like in practice.

    Does this mean a trip report?
    It looks fairly nice to me — lots better than Lufthansa PE.

  26. Well, with most programs, you can’t use miles/upgrade vouchers on long haul with the cheapest fares, majority actually require the fully flex fare, so having to purchase PE to upgrade to business is just a move in the same direction.

  27. Oh yes! The food looks good in the marketing picture. Wait until the real food pictures start making their way in social media.

  28. @Michael,

    Obviously, people are being somewhat facetious, but this DOES seem like what business class was like in the 90s and early aughts, before the airlines started installing lie flat seats. In those days, the seats would recline probably about 140-160 degrees, had in-seat entertainment, the old EmPower outlets. Maybe the seats were a little wider and more cushioned, but the difference is not that that significant.

    Comparing it to even a 10 year old business class product, though, is inappropriate.

  29. So first they cut the number of SWU to 4, and they give you more EQMs to re-qualify next year easily to EXP BUT in 2017 after you put so much effort to re-qualify, you will only upgrade to Premium Econony so in 2017 they will have a clean group of EXP who have paid premium fares. TERRIBLE.

  30. Well, boo hoo to Lucky and his lot~ you have had it too good for too long with SWUs from Y to J. This roadblock will indeed be inconvenient! However, welcome to the real world! This is what comes of AA and QF CEOs having deep and meaningful chats.
    From the pics supplied I’m thinking the new PE service looks awfully similar to Cathay Pacific’s, but not quite as good as Qantas. If AA manages to inject some taste into their food offerings (unlikely) it could compare to QF. Time will tell.

  31. Yep. All of this is why I am leaving AA, with my 10 years of Exec Plat, for Delta in 2017. Would have done it in 2016 but I had too many Winter trips already ticketed when the bad news started raining down.
    I was with America West (as a Platinum) when Doug Parker came on board, got boosted to US Air when he went there (Platinum) and soon left for American. Things will only get worse under his leadership. He is a nasty dude.
    Have a serious chat with any FA who is willing to talk and they will give you the horrible scoop from their end. This guy is a disaster to airline staff and frequent flyers. Like many, including Lucky, I have been proud of my American status and the only company who didn’t go BK. That is all gone now.
    If only they would have bought Alaska instead of America’s worst legacy airline US Air.

  32. @truthintravel misrepresents the Norwegian Air offering JFK-CPH. Having done that exact route earlier this year, I must point out that the low fare quoted excludes checked baggage, seat allocation, meals, headphones, blanket, etc, It is truly a LCC! However the Premium deal offered is much better; better than some true Premium Economy products, but is 3-4 times dearer than the bare bones Saver option.
    Biggest benefit is that it is a non-stop flight, and newish Dreamliners.

  33. So a lot of the commentary seems to be that this was inevitable because QF, CX, SQ, LH, AF and other airlines have similar products. Are any of those airlines doing well financially? It doesn’t seem like a great batch to follow from a business perspective.

  34. How about if domestic upgrade rules apply to international PE upgrades – like free for EXP 96 hours out, and Plat and Gold add 500-upgrade segments.
    Then SWUs (EXP only anyway) go to J.

    Viewfromthewing indicated (I believe) that Suzanne Rubin indicated that AA was going to do some things with upgrades to counter copying DL and UA on RDM earning.

  35. @Randy
    Another blog has reported that the AA configuration includes only 3 rows (21 seats) in PE. That will leave 4 SWUs per EP chasing max of 21 PE seats, while currently we have 8 SWUs per EP chasing max of 44 to 52 J seats. The ratio of available seats to issued SWUs will actually get worse. Since the US Air group was converted to EP and received SWUs it has become very rare for an SWU to clear. Better to have 4 SWUs with some chance of clearing, than 8 useless SWUs.

  36. A little bit of wishful thinking – AA creates a new Super Upgrade, issued at the 150K level that upgrades from Y to J or from PE to F. As long as I’m being unrealistic, why not clear them @ booking so long as 2 seats will remain available for sale after clearing the Super Upgrade.

  37. So we hear all the grumblings about leaving AA. One question: WHERE ARE YOU GOING TO GO?. As you sail over to DL and UA, the lube trucks are pulling into their HQ’s to meet you all…and these trucks are full!!

  38. QF allow upgrades from Y to J, but is tough to score one as PE and status gets you priority. Also other factors include fare paid and the points required is much higher from Y to J than PE to J. I think AA will follow the QF route.
    Also heard AA are pouring Penfolds Grange in F on their new Syd/Lax route, wow, they are really trying to make a statement.

  39. This product looks terrible at that price point. Maybe I would pay an extra $200 rt for this but probably I would just stick to extra. Could care less about food or headphones, literally worth zero in my book.

  40. @dean LH has a so-called SWU for HON circle only. AC has eUps, equivalent to SWU but there is no CPU for AC elites.

  41. The potential upside is that now, to fill its F and J cabins, AA will have to actually SELL tickets. That potentially means:

    1. Lower J price points to increase volumes
    2. More investment into hard and soft product

    Not all that bad!

  42. I suppose I can understand how some people find it worth the price who aren’t willing to spend significantly more for business class but personally I will never understand the value of premium economy with how much more expensive it is over economy. Even for a 15 hour flight, unless I’m getting a flat bed I would never spend twice as much or even $1,000 more for a slightly more comfortable seat. I’d rather deal with the inconvenience of regular economy and splurge on hotels during a vacation.
    When it comes to work trips I can fly business class internationally so I don’t have to worry about the premium economy issue either.
    In any case I just don’t see how it’s worth the incremental difference they charge for slightly more comfort when it’s still not an actual lay flat seat.

  43. @NP I totally agree with you. I’m willing to spend about $100 each way on an extra leg room seat for flights 6+ hours, but not much more than that. I’m 6’5″ and just did a 16 hour flight in a Y middle seat. It really wasn’t that bad. If I can get J with miles or on a big discount, great. Otherwise, Y is just fine.

  44. I’ve been saving and slowly using credit cards to build up enough miles to fly my girl business class (I’m also a fearful flyer so hoping bigger open seats will make it easier) to London, hopefully with this I can take her there a little sooner with fewer miles.

  45. The new PE seats have got to come from somewhere – you can’t build an extension on an aircraft – so will they come out of economy or main cabin extra capacity (assuming they wouldn’t reduce first / business seating)?

    It has been a while since I used PE (which would have been on BA) but remember it being apalling. Sure there was a foot rest and maybe you got metal cutlery but I agree with others above that the value added was nowhere near worth the extra cost paid. Based on my experience, I would never ever pay to book PE.

  46. I fly from the West coast to LHR quite regularly and almost anyways choose v Premium Economy on BA and find it well worth it. The prices quoted here aren’t usual from my experience. What I’ve usually seen is about 1500 for coach, about 2200 for premium economy, and a MASSIVE jump to 5000 or more for business.

    At these prices I think it’s a good value. The seat is wider, there’s more legroom and the IFE screens are better. Of course if you’re a small person it may not matter, but I’m 6′ and broad shouldered and I simply refuse to fly coach more than 6 hours.

    One caveat — for BA — you must get the new premium economy. The old seats are pretty meh while the new are quite nice. The way to insure this out of LAX and SFO is to get in an A380 flight.

  47. Doug Parker has been nothing but bad news for American’s frequent flyers, I hope he gets fired soon before he chases us all away. I have been an EP with American for almost 10 years. I make 2 million next year but when I do I am seriously thinking of going back to United.

  48. I am exact same as Ikaika, EP for 10 years, hitting 2,000,000 this month and I’m heading to Delta or Alaska, or both!, come January 1st. Watched Doug Parker cripple American West, then US Air (biggest joke legacy airline in the sky) and now American.

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