A premium economy ruse?

Airlines are already starting to charge for ancillaries and premium economy may be a way to push that pedal harder, ie, charge for everything in economy that travellers might as well pay a little more to fly premium economy.

Premium economy is seeing a second wave of sorts, with Singapore Airlines (SIA) being the latest to introduce the four-cabin configuration, which it had some time back, but later pulled out (see our guide to premium economy class on page 18).

Airlines are saying there is now a market for it in Asia, because for one, not all corporate travellers are equal – the market has become more segmentised – and secondly, they are seeing the emergence of more sophisticated leisure travellers in the region who do not mind paying more for extra comfort.

I do not think premium economy is ever a threat to business class. This is nonsense. If I ever get the same bed, F&B and plush service that I’m currently enjoying while writing this piece (on SQ’s business class from Zurich to Singapore) in premium economy class, then that’s the end of the business class. So forget the debate about premium economy cannibalising business class – airlines are not that stupid.

What I fear is that it will affect the way air fares in the cattle class are sold. Airlines are already starting to charge for ancillaries and premium economy may be a way to push that pedal harder, ie, charge for everything in economy class that travellers might as well pay a little more to fly premium economy.

Thus, premium economy ends up being just a little better than the economy class we are used to today, while the economy class goes on a fee-based structure (and pity the low-cost traveller who takes a seat in the back row, pays a fee to watch the latest movie, pays for a meal, pays to go to the loo). So four products in one aircraft – in the hotel industry parlance, it’s the five-star, four-star, economy and no-frills – which means the top end no longer has to subsidise the back end as much as before.

If I see it from the airlines’ perspective, it is a smart move. As a consumer, it’s sad. I still fly in economy mostly, and only on SIA if I can help it, because the crew still makes me feel human even if I’m at the back of the house. And now I’m being compelled to pay more for the extra comfort which I’ve actually largely been enjoying in economy. In other words, premium economy is not a threat to business class, but it may end up a threat to those of us who travel economy class.

I hope the airlines will prove me wrong. For premium economy to take off, there has to be a real gap between economy and premium economy, without the latter inching too close to business class, and effective pricing. That requires airline innovation – not just one extra prawn, two extra foot of legroom, three extra miles, four extra peanuts…