The Decline Of First Class Vs The Rise Of Premium Economy

As first class declines around the world, we’re simultaneously seeing premium economy expanding to fill the gap. We investigate how the two are related, and whether this is good news for travelers.

First class
First class is out, premium economy is in. Photo: Emirates

As two more airlines drop first class from their aircraft, it seems there is no stopping the juggernaut of change at the pointy end of the plane. However, there’s something interesting going on a bit further back too, as many airlines are adding more premium economy seats to the mix.

What’s going on, and does it make any sense? And is the rise of PE and the loss of first a good thing for passengers, or not?

First class is out

While I previously talked at length about how first class is disappearing from airlines, the trend seems to be spreading even further and faster than we first thought. If anywhere in the world was going to keep first class a bit longer, we would have picked it to be Asia. But now it seems even the Asian carriers are failing to see the benefit of an elite cabin.

Korean Air first class
Korean Air’s are dropping first class. Photo: TravelingOtter via Flickr

Both Korean Air and Asiana have recently announced they are eliminating first from a number of their routes. From June, Korean Air will scrap their first class cabin from 27 of their international routes. Asiana will stop offering first on their A380s from September, instead planning to sell the same seats at a huge markdown as what they’re calling ‘business suites’.

Heard of business suites somewhere before? That’d be on Malaysia Airlines, who last year rebranded their first class offering as an uprated business class instead, perhaps in response to legislation preventing government officials from travelling in first.

Business Suite Malaysian Airlines A350
Malaysian Airlines have recently rebranded their first suites as ‘premium business’. Photo: Malaysian Airlines

As we already know, many other airlines are falling out of love with first. The main problem is that the business class product has become so good, there’s very little reason left for passengers to pay more. Consequently, airlines are continuing to make business class the best it can be, while simultaneously dropping first from their planes.

Premium economy is in

Premium economy is something quite different to the ‘economy plus’ option you might have come across. Economy plus usually sells the odd seats which just happen to have a bit more legroom, such as bulkhead or exit row seats, for a markup. Everything else remains the same. Same cabin, same food, same service.

Premium economy on air france
The premium economy cabin on Air France. Photo: Air France

But a real premium economy product, such as BA’s World Traveler Plus, is not like this. Premium economy has its own cabin, separate from the hustle and bustle of economy. It has better seats, more legroom, and in some cases other perks such as priority boarding or a better inflight menu.

American Airlines added premium economy to 100 aircraft last year, making it the airline with the most PE capacity in the US. Delta plan to add Premium Select to all widebody flights by 2021. And for the first time ever, Emirates passengers will have the option of premium economy from next year onwards.

American Airlines Main Cabin Extra
American Airlines offer more PE seats than any other airline. Photo: AA

The rise of premium economy is no big surprise. Airlines are making huge profits on these seats, selling them for as much as double the cost of a regular economy seat, and without giving up as much cabin space as a business class product does. The Sydney Morning Herald spoke to CAPA’s chief executive, Peter Harbison, about premium economy, who said:

“It’s a poor man’s, or woman’s, business class. It’s there because the premium between economy and business class fares is so extreme, usually about five times the economy fare.”

Skyscanner report that premium economy seats range from 30 to 100% more than a regular economy ticket. This makes them a good money spinner for airlines, but also an affordable upgrade for economy passengers looking for a little bit more.

How BA have grown premium economy

While most of the world is obsessing over the new business class seat on board BA’s A350, there’s something interesting going on further back in the plane too. For the first time, BA have opted to install the same number of seats in World Traveler Plus, their version of premium economy.

British Airways Premium Economy

On most of their existing planes, British Airways have around half the number of World Traveler Plus seats as they do Club World. The new A350 will be the first aircraft to have an equal number of premium economy and business class seats, revealing an interesting strategy from BA.

The new A350 will have the same number of premium economy seats as it does business. Photo: BA

As first class falls off the front of the plane, those who would have flown first will fly business, and those who would have flown business have a choice of either flying the new and improved business product or saving some pennies and choosing premium economy. By the same token, those who would normally fly economy have a choice too, of spending a little bit more and going premium.

Because the jump between economy and premium economy is far less than that between economy and business, BA stand more chance of getting more passengers upgraded than if there was only business and economy to choose from. Because seats sold at a higher price make more money for them, this is a good thing. Therefore, they gave themselves more seats to sell.

Is it good for passengers?

That’s up for debate, and depends on your perspective, but for the majority of passengers we’d say yes. Premium economy offers a taste of the high life without needing to take out a second mortgage for your trip. Those who miss the exclusivity of first will still be able to find it in some places. If not, well the new business class suites are, in many cases, better than first used to be.

Singapore airlines business class
When business is this good, why would you pay more? Photo: Singapore Airlines

Taking that idea a step further, isn’t the current premium economy class almost as good as old school business class used to be? So, if business is on a par with yesteryears first, and PE is up there with previous iterations of business, has anything really changed at all?

Aside of the name change, the biggest change is in price. Air fares are spiraling downwards, as tough competition forces airlines to price low in order to fill their planes. In fact, premium economy is the same price on many routes as economy was a few years ago.

The end result? A better seat and service for the same price. That’s got to be a massive win for passengers, right?