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Singapore Airlines unveiled a revamped cabin service for its premium economy passengers earlier this month, and it’s part of a broader trend.

Long-haul premium economics is becoming increasingly important for airlines. That’s partly because leisure travelers have been willing to spend more on vacations in recent years and business travel has still not fully recovered to pre-pandemic levels.

Demand for premium economy is increasing as travelers become more familiar with what to expect, intensifying the competition for those mid-market dollars. Carriers around the world are aware of the growing interest and are increasingly investing in the cabin class.

What is premium economy?

In this case, premium economy refers to the long-haul airline product that sits between standard economy class and business class. Confusingly, many airlines refer to economy seats with extra legroom as ‘premium economy’ on domestic flights, but here the term refers to a separate cabin with larger seats and often higher service.

“Premium Economy is the 21st century version of business class. Business class emerged in the 1980s as an intermediate cabin between standard economy and first class, and now premium economy is an intermediate cabin between standard economy and business class,” Henry Harteveldt, president of Atmosphere Research, a travel industry analytics firm, told USA TODAY . “It is available to travelers at a much lower cost than business class.”

What travelers can expect when flying Premium Economy

Joe Lai, a physician in Charlotte, North Carolina, and a frequent flyer for American Airlines, told USA TODAY that he finds premium economy is often a better overall experience than flying in coach.

“Better seats overall, that’s actually the biggest plus of that, just being able to relax, throw my feet up – preferably with shoes on,” he said. “Sometimes improved food options, alcohol, things like that.”

Premium Economy on long-haul flights usually has larger seats than Economy, as Lai mentioned, with more legroom, potentially more padding and often more extensive cabin service compared to standard Economy offerings.

Singapore Airlines, for example, serves its premium economy meals in porcelain tableware with metal cutlery.

But as Harteveldt said, premium economy is intended as a bridge between standard economy and business class, and not as a competing product for the more luxurious cabins.

“It is definitely better, tangibly better than a standard coach,” he said, but “passengers should not expect a luxury experience in premium economy. It does not offer the same level of comfort, privacy or attention as business class.”

It can be difficult for airlines to find the right balance between expanding comfort and service without pirating their own more premium demand.

“How do they create a product that is good enough to entice people to trade from the economy, but not so good that people from the business class move to a lower trade?” said Harteveldt. “When airlines introduced lie-flat seats in business class, they made first class almost irrelevant.”

He added that different airlines think differently about their premium economy cabins, even though the seats most airlines use are becoming more or less standardized across the industry.

“It’s interesting to see where airlines are emphasizing: is it on the economy side or on the premium side?” said Harteveldt. “Some airlines are going to offer above-average legroom in their premium economy seats, they could have fewer seats across the cabin than would otherwise be the case. Some airlines will say, ‘look, this is definitely better than economy, but we’re not going to have a special restroom for you, we’re not going to have flight attendants dedicated to your cabin.’ ”

For these benefits, travelers can generally expect to pay about 50% more than the regular economy fare for the same flight, according to Harteveldt.

Lai said he often looks for opportunities to upgrade to premium economy, especially on longer flights.

On a recent trip to New Zealand, he paid just $250 to upgrade to premium economy seats with extra legroom. He said the cost was “absolutely worth it,” especially as the extra legroom and larger seats made it easier for him to sleep.

Why premium economy is important for airlines

Premium economics have become increasingly important to airlines’ bottom lines emerging from the pandemic.

“A lot of people have also been booking the premium cabins quite quickly, so we have seen a lot of demand for the premium cabins coming out of the COVID-19 crisis,” Siva Govindasamy, Singapore Airlines vice president of public affairs, said during a meeting. press event to unveil the airline’s new premium economy service concept in Singapore earlier this month. “Premium Economy in particular has been quite popular with our customers since we launched it in 2015.”

For Singapore and other airlines, that popularity means they have to spend more to attract customers to buy premium economy seats.

“As a result, there has been an increase in investment in the premium economy, the budget that we have. We believe this is a good investment as it will ultimately ensure that the premium economy remains competitive and provides excellent value for our customers,” said Govindasamy. “You have extra facilities, more comfort, more space; now you have even better meals, even better drinks and champagne. When we look at the feedback from our customers, it is about the value that premium economy offers.”

Harteveldt said long-haul airlines that do not offer competitive premium economy products risk falling behind their peers.

“When a critical mass of airlines starts doing something, the airlines that don’t offer it stand out, and often in a negative way,” he said. “The fact that some airlines are expanding premium economy and adding more seats to the cabin shows that this has been financially successful for airlines.”

Zach Wichter is a travel reporter for USA TODAY based in New York. You can reach him at zwicher@usatoday.com

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