United Airlines remains relatively reserved when it comes to releasing details on its upcoming Premium Plus premium economy product. Virtually no new details have appeared since the initial news announcing the Premium Plus product slipped out in mid-January. Today, however, company President Scott Kirby injected an interesting comment into his presentation at the J.P. Morgan Aviation, Transportation and Industrials Conference. Kirby reiterated that the international premium economy product is expected to take flight at the end of 2018; the slides say “fall” while Kirby said “Q4” was the launch timing. More significantly, however, Kirby indicated that the company is also considering a domestic version of a premium economy offering.
But also, "We're even looking at a premium economy product in the domestic market." That would be a significant and interesting shift in the market. #PaxEx #AvGeek $UAL https://t.co/yOdBBSexzl
— Seth Miller (@WandrMe) March 13, 2018
Alas, much like the initial Premium Plus announcement there are no details available here to fill in the gaps.
With the company remaining tight-lipped on this theoretical new offering we are left to imagine what this version of Premium Plus might look like. There are two main directions it could go, each with distinct benefits to the airline. Not surprisingly only one presents real benefits to passengers.
Kill off first class in order to save it
Delivering a true premium product on board the company’s domestic fleet presents both a market segmentation challenge and a real estate challenge. With a 2-2 seating arrangement up front and a 3-3 layout in the back there isn’t much of an option to bring premium economy’s main benefit – more personal space on board – to bear without destroying the domestic first class offering. The good news is that it is ready to die.
Domestic first class stopped being about luxury a long time ago. It is, quite frankly, a premium economy product today. Certainly when matched with various international premium economy products it fits quite nicely. The seat dimensions are roughly the same, though generally the international version offers a bit more pitch and recline adding comfort to the longer travel times.
Combine the comparable space argument with the recent transition by the US3 legacy carriers to aggressively price the domestic first class product – often only incrementally more expensive than economy class – and the opportunity exists to rebrand and rebuild the offering in a way that the pricing and market positioning blends smoothly across markets and price points. For the premium transcon markets a premium product is still viable and could still be sold. Plus there would be less confusion about the branding of those markets. But for the rest of the flights the option to deliver premium economy as a proper replacement for “first class” is very real.
It is also almost certainly not what United will do.
From Economy Plus to Premium Plus
United’s Economy Plus extra legroom product remains a huge source of ancillary revenue for the company. It also sits nicely in a position between the current domestic first class and economy seating options that could be relatively easily converted to a “premium economy” product so long as license is taken with that term. And there is precedent to do so.
With the extra leg room on offer United can claim that Economy+ seating already meets the “extra space” aspect of a premium economy product. No extra width compared to the regular economy seats, of course, but the carrier likely won’t struggle to claim that’s not an issue to contend with here. The other aspect of premium economy – upgraded food & beverage – is also relatively easy to deliver to these few rows on board. The company already does it on its “Coast” transcon flights.
Plus there’s the part where Delta Air Lines made a similar decision over a year ago to start selling its “Comfort+” product as a premium economy offering. It is a separate booking cabin now system wide rather than just an ancillary fee to get the extra legroom on board.
This does create a problem in the international markets. When Delta sells both Comfort+ and Premium Select (its “real” premium economy offering) both as premium economy there is real risk to the passenger of getting a substantially different product on board. Only Delta’s direct sales channels address that potential confusion. Even more complex is that on a domestic segment connecting to a Premium Select flight Delta offers the traveler a seat in first class. Because it is comparable to the true premium economy international offering. But if only flying Comfort+ across the ocean the domestic feed is also only a Comfort+ seat.
This offering creates more confusion and delivers a lower quality premium product to passengers. It is also easier to implement and United can claim better segmentation of the market with three “cabins” on board. It is much more likely to be the path chosen. It is low risk but also lack creativity and the potential to really shake up a market that, quite frankly, could use a little shaking.
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Gene Kaskiw says
One possible, however unlikely solution, could be United adopting a “Eurobiz” model for domestic PE priced at an ‘actual’ premium to Y. Blocked middles, improved meal service (or just comp BOB), extra baggage allowance, drinks, etc. Cabin size can be flexed based on market/season, etc. and would not require much in the way of capital investment, save for the movable partition. The balance of E+ stays as-is to capture the ancillary/upsell revenue and still provide a status benefit
Steven Sullivan says
I assume you’re suggesting this as partitioning off part of the E+ seats, and preserving domestic F? Or is this idea in lieu of domestic F?
I’d hate to see the US carriers shift toward the Eurobiz model in lieu of the current domestic F seats, which I think is a horrible “premium” cabin product. It would be fine as a more premium E+, but not as a replacement for the bigger seats up front.
Igor Matlin says
+1: EuroBiz is awful. It’s not even a good replacement for E+. I’ll take 34″ pitch with someone in middle seat over 30″ pitch and a blocked middle. A premium seat where it is impossible to open a 14″ laptop doesn’t work for me.
Steven Sullivan says
It’s not a premium seat if my knees a jammed into the back of the seat in front of me when that seat is upright. That’s Eurobiz. No amount of food on board is going to change the physical discomfort.
Gene Kaskiw says
I was thinking along the lines of a variable partition for the first 1-3 rows of E+, which could flex up or down depending on route, season, etc. E+ legroom with a guaranteed empty middle is pretty close to the personal space offered in domestic F. It’s a treat on the rare occasions I catch that these days.
UA has comparatively large E+ cabins so this would not cannibalize too much real estate for ancillaries and still provide a meaningful elite benefit. The rub would be on the RM side to price the product in such a way that the potential revenue lost by the empty middles is offset by the premium pax would pay for the PE product. It would definitely be a niche offering in the domestic network.
What cuts against this idea is the small premium for F over Y in many markets, so either the product cannibalizes F demand, or pax choose to skip right over a PE to buy F. Similarly, if other carriers did not follow suit with such a product and kept their respective F pricing models the same, UA doesn’t have much room to play between pricing for Y and F, which would not justify a standalone product.
Gene Kaskiw says
(clicked ‘enter’ too early)
That last point I make is why I tend to agree with the idea that UA domestic premium economy, if it comes to pass, will be little more than a re-positioning of an existing product, rather than a unique offering. My money is on UA moving in the direction of the DL C+ model (upgrades and all), which IMO is a net negative for UA elites in particular.
Seth Miller says
No need for a partition/curtain. That’s just stupid in every scenario.
I considered the blocked middle seat idea and it certainly has some merits but I doubt UA would do that and also remove the extra legroom so it costs too much to implement in terms of theoretical lost revenue.
Gene Kaskiw says
Seth Miller just to clarify I was never talking about removing extra legroom. My thought is that it would be the easiest way to implement a distinct class of service, aside from just rebranding an existing product. Really a zero capex solution. Again, my expectation is that United just follows the Delta C+ model
Steven Sullivan says
Agreed, I think if they do anything, it’s a DL C+ clone. I don’t think that’s the end of the world for top-tier elites; it still hurt on the lower end, though.
Gene Kaskiw says
Agree. It’s safe to assume that it will be a diminution of benefits from the current situation, in some way
Igor Matlin says
Wait, United copying something Delta has done?? Nah, that would never happen, right?
Craig Lowdermilk says
will it be pet friendly?