Premium economy: good for airlines?

Does it encourage passengers to upgrade or downgrade?
The relatively new seating class premium economy is attracting more passengers to upgrade from economy, rather than business-class passengers to downgrade, Skift reports.
Most big airlines have added premium economy, or plan to, giving passengers a little more space at a reasonable price.
Adding new seats to planes is costly and time consuming, but airlines are coming to understand its potential niche, realising it will not eat into their profitable flatbed business class. There is a chasm in comfort between premium economy and business.
Airlines like Lufthansa, Cathay Pacific, Singapore Airlines, Air Canada and Iberia have added it to the cabin, while Emirates and Aer Lingus may soon follow. In the US, American and Delta are adding premium economy on long-haul, while United is considering it.
“I think once somebody gets used to and can get away with the company purchasing the flatbed seat internationally, they can’t buy down,” says Ben Smith, Air Canada’s president for passenger airlines. “The buy up is for people who cannot justify the price of a business-class seat.”
Marco Sansavini, Iberia’s chief commercial officer, agrees: “Our view is that business class will keep developing and will be increasingly comparable with a hotel experience, with lie-flat seats and outstanding food.”
However, Willie Walsh, CEO of International Airlines Group, says that sometimes passengers buy business class for overnight flights from America to Europe, but fly the other direction, by day, in premium economy. The debate about premium economy continues.


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