American Airlines President Scott Kirby spoke today at the Bank of America Transportation Conference and indicated that ‘premium economy’ would be coming to the domestic fleet in 2017.
Here’s the statement Scott Kirby made at the conference which came 26 minutes and 8 seconds into the presentation (and oddly the page identifies the speaker as American’s CFO Derek Kerr, when it’s in fact Scott Kirby):
Basic economy will come sometime at the end of this year, we don’t have an exact date yet, towards the end of this year. And then premium economy domestically will come sometime in 2017 but we still don’t have exact dates yet.
We already know that:
- American will be introducing ‘basic economy’ fares in late 2016, these are likely to be fares that do not allow changes or advance seat assignments and do not permit elite upgrades although American has not specifically stated what the characteristics of the fares will be.
- American will be introducing ‘premium economy’ initially with their new Boeing 787-9 aircraft. This will be, essentially, their new domestic first class seat that’s going into Legacy US Airways Airbus A319s with foot rests added. So domestic first class seats as an option between coach and business for widebody aircraft.
Both are part of the product differentiation efforts the airline is pursuing. They want customers to get less when they pay less, and offer the opportunity to buy up to a better product and pay more without having to buy all the way to business class. A ‘premium economy’ domestically will be new for American.
I wanted to make sure that there wasn’t any confusion, and that Scott Kirby didn’t misspeak, so I followed up with American to learn more. I was told that they’re still developing their plans for domestic premium economy, with a roll out sometime in 2017. They haven’t decided what beyond additional leg room the product will offer, or how it relates to Main Cabin Extra.
So at this point we’re just guessing, but we can make very educated guesses.
The most likely scenario would seem to be something akin to what Delta has done with their extra legroom product. American offers Main Cabin Extra which is just extra legroom seating. Delta bundles their extra legroom with free drinks and snacks (depending on flight length).
Extra Legroom “Main Cabin Extra” Seats
As of Monday’s flights Delta offers “Comfort+” as a separate fare class that passengers get upgraded into on the basis of their elite status or that they can purchase or redeem miles for.
And in Delta’s implementation, it’s meant less access to the seats for elites (for instance a top tier Diamond member with a companion gets access to the seats only 24 hours out, not at time of booking) and less desirable seats (a middle seat with extra legroom is an ‘upgrade’ with no option to get moved back to an aisle seat without the extra legroom).
Since legacy US airlines generally do what Delta does, that’s the best guess we have of the direction American will go.
It certainly can’t be putting premium economy seats into domestic aircraft — because domestic aircraft already have those (minus the leg rests). They’re called first class seats. So you’re left with extra legroom, like you have now, and then bundling extras.
On the one hand it would mean drinks and snacks in coach for those sitting in the section (something American’s Executive Platinums already receive regardless of seating location) it’s also likely to coincide with reduction in elite benefits since the airline is trying to get elites to pay more for its product.
The fruits of oligopoly, pure and simple.
Not that this would make a whole lot of business sense, but isn’t it conceivable that they could put in something akin to BA’s old premium economy (slightly bigger seats, but not as wide as domestic first), or Air France premium economy on short haul (coach seating with business class meals, so Delta Comfort+ on steroids)?
And so it begins, the race to give us less for more cost.
They want to compete with low fare carriers for the cheapest tickets and charge their loyal customers more.
For narrow body aircraft, a 5-across premium economy section might be the most profitable option.
I just don’t see a lot of differentiation worth paying for on domestic flights. Still have the same hassles (ATC delays, mechanicals, same crew, same miserable airport experience, etc.) on relatively short flights. I will continue to be 100% free agent. During the next downturn when the oligopoly needs to fill seats these things will be free to those with status. I’m not going to encourage them by paying up for the a slightly differentiated product.
Developing a gradation between Y and international C is not tough – its basically like domestic F.
A gradation between Y and domestic F is a tougher needle to thread. Just what attributs of domestic F would be lost? For me, on a domestic narrowbody, I’d be satisfied with a 3-2 configuration with 35 inches of pitch , an intermediate recline AND ample armrest real estate to ensure that I need not go to war with my seat mate/seat opponent over armrests.
Should be interesting. Given that domestic F isn’t really anything to write home about, as other posters have mentioned making a physical differentiation between it and Y is tough. Seems like a lot of work from a procurement, engineering, retrofit standpoint to actually develop an implement a new hard product, at least one with new width. My gut would tell me that this is just window dressing on the existing MCE product, but then on the other hand why would it take until 2017 to roll out? Guess we’ll see…
It may be a narrow space to create a class between domestic F and Y now, but it seems plausible that they (Delta and it’s followers) could gradually enhance domestic F, and domestic F prices to expand the space where they are trying to fit this new class. For the past 5 years they’ve been re-training us to expect to pay for domestic F through a combination of lower prices and less frequent upgrades. So, now that we are paying for the higher class more often and they’ve moved us psychologically past expecting free upgrades to first class…to me the next logical step for them is to get us to expect to get a little less for the same price which could be in the form of a stripped down domestic F that they call Premium Economy or….pay a bit more for a nicer domestic F.
Last year when Alaska announced a new premium economy product they described it as having 35 inch pitch (compared to 32 inch in economy) and at the same time they announced a NEW first class that would go from the current 35 inch pitch to 41 inches. Now that they’ve trained us to stop expecting free benefits just because we spend $10,000 a year or more with them, the product differentiation opportunities are pretty broad.
I have to admit, and I promise I’m not trolling, but as an infrequent flyer, I actually like the ability to pay for what I want. If the price is a reasonable upcharge, I’m game.
Copying DL in this regard doesn’t mean good things in terms of the price of redeeming AA miles for AA flights.
Finally the days of freeloaders taking up first class seats is coming to an end. Now they’ll be sitting in MCE seats with a few snacks and drinks thrown in. AA isn’t going to change the seats much if at all they’ll just make their upgrades from basic economy to MCE seats with a few minor perks.
@Gary, The most important news in Kirby’s presentation seems to be what he said about the effect that premium economy would have on first-class upgrades. In response to a question about what impact premium economy will have on customers, Kirby stated one possible impact was that “premium economy might have more ability to upgrade to first class.” That was at about the 17 minute mark of the presentation. He repeated that statement later in the Q & A as well. To me, that’s huge.
Maybe this has been covered and discussed in other posts, but the writing appears to be on the wall that soon on American the only way to get a complimentary first class domestic upgrade will be to purchase a premium economy fare. It appears that those who buy coach fares will only be eligible for “upgrades” to premium economy (what Delta also likely has in store). And for international travel, it follows that SWUs will only be good for premium economy not business class if buying a coach ticket. Is it possible to get clarification from American about the statements on upgrading to first class?
Also Kirby once again cited the switch to a revenue-based ff program as resulting in higher revenues for the airline without explaining the basis for that conclusion.
Maybe premium economy on narrow bodies will just be Euro-business. Middle seat blocked for “your space” haha
I still have forty -four 500 mile upgrades that will likely never get used.
I think the airlines no longer care about loyalty, because I certainly don’t. I’d rather have some degree of luxury and an efficient routing.
Besides, my miles are earned from cc spend , not flying.
My 3rd and final mileage run was from LAS-LGB , but that was to get the 75k JBLU miles.
Never flew JBLU before, and I liked the extra legroom.
They may have hooked me into flying economy with the 38 inch seat pitch product, but only if the routing is efficient.
I’d like to fly MINT but I’m not flying from LAS-california just to turn around and fly to NYC