by Barbara Peterson
United Airlines is not only rolling out a new premium economy class in international markets, it’s also looking at adding the product to select domestic routes, as well.
The airline revealed the plan at a presentation at a JPMorgan investors conference in New York, where it said it will also expand its lowest-fare type — basic economy — to transatlantic and Latin American markets later this year. Both American and Delta have already said they will offer that rock-bottom, highly restricted fare in international markets, as well, starting this spring.
With its multi-pronged class strategy, United could end up with four distinct types of coach fares on many flights: basic, standard economy, economy plus (with extra legroom) and premium economy (which might feature a better seat to distinguish it from the next best product).
The carrier would still maintain a first class on domestic flights and its business class, dubbed Polaris, on international routes. Creating distinct service classes has another benefit; they can be booked through GDSs, as opposed to the current practice of giving coach fliers a chance to buy an extra-legroom seat for a flat fee, usually through the airline’s own website.
“Segmentation allows us to compete for all customers,” is how United explained the rationale behind the varying service types, although it has yet to reveal details of how premium economy would work domestically. While this cabin section is popular on long-distance international flights, where customers are willing to pay a hefty premium to escape coach class, it has yet to materialize in the U.S. because it might not make economic sense aboard a smaller narrow-body plane. United said it will probably reveal details later this year but did not indicate when the domestic product will be available, if it does indeed get the green light.
For international flights, however, United said it is pressing ahead with its launch of premium economy to select destinations under the brand name “Premium Plus” later this year. While it has not unveiled a prototype yet, the seat is expected to be several inches wider than the normal 17-inch-wide coach seat, with inflight service featuring china dinnerware, complimentary alcoholic beverages, Saks Fifth Avenue blankets and pillows, and amenity kits. And United will join a crowded field; both American and Delta are already launching premium economy internationally and most major international carriers have had the product for years.
Just how far carriers can go with this segmentation strategy remains to be seen. Henry Harteveldt, a travel industry analyst with Atmosphere Research, said that a domestic premium economy class might be perceived as too similar to existing domestic first class. But on the other hand, recent research shows that consumers are looking more favorably on the unbundled fare trend, where everything from added legroom to WiFi access carries an extra price tag. “They say that it’s giving them more choice — why pay for what you don’t need?” he said.
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