Why Even Basic Airline Seats Keep Getting More ‘Premium’

DealBook|Why Even Basic Airline Seats Keep Getting More ‘Premium’

Basic economy once ruled the airplane. Aside from those few rows in the business class cabin, what most passengers got was a bare bones, bottom-rung experience.

Now, even on budget airlines, premium seating is taking over.

Wealthy leisure travelers have proven most resilient to economic turbulence. So airlines are finding new ways to profit from customers who are willing to pay for some perks.

Sometimes that means turning previously included options, like a seat in the front half of the main cabin, into paid upgrades. It has also involved expanding the cabin between first class and coach, and introducing a torrent of small luxuries to justify higher fares in the not-quite-business class. For example:

• American Airlines introduced a Boeing 787-9 plane this summer with redesigned premium economy seats that have headrest wings for “additional privacy,” water bottle storage, and calf and footrests. It has said it plans to expand its lie-flat and premium economy seating by 50 percent before the end of the decade.

• Delta expanded its premium economy service — which comes with amenities kits, meals and more legroom — to transcontinental flights last fall. Glen Hauenstein, the airline’s president, said in the company’s recent earnings call that it used segmentation of the main cabin (think fees for extra leg room) as “the template that we’re going to bring to all of our premium cabins over time.”

• United Airlines said in July that it would add more premium economy seats between business class and economy-plus seats on its wide-body jets. “That’s the cabin, I think, that is generating very good returns,” Andrew Nocella, the airline’s chief commercial officer, said during the company’s earnings call.

Revenue growth in the premium cabin is outpacing the main cabin at all three carriers.

As airlines add premium options, they have also made moves to further distinguish their top-tier tickets from other rungs. This summer, American Airlines debuted an aircraft with first-class suites that have privacy doors — a feature Delta already offered on some flights and that United will soon include in a new international business class that also comes with caviar service and designer pajamas.

“It’s all about giving people more choice, more pricing options, and more products and services in every cabin,” Delta’s Hauenstein said about expanding premium offerings on the earnings call.

Meanwhile, basic fares are dropping. Airfares overall have decreased by 3.5 percent in the last year as inflation overall increased by 2.7 percent, according to the Department of Labor. Price drops at major airlines have caused a problem for budget airlines, which historically compete on price alone. Their response? You guessed it, also more perks.

Spirit Airlines, once the largest ultra-low-cost airline in North America, emerged from bankruptcy protection this year with plans to rebrand as a premium airline. Southwest Airlines, which joined American and Delta in withdrawing its financial forecast for 2025, has created premium seats with more legroom on all flights. And even no-frills carrier Frontier Airlines is planning to debut “first-class style” seats in late 2025.