Alaska Tests Premium Economy as the Mid-Class Upgrade

Alaska Airlines has recently announced that it will introduce a Premium Economy cabin with extra legroom for passengers and other cabin experience perks which will be revealed at a future date.

“Customers who upgrade to Premium Class will get priority boarding and enjoy three to four inches more legroom compared with a standard coach seat. In addition, Alaska Airlines plans to offer additional amenities to further enhance the Premium Class in-flight experience. This upgrade option will be available to Alaska Airlines elite Mileage Plan members on a complimentary basis at booking or day of travel dependent on status and fare purchased,” the airline stated in its announcement.

“Premium Class will provide an opportunity for all customers to get an enhanced flight experience,” said Andrew Harrison, executive vice president and chief commercial officer at Alaska Airlines. “We are listening to our customers and they have told us that more personal space and extra perks are a priority.”

Seats in Alaska Airline’s new Premium Class section will have at least 35″ of pitch, compared to 31″ to 32″ in the rest of the main cabin.

Rather than treating what will be a Plus product as a consolation prize for a punitive Economy product, the airline is betting big on passenger demand by keeping the Economy section’s pitch intact.

Alaska will instead making room for this new middle cabin by reconfiguring and reducing the number of seats on some aircraft.

To keep premium customers buying up, pitch in First Class cabin will be increased from 36″ to 41″.

The airline’s 61 737-800s will be reconfigured from an First class with 16 seats and Economy with 147 seats to 12 seats in First, 30 in the new Premium Economy, and 117 seats in Economy class.

The 77 737-900/900ER aircraft will change from 16 First and 165 in Economy class to 16 in First, 24 in the new Premium Economy and 138 in Economy class.

The arline will also introduce its Premium Economy product on its 15 Embraer E175 aircraft changing them over from 12 First class seats and 64 Economy class seats to 12 First Class Seats, 12 Premium Economy seats, and 52 Economy class seat.

The airline’s current Preferred Plus seating product, for bulkhead and exit rows, which can be bought at check-in, will still be offered on Alaska’s 737-400s and -700s.

The Mid-Class Upgrade Option

This approach makes the new Premium Economy product an interesting solution to the nagging problem of losing true premium seats—in Alaska’s case First Class seats—to upgrades.

Alaska has said it will also sell this new Premium Economy product available as a paid upgrade, for customers who want more room, with pricing to be announced at a later date.

While this product lacks the clear hard product differentiation that would qualify it as a true Premium Economy product, Alaska Airlines is directly targeting its rival Delta airlines with this third cabin option, matching like to like.

The open question is whether referring to this product as Premium Economy class, while configuring it as a plus product, differentiated by perks, will be enough to compete with other Low-Cost LUX players in the market who offer a true premium experience at a budget rate. Like Delta, Alaska Airlines seems to be betting on its network. For Alaska Airlines’ particular market this move could make sense.

But it’s the advanced announcement that the product is intended to address upgrade demand that makes Alaska’s announcement interesting.

Airlines make heavy investments in the design and equipping of their front cabins, and that expensive real estate must yield revenue if airlines are to stay profitable. But frequent flyer members have long enjoyed upgrades as part of their travel perks.

By creating a new plus product (one packaged as Premium Economy, but without a hard product differentiation) airlines can give something to their frequent flyer members without giving away the most valuable real estate at the front of the plane.

Whether the strategy of shifting upgrades to this new middle class works for Alaska Airlines’ frequent flyers in future is something we’ll want to watch.

But introducing a plus product as Premium Economy, without clear product differentiation, and targeting that product as an upgrade, could itself be forfeiting revenue. While a true mid-class product could still be offered as an upgrade, and make frequent flyers happier, it could also be sold for a higher fare.

For more on tricky Premium Economy positioning, you can read my three-part series for the Airline Passenger Experience Association (APEX):

Happy Medium: Tackling Premium Economy for Brand and Profit – Part One

Happy Medium: LOT Avoids Brand Commoditization With a Focus on Premium Economy – Part Two

Happy Medium: JPA Design Explains Why Airlines Should Make Premium Economy Differentiation Count – Part Three

 

 

 

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