Why Airlines Are Investing Big in Premium Seats

As more travelers choose to upgrade their in-flight experience, carriers are rethinking service, cabin design, and lounge experiences.

Empty United Polaris seats in low lighting

Flying in United Polaris is getting comfier and cozier.

Courtesy of United Airlines

Over the past decade, airlines have introduced seats (and suites) that deliver the comfort of a five-star hotel, thanks to features such as sliding privacy doors, restaurant-quality dining, and plush bedding that rivals what one would get on the ground.

The pace of innovation doesn’t seem to be slowing down anytime soon: There’s the new premium economy cabin from Emirates, a first for a Middle Eastern carrier; United recently unveiled its biggest overhaul to Polaris business class since launching the seats in 2016; and Delta is in the midst of transforming its Delta One ground experience and opening new lounges. That’s just the tip of the iceberg.

Premium leisure travelers who bought a seat up front over the past several years—some, for the very first time—are eager for more swanky in-flight experiences. After all, once you fly at the pointy end of the plane, it’s hard to go back to the back. However, there’s one caveat. The empty cabins, and more importantly, the bargain-basement prices for premium seats during the pandemic are now a relic of the past. Demand for travel has returned with a vengeance and, with it, the high prices of first- and business-class tickets.

“With generally lower price points to access premium seats during the pandemic, a lot of people got a taste of what these products are like and they want more,” Edward Russell, an aviation analyst and reporter with Skift, tells AFAR. In fact, even as airfare spiked this past summer, planes continued to leave their gates filled to the brim—as airlines made record profits.

Here’s the thing: As the last couple of years have shown, leisure travelers are willing to pay a premium for premium, more so than airlines even initially believed. That means carriers are not only rethinking their strategy for first,class, business, and premium economy but many are also adding more seats and lavish perks as quickly as possible.

The short answer to why are airlines investing big in aspirational onboard experiences? It makes them a lot of money, and passengers are paying up.

Passengers in Emirates' cream-colored leather premium economy seats being served drinks

Emirates’ premium economy includes leather seats that recline 8 inches, calf rests, and a welcome drink once onboard.

Courtesy of Emirates

Premium economy is the future

While it might not be the sexiest product, the premium economy cabin—a Goldilocks middle ground between business class and economy—is a huge part of that strategy shift.

American Airlines was the first U.S. carrier to debut long-haul premium economy in 2016, and it’s a segment that is surging across the industry. Next year, American will introduce a new, second-generation premium economy seat with more privacy and double the in-seat storage space.

Delta Air Lines, for its part, said in its most recent earnings call that premium economy (which the airline calls Premium Select) is a “key contributor to record international margins.” Over at United Airlines, executives provided more details in its earnings report, saying revenue in the third quarter of 2023 for premium economy (Premium Plus) was up seven times compared to 2019 levels.

It’s not just U.S. airlines going all in on this class of service. Emirates entered the premium economy war in late 2022, and after a year, it launched in the United States for the first time this past spring. In total, the Dubai-based airline will add 1,608 premium economy seats to its Airbus A380 fleet of 67 aircraft and 1,032 premium economy seats to its 53 Boeing 777 aircraft.

Business- and first-class investments

Ticket sales of business- and first-class seats make up the lion’s share of most airline’s profits. “The industry’s investment in premium is really a signal of what they value, the money premium travelers bring,” says Russell. There are many updates on this front, too.

Earlier this fall, Japan Airlines unveiled its newest flagship aircraft, the Airbus A350-1000, with a double bed in first class and for the first time in the carrier’s history, privacy doors in business class.

Later this year, Air France plans to reveal the longest first-class suite on the market with five windows and a vast modular space. “It’s an ambitious project and a fine illustration of the elegance and excellence that characterizes Air France,” says Fabien Pelous, Air France’s SVP of customer experience. That comes after Air France recently upgraded its business-class experience.

For Lufthansa, a $2.7 billion program called Allegris aims to reimagine long-haul flying. “I’ve been in this job for nine years,” says Lufthansa Group CEO Carsten Spohr. “But this is the first year my team has told me we need to grow first class. I never thought I would hear that.”

On the U.S. side, American is updating its business-class offering to include suite doors,and is adding 18 more lie-flat seats to its Boeing 777-300ER aircraft. All of that means 43 percent more premium seating between now and 2026, according to Robert Isom, American’s CEO.

Meanwhile, Delta is seeing the fruits of its many premium investments over the years.“With [the airline’s] differentiated premium revenue strategy and strong global network, we will continue to deliver industry-leading profitability,” said CEO Ed Bastian during Delta’s Q3 earnings call. Premium revenue was up 17 percent over the prior year for the Atlanta-based carrier.

Lufthansa Allegris first-class "Suite Plus"

Grab your favorite travel companion and book a two-seater first-class “Suite Plus” in Lufthansa’s forthcoming Allegris cabins.

Courtesy of Lufthansa

In fact, Delta justified the massive (and controversial) changes to its frequent flier program in part due to too many premium passengers. “Everyone sees that the number of premium customers that we continue to build are in excess of the premium assets that we have to offer,” Bastian said. “[We’re] figuring out how to better rationalize and make certain that the service levels for our premium customers are where they need to be.”

What happens with economy passengers?

The trend major airlines are moving toward is larger (and newer) first-class, business, and premium economy cabins. But how does that impact those flying in back, in economy? Well, the news is rather mixed.

First, airlines typically find a way to keep the same number of economy seats, even if they’re expanding premium cabins. Russell says that’s done by reducing pitch—the distance between seats—or installing smaller lavatories that allow them to add a new row. Therefore, more premium usually comes at the expense of more cramped quarters in economy.

While airlines like Delta or Lufthansa focus on the more lucrative premium segments, Russell believes that will give low-cost carriers, like French Bee or Norse Atlantic, the opportunity to “scoop up more of the budget-conscious travelers.” So at least economy fliers will still be able to find deals—but perhaps not on their carrier of choice.

Meanwhile, airlines are making small but mighty changes for all of their passengers, regardless of cabin. United, for example, has been adding Bluetooth connectivity to its newest jets at every seat, which allows passengers to link their wireless headphones with seat-back screens.

Chris Dong is a freelance travel writer and editor with a focus on timely travel trends, points and miles, hot new hotels, and all things that go (he’s a proud aviation geek and transit nerd).
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