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TurnaroudUK
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Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 1:07 pm

Hello all,
This is my first forum thread so please be kind.
As the title states why do none of the ME3 have a Premium Economy Cabin. Surely all the airlines would be able to fill the cabin very easily?
Would love to hear your thoughts.
 
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LAXintl
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 1:12 pm

Its not matter of filing the cabin, its a matter of the revenue associated with it.

Putting premium econ in means you either lose business class or economy seats. The trick is for the new cabin revenue to exceed the lost revenue of the reduced cabin.

Its not always a clear case. Turkish Airlines found its Comfort Class, no matter how popular and award winning it was did not cover the cost of the space it took up versus the other cabins.
From the desert to the sea, to all of Southern California
 
TurnaroudUK
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 1:22 pm

I get where you are coming from, but with other airlines having the product i.e. BA, NZ, CX, QF, for example shows that the product can be profitable.
 
jasoncrh
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 1:26 pm

The ME3 is based on volume. Fares are low because the markets that they operate in are highly price sensitive. the premium economy works on those airlines because they operate in markets
with more business traffic and less price sensitive customers. ME3 needs every ounce of revenue they can get, and they've done the analysis that shows that the revenue from Y+ wouldn't be enough to
offset the revenue lost from reducing Y or J seats. Basically, in extremely price sensitive markets (like the markets the ME3 target), you need every last passenger. Putting in Y+ doesn't achieve that.

Quoting TurnaroudUK (Reply 2):
I get where you are coming from, but with other airlines having the product i.e. BA, NZ, CX, QF, for example shows that the product can be profitable.
 
dfambro
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 2:27 pm

Quoting JasonCRH (Reply 3):
The ME3 is based on volume. Fares are low because the markets that they operate in are highly price sensitive. the premium economy works on those airlines because they operate in markets
with more business traffic and less price sensitive customers. ME3 needs every ounce of revenue they can get, and they've done the analysis that shows that the revenue from Y+ wouldn't be enough to
offset the revenue lost from reducing Y or J seats. Basically, in extremely price sensitive markets (like the markets the ME3 target), you need every last passenger. Putting in Y+ doesn't achieve that.

No doubt that's the idea. However, I wouldn't put it out there as a proven truth. Businesses make market mistakes all the time. Market efficiency is an ideal the real world approximates and tries to converge on all the time, even while the underlying market landscape keeps changing. If no one has tried putting a premium economy in the competitive mix, we really don't know for certain how the economics would play out. The airline's model might suggest it won't work, but it's just a model.
 
parapente
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 3:08 pm

It's a question I have asked myself so thanks for the question and answers.
Although I would have thought the math is simple (one way or the other).If one took (for instance) an Emirates 777 (10 across) and replaced 2 rows to 9 across (ie Y+) then clearly the total revenue of the 18 Y+ seats must exceed the 20 Y if it is to be worth while - and by some margin- to accommodation the ancillary costs of (say) altering the computer booking systems etc.
I guess they have done the maths and for them it does not work.But I must say it is odd considering the growth ( and inc margin) one has seen in Y+ around the World with many other airlines that fly to similar places.

I saw one report that suggested that on the new 2 class A380's for Emirates they could (if they chose to) charge a premium for the half upper deck Y without changing a thing! Because it is simply so much nicer to be up there.
 
richardw
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 3:37 pm

QF fly LHR-DXB A380 with Premium Economy, so seems good for them.
 
DiscoverCSG
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 4:05 pm

Quoting richardw (Reply 6):
QF fly LHR-DXB A380 with Premium Economy, so seems good for them.

Yes, on that one route. LHR is one of the most premium high-volume destinations in the world. Is there any other destination around that distance from DXB that even comes close?

And that segment is (in one sense) a tag to SYD-DXB, so you have lots of SYD-LHR ULH premium demand.
 
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mh330fc
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 4:24 pm

Personally, I think that if any passenger would opt to pay a little extra for a bit of an upgrade, then why don't just fly direct?
I'm not sure how a semi premium passenger would reason if a higher fare with lower flying time would be a better option. BA QF SQ LH and all the other mainstream airlines has the advantage of going directly to the main destination in most cases.

I would personally LOVE to see their product though  
 
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AA777223
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 4:55 pm

Until EK rolled out their new seat a day or two ago, their angled J product could have passed for Y+.   

I kid, I kid...
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TurnaroudUK
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 7:40 pm

Quoting parapente (Reply 5):

I have to agree it wouldnt be a spacious as other Y+ products as it would be more congested in the cabin but the possibilities of the product could be immense, I will always look to fly premium economy where possible. (Not quite at the stage of being able to afford business yet)
 
dubaiamman243
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 8:07 pm

One time Sir. Tim Clark said that Emirates economy class equates other airlines premium economy.
The next airline CEO :crossfingers:
 
mict
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 8:15 pm

Quoting dubaiamman243 (Reply 11):

One time Sir. Tim Clark said that Emirates economy class equates other airlines premium economy.

With 3-4-3 777s? 
 
dubaiamman243
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 8:27 pm

Quoting mict (Reply 12):

I am searching for Tim's interview regarding the EK economy class.

I don't know why some people are making noise about EK 10-abreast B777s? The 10 abreast economy class will be the new norm for airlines. The latest airline to join the club is United and Qatar Airways.

[Edited 2016-04-29 13:28:00]
The next airline CEO :crossfingers:
 
ytz
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 9:20 pm

3-4-3 on EK aside their economy product is usually a bit better than the competition. It's more generous on pitch. They take catering and IFE rather seriously. Ditto Indian carriers like 9W and AI. It makes for a Y product that is a bit more marketable. Compare that to other airlines. Air Canada launched Y+. They did it by making Y worse. Y on the 777 went from 3-3-3 with 32" pitch to 3-4-3 with 31" pitch. So they're selling Y+ by degrading Y.

EK in particular will over the next 15 years move to a fleet of only A380s and 777X aircraft. This means their Y product will consistently be 18" wide seats (minimum) and 32-33" pitch. That's about half way between Air Canada's Y product (17" wide, 31" pitch) and AC's Y+ product (20" wide, 37" pitch). Using AC as an example. But the US3 and EU3 are similar.

Have a look at airlines that offer Y+. With the exception of Cathay, I can't think of an airline that offers more than 31" pitch in Y. In fact the key to a good experience in Y, may actually be avoiding carriers that offer Y+. Especially when you consider that 17" width and 31" pitch is now the Y standard the EU3 and US3.

Quoting LAXintl (Reply 1):
Its not always a clear case. Turkish Airlines found its Comfort Class, no matter how popular and award winning it was did not cover the cost of the space it took up versus the other cabins.

This is simplistic analysis. TK had two problems with Comfort Class. The first was that it was way too generous. They had 9 rows of 7 abreast in a cabin that could probably fit 10 rows of 8 abreast, still with very generous product. Beyond that was the marketing problem. Because Comfort Class was offered on a handful of aircraft, they couldn't market it on most flights. So you ended up with passengers who didn't know the product was there or with an inconsistent product (Y+ on one leg and J on the other leg).
 
zkncj
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RE: Why Does None Of The ME3 Have Premium Economy

Fri Apr 29, 2016 11:40 pm

Quoting TurnaroudUK (Reply 2):
I get where you are coming from, but with other airlines having the product i.e. BA, NZ, CX, QF, for example shows that the product can be profitable.

You just have to look at how much NZ charges for PE on AKL-LAX and they pretty much fill all 50 seats twice an day on the 77W.

AKL-LAX a couple months out oneway in PE averages out at $2589, we're as Y is only $889.
 
TC957
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RE: Why Does None Of The ME3 Have Premium Economy

Sat Apr 30, 2016 4:43 pm

The ME3 generally have a competitively-priced business class fares compared to a lot of airlines, so personally I don't see their need for a Y+.
 
LondonCity
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RE: Why Does None Of The ME3 Have Premium Economy

Sat Apr 30, 2016 6:25 pm

Quoting TC957 (Reply 16):
The ME3 generally have a competitively-priced business class fares compared to a lot of airlines, so personally I don't see their need for a Y+.

That's a good point. QR regularly has seat sales from Europe and Scandinavia. For example, very recently some of its ex-BHX J seat sale fares undercut the Y+ fares ex-LHR. One traveller reported that BHX-DOH-PER J rtn was being sold for around £1,600 +

Of course, being a hub airline, QR was offering the savings not to DOH but to destinations beyond DOH.
 
vinaixa
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RE: Why Does None Of The ME3 Have Premium Economy

Sat Apr 30, 2016 8:29 pm

Quoting TC957 (Reply 16):

I´m disappointed about how most A.netters always seem to have a "logical" explanation to threads like this specific one, but change their minds as soon as their predictions are not accurate or don´t match reality.

Example: The day EK announced PTY, most users were sure that the flight was going to be very successful with CM feed. When EK gave up before the first flight a few months ago, all you could see was users claiming that it was obvious from the start and that the route would never materialize.

I see the same case here. I would bet that if EK or any other ME3 airline launched Y+ in a few weeks, most users will go on about "expectations couldn´t be higher" or "very clever move". Thank God that not all users are hypocrites.
 
ytz
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 12:54 am

Quoting vinaixa (Reply 18):

Tim Clark has been asked why EK doesn't do PE. Take his word for it. Not a.net. He's said that adequate Y obviates the market for Y+. He's right.

There's no carrier that offers Y+, that doesn't make Y more miserable. It's the only way to upsell. And the only the the ME3 could ever do Y+ is by substantially degrading their Y product. When that happens, there'll be little to no differentiation from the Western legacy carriers.
 
pa747sp
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 2:12 am

There is also another consideration. Replacing Y with Y+ may not increase an airlines revenue, but it may decrease loss of pax to the competition.

If a passenger wishes to pay the extra and fly Y+, and the choice on a route is between airline A that offers it, and airline B that doesn't, they will choose A. Airline A may not be increasing their revenue, but they have avoided losing the pax to airline B. That could make it worthwhile.

All the airlines that offer Y+ seem to be tentatively testing the market, with smallish Y+ cabins. Obviously for the airlines the balance is to get a product that will encourage Y pax to spend more, but not to tempt J pax (and the companies that often pay for the tickets) to downgrade to Y+. If this is the case, it would suggest that in future airlines may be willing to fit more Y+ seats, but unwilling to make the product to close to J class.

I also think that it is a good product to allow frequent travellers to burn their points. They often already have lounge access, and also they are likely travelling with family, so having a class above Y but cheaper in terms of points than J means that it is an attractive prospect for points redemption.
Nothing seems as good since the VC10.
 
hz747300
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 3:58 pm

Quoting JasonCRH (Reply 3):

The ME3 is based on volume. Fares are low because the markets that they operate in are highly price sensitive. the premium economy works on those airlines because they operate in markets

I think this is exactly it. They are targeting low paying, high volume demand on east meets west (mostly) routes. The prices are astonishing at times. If you are not in a rush, ie, require a nonstop flight, I've seen EK and QR under US$800 from HKG to LON. That's just putting butts in the seats pricing, as an empty seat pays no money.
Keep on truckin'...
 
LondonCity
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 4:08 pm

Quoting hz747300 (Reply 21):
I've seen EK and QR under US$800 from HKG to LON. That's just putting butts in the seats pricing, as an empty seat pays no money.

QR tends to have even lower prices (in both Y and J) when it launches a new route. These are introductory offers.

You mention US$800 for HKG-LON.

But ex-BHX (a new QR route) the carrier is charging a mere GBP325 return in Y for BHX-HKG.

Other destinations too. For example, Singapore is GBP405. Shanghai is GBP360.

Imagine these prices will include taxes/fees/charges.


http://www.qatarairways.com/uk/en/offers/birmingham.page
 
hoons90
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 4:09 pm

Quoting ytz (Reply 14):
Have a look at airlines that offer Y+. With the exception of Cathay, I can't think of an airline that offers more than 31" pitch in Y.

On the 77W, JAL has 34" seat pitch and 19" seat width in Y, and markets the seats as "Sky Wider Seats". They also have a Premium Economy with 42" seat pitch.
JAL is also only one of two airlines to offer a 2-4-2 config on the 787, and select 787s also have PY. So, it's doable.
Oh, and JAL has excellent Y class food.
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jacobchoi
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 4:19 pm

Quoting ytz (Reply 14):
Have a look at airlines that offer Y+. With the exception of Cathay, I can't think of an airline that offers more than 31" pitch in Y

SQ, BR, .CA, NH, JL, LH
 
LondonCity
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RE: Why Does None Of The ME3 Have Premium Economy

Sun May 01, 2016 4:19 pm

Quoting hoons90 (Reply 23):

Quoting ytz (Reply 14):
Have a look at airlines that offer Y+. With the exception of Cathay, I can't think of an airline that offers more than 31" pitch in Y.

On the 77W, JAL has 34" seat pitch and 19" seat width in Y, and markets the seats as "Sky Wider Seats". They also have a Premium Economy with 42" seat pitch.
JAL is also only one of two airlines to offer a 2-4-2 config on the 787, and select 787s also have PY. So, it's doable.
Oh, and JAL has excellent Y class food.

But JL can get away with this because it has a relatively limited route network, for example there are few if any JL flights to India, the Mid-East or Africa. Even when flying to Europe, JL serves only a few destinations. And JL's prices tend to be on the high side.
 
ytz
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RE: Why Does None Of The ME3 Have Premium Economy

Mon May 02, 2016 3:03 am

Quoting hoons90 (Reply 23):
Quoting jacobchoi (Reply 24):

The Asian carriers are somewhat exceptions. ME3's main competition are the EU3. Which one of them is generous with Y, while offering a generous Y+?
 
parapente
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RE: Why Does None Of The ME3 Have Premium Economy

Tue May 03, 2016 3:13 pm

I guess another reason for (Emirates et al) not offering Y+ is the numbers game.If they (and they are) take a huge chunk of traffic on a particular route (ie max bums on seats), it forces any competition (that wishes to remain on the route) to downsize to a smaller (but still profitable) aircraft such as the 787.But once done, they are 'locked in' to that smaller share of the route target market.

This does appear to be happening.

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