Delta now earns more from premium than in coach, and United and American keep pouring seats into premium economy. The back of the plane is shrinking.
Premium Economy Is Carrying The Industry
For years the cabin between coach and business class was an afterthought, a few rows with a wider seat and a footrest. Airlines were wise to experiment as they have with more room in coach, better IFE, or wifi. But we have watched Premium Economy mature and for good reason. That cabin is now the center of the business. Delta crossed a line late last year that tells you everything about where this is going, with premium ticket revenue surpassing main cabin revenue for the first time in the company’s history. The front of the plane, broadly defined, now outearns the back.
The reason is not complicated. Households earning more than $100,000 a year account for roughly 75% of all leisure airline spending in the US, and those travelers have shown they will pay for a bigger seat without stepping all the way up to a lie-flat fare. Premium economy sits exactly in that gap. It captures the leisure traveler who wants more room on a long flight and the budget-conscious business traveler whose company will not approve business class. Airlines have noticed that this customer is both willing to spend and reliably profitable.
The Seats Are Multiplying While Coach Stalls
Watch where the carriers are actually putting their money and the strategy is obvious. American Airlines is expanding its premium and lie-flat seating by roughly 50% by the end of the decade, which the airline itself describes as double the growth rate of its main cabin. Its newest Boeing 787-9 was built around a denser premium section, including a redesigned premium economy seat with privacy headrest wings, calf and foot rests, and wireless charging. That is not a tweak. That is a fleet being reshaped around the front.
United is on the same path, targeting a 75% increase in premium seats by this year compared to 2019. Premium seats now make up about 12% of everything United flies, and premium revenue has been growing at double-digit rates while basic economy grows in the single digits. Delta is adding capacity almost entirely through interior upgrades and new aircraft aimed at the front, with effectively none of its growth landing in the main cabin. Three of the largest carriers in the country are telling you the same thing. The growth is up front, and coach is being held flat or squeezed.
Some carriers, Japan Airlines, ANA, and LATAM all offer Premium Economy travelers on international long haul routes lounge access. As of last year, almost all airlines offered amenity kits in premium economy cabins and elevated menus that are above coach’s “chicken or beef” but below business class. Singapore Airlines even offers its Book The Cook service. Those are genuine distinctions above coach that mirror domestic first class (but not trans-continental flights) but without the pomp and ceremony.
Airlines Incentivizing Travelers To Sit Up Front
The push is showing up in loyalty promotions too, which is where it gets interesting for anyone earning miles. Through August 31, Lufthansa and the Miles & More program are offering 50% more award miles and status-qualifying points for flying premium economy on Lufthansa Group carriers. That is a deliberate nudge. Airlines do not hand out bonus status points on a cabin they want to shrink. They do it on the cabin they are trying to fill and normalize. Get customers to try the product, and then when the promo is gone, they come back again.
This is the part I spend the most time on with clients. Premium economy is frequently the smartest use of cash on a long-haul flight when business class award space has dried up, which during peak summer is most of the time. The cash premium over coach is rarely brutal, the seat genuinely changes how you arrive, and on many routes the points-and-status earning now outpaces what you would get sitting in back. For travelers who refuse to burn 100,000 miles each way on a lie-flat seat, this cabin has become the value sweet spot rather than the consolation prize.
There’s A Psychological Bend To This Too
Some travelers see true business and first class as a superfluous luxury – even on expensive trips. One client was planning a heavy travel year with multiple trips touching almost every continent and a maximum budget of $300,000, a sum that begins to approach the median price of a single family home. Yet unless the flight was excessive (16-20 hours in a single leg), they wouldn’t spring for business class because it was too expensive for a 7-10 hour flight. With similar thinking, a client taking his family to Europe last year spent more than $40,000 on his trip, but was comfortable traveling in premium economy.
There’s a stigma about flying in business or first class and some don’t see themselves as “luxury” or “fancy” travelers, even though their budgets disagree. Just last week, a client was willing to spend more on a trip to Antarctica with an expedition operator which is decidedly not luxury, over a luxury product that has a comparable expedition team, equipment, and experience at a lower price point for white glove service and caviar on-demand. They chose to pay more for less, because they didn’t need a luxury experience.
Regardless of the price point, and regardless of the product, some travelers who know they are not going to be happy in deep coach, still won’t opt for business class even when premium economy is more expensive as the writers of Live And Let’s Fly have covered for years. The reason is because they don’t even look as they aren’t that (luxury) type of traveler. Other places in the economy have a similar dichotomy. Chili’s increased sales two years ago by 34% because customers hadn’t realized that it was cheaper to get a bigger, better burger, fries, and a drink (plus bottomless chips and salsa) from them than it was to drive-thru McDonald’s. Most customers see McDonald’s as a cheap meal for the family even if it’s now more expensive than a full-service restaurant.
These value proposition isn’t always that premium economy is a “poor man’s business class”, sometimes it just matters that it’s a more comfortable version of coach.
Conclusion
Coach isn’t disappearing (though it’s shrinking), and plenty of travelers will keep buying the cheapest seat on the plane because price is the only thing that matters to them. What is changing is where the airlines aim their best product and their marketing dollars, and the answer is no longer the lie-flat suite that grabs headlines. It is the cabin most people overlook on the seat map. For the airlines, premium economy has turned into the rare product that delights customers and pads margins at the same time. For travelers, that alignment is worth using while it lasts.
What do you think?
I fully agree, I see that airlines are now adding more Premium Economy seats to their planes. Never made sense that there were only 3 rows vs 5-7 rows. Lie down seats are great but the price point makes is unaffordable for some. The only thing I don’t like is getting stuck in the middle seats of PE. Especially on the 4 across middle. Getting PE on the 2 seat with a traveling person, for the price, I’ll take that over Lie down anyday (Unless the flight is over 12+ hours).
I think its just too much cosmetic hype; you only get 1 to 2″ more in seat width on PE ; thats a small gain for comfort; its really not premium unless you have a wide seat to enjoy the long flight.
Not all PE are the same, some are very much worth it, others not so much. Some carriers like AA even have some PE seat that are better than others. AA’s front row has leg rests while all the other seat in PE don’t.
In the first half plus of the widebody era, you had first, business, and coach. Now, modern J is better than old first, PE is closer to old business, Y+ (extra legroom Y) is the old Y, and modern Y is a historical cheap (adjusted for inflation) way to fly if you’re willing to suffer little legroom. On most narrowbodies, you get the same width seat in F and Y (2-2 and 3-3 is the same today as in old 737s) or wider (320 family). Yes, regular Y legroom (more important than pitch) has shrunk, but, I contend the extra legroom Y (i.e., Y+) is the old Y. But, again, modern Y+ is cheaper than old Y by a lot (adjusted for inflation). So, if you take the attitude that Y+ is the new base coach and Y and BE are more akin to flying old standby (getting a bargain for a lesser product, albeit the same Y seats), this is the golden era of flying (except for food and service). I would never listen to a standby pax complain about the inconvenience of the old standby deal. I won’t listen to a pax complain about their Y seats when they could have bought Y+.
I don’t think I agree that Y plus is equivalent to old Y. It might be in terms of legroom, but on long haul flights, we’ve gone from nine across to 10 across in economy.
I’m with chris D, because for the most part, This comes to mind has pretty weak ideas and draws the wrong conclusions a lot of the time. Also, he’s from Ohio, so…
If they are paying someone to book their trips they already have too much money.*
*According to the commies trying to take over the country and kill all Jews.
Life would be much simpler if everyone 18 and over just watched my old porn shorts and films. Look me up under Colt Studios. By the way, I don’t get any residuals anymore. Just a public service announcement.
I’ve enjoyed your Sunday business-focused columns for a while so please take this constructively from someone who respects your opinion. While some elements of your hypothesis may be true, this article is too AI heavy (“genuine”, “anlignment”, etc) and is not how you speak, Kyle. The data presented talks about premium cabins, not premium economy. I understand your desire to link your anecdotes to the data to draw the inference that PE is a gold mine but it’s still TBD. PE for an overnight is far closer to Economy than layflat Business, Most wide body premium cabin growth is in layflat Business, not recliner Premium Economy. Chilli’s vs. fast food is not the analogy you’re hoping it is. That’s a story of the “coach” product (fast food) not representing value any more because of price increases. Inflation-adjusted coach airfares indexed since 2019 still remain reasonable. Lodging pricing is far more egregious vs. changes in quality and if your article was about travelers choosing to go upmarket there, your analogy would have “landed better” (AI diction).
I think his premise is right as I’m finding premium economy to be overpriced (see other comment) but clearly lots of people are paying for it – both BA and EK have been rather vocal in pointing out that it’s their most profitable cabin per square metre.
However, I agree that conflating the three premium cabins is unhelpful and I also think that the references to the US airlines aren’t the best way of illustrating the popularity of premium economy – it’s a fairly new product for them plus they’ve also got the virtual ‘economy plus’ cabins to confuse things further.
Premium economy is considered to be a premium cabin.
It is close to 1980s J, back when J had 38 inches of pitch and elevated dining. It’s not 1990s or 2000s J.
I’d expect the next evolution would be toward early 1990s J with 40-42 inches of pitch becoming the standard. A meaningful upgrade over Y, but nowhere close to modern J
I rarely see the reasonable prices you’re on about, unless you’re talking hybrid/low-cost/holiday airlines such as Scoot, Norse, Condor etc.
Air Europa are selling one-ways in Y from Italy/Portugal to S. America for late July at prices as low as €350 (or €400 with checked in luggage). UX only have two cabins, but the cheapest alternative in premium economy is Iberia at €1.3k- in other words, nearly 300% more and just €150 short of the cheapest business class ticket for the route.
Nobody in their right mind would choose premium economy in those circumstances, which have been pretty similar to what I have come across whenever I have entertained the possibility of flying in premium economy. That has also been the experience of a friend who has to take a handful of intercontinental trips for work per year at around €2.5k a pop, which is usually more than the best fare in business class (rigid company policies only allow directors to fly in the big seats).
Premium economy award redemptions can be much better value than cash tickets as airlines tend to offer more availability than in C (presumably because they can’t find enough mugs to pay those prices) and typically only charge around 50% more miles than Y (which works out at less than that if you happen to value the additional luggage allowance).
On the other hand, I still can’t sleep in premium economy, which is my point for spending extra $$$$$.
The point for me is avoiding the inhumane conditions in long haul Y. Not willing to pay a huge premium though as I can also achieve that by leveraging status to secure better Y seats and/or breaking the journey with a connection (which is extremely cheap and easy to do between Europe and Asia or Africa, less straightforward when an ocean crossing is involved).
I agree with this. The only reason I’ll pay more than a nominal surcharge over coach is to be able to sleep better. And I still can’t sleep well in premium economy / domestic first.
In the 1980’s, first class was a little more than premium economy in terms of seat comfort. Business class was about the same as premium economy. Economy was the same except 1″ more legroom.
Which class is the most expensive per inch?
Early calculations are economy is 9 abreast. premium economy is 8 abreast and a little more leg room, business class is 4 abreast. In the space that fits 6 rows of economy (54 seats), premium economy has 5 rows (40 seats), and business class has 3 rows (12 seats). Is this correct? If so, if the economy seat is $1000 round trip, the premium economy seat should be $1350 and business class $4500 round trip. Clearly, premium economy and business class is more than that though there is the cost of a complex business class seat and a little more food.
In this example, is premium economy $2700/round trip and business class $7500/round trip? If so, premium economy earns the most for the area used in the aircraft. If business class is able to charge $10,000, it could be more profitable.
Situated between standard Economy and Business Class, Premium Economy has officially become the most efficient revenue generator and the highest profit-margin cabin per square foot for major global airlines… Let’s hope that this distinct cabin class and physical seat configuration lasts a long time!
Let’s recall that Premium Economy is usually worth it for long-haul daytime flights over 7 hours if you value legroom, better food, and smaller cabin privacy but cannot afford Business Class. Naturally, it lacks lie-flat beds and rarely includes lounge access.