Last week, Delta Air Lines unveiled its first true international premium economy cabin.
Dubbed “Delta Premium” the new service will arrive in 2017 with the airline’s new Airbus A350 fleet.
This announcement came just a month after American Airlines’ new Boeing 787-9 Dreamliner entered service equipped with its own brand new premium economy cabin.
So what’s the big deal about premium economy seats?
After all, international airlines such as Taiwan’s EVA Air and Britain’s Virgin Atlantic have had them since the early 1990s.
The big deal is that American’s and Delta’s investment in this new product shows how much these airlines have changed over the past decade.
Here’s what I mean.
In the “good old days” of commercial aviation, booking a flight on America’s airlines meant you had a choice between first class, business, and coach. They were the three options we’ve always had and for the most part we, as consumers, seemed to be pretty happy with it.
Fast forward to the early 2000s.
Fall out from 9/11 followed by the worst economic crisis since the Great Depression decimated America’s legacy airlines. Several rounds of bankruptcies and mergers ensued with three mega airlines emerging from the fray.
However, the American, Delta, and United Airlines that we know today are not the same old dinosaurs that their legacy branding would lead you to believe.
The days of frivolous spending, unchecked capacity expansion, and an almost blinding naivety to the changing needs of the modern consumer are gone.
The companies that emerged are leaner and more financially prudent. These days, American, Delta, and United all operate with double digit profit margins — something virtually unheard of for full-service international airlines.
But even more important is the fact that they have become more keen to the detailed needs of their clientele. In fact, some would say that America’s major airlines have have, in recent years, turned understanding what flyers can live with and without into a true science.
“We are constantly trying to get a better understanding of what our customers want,” Delta’s managing director for product and customer experience Joe Kiely told Business Insider in an interview regarding the creation of Delta Premium.
“We have 180 million passengers that fly on our planes every year, so we have many opportunities to learn.”
What Delta learned led to a much greater level of product segmentation — with the latest progeny of that decision being a full on international premium economy product.
“We discovered that there’s pent up demand for a product that slots in between our Delta One and our economy cabins,” Kiely added.
According Kiely, Delta’s customers wanted comfort, space to be productive, and connectivity without the cost of a premium suite like Delta One.
Although some may see product segmentation as a way to nickel and dime the consumer, an argument can be made that it allows airlines to better key in on the needs and wants of the individual.
For example, Delta now offers bargain hunters a low-cost offering called Basic Economy which does not allow customers to pre-select seats and make changes to their itinerary. One rung above that is their Main Cabin product, which offers the traditionalist an run-of-the-mill economy class experience. At the same time, Delta also offers an Comfort Plus product which — for a small fee — gives economy passengers a slightly nicer flight, but at the a much lower price point than business class.
Slotting above Comfort Plus is the new Delta Premium offering, which is targeted at business and leisure travellers who want a premium experience, but aren’t willing to pay for Delta One’s luxury suites at the top of the the range.
Are America’s airline’s perfect? No. Far from it. There is certainly room for improvement in terms of customer service, seat comfort, and many other aspects. However, their decision to segment their product offerings allows customers the ability to pay for the experiences and the services of their choosing. That is certainly a step in the right direction.
And Premium Economy is a great example of that.
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