Issued 05 December 2023

Long Haul Premium: Upper Middle Class ─ for the Upper

Middle Class

This report reviews this cabin’s appeal to upper income leisure travelers and price-

conscious business travelers, and includes a review of adoption by 20 key airlines.

Contents

CABIN LAYOUT IS A REAL ESTATE GAME ............................................................ 4

THE PANDEMIC BOOSTED PREMIUM ECONOMY ................................................ 5

IT’S NOT YOUR IMAGINATION, THERE ARE MORE PREMIUM SEATS ................ 7

LOW COST CARRIERS UPGRADE THEMSELVES ................................................. 8

THE LONG-HAUL PRODUCT IS GLOBALLY CONSISTENT ................................... 9

MORE IS NOT ALWAYS BETTER........................................................................... 11

AN INDUSTRY MOVING TO OPTIMUM RESULTS ................................................ 14

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Issued by IdeaWorksCompany.com LLC

Shorewood, Wisconsin, USA

www.IdeaWorksCompany.com

About Jay Sorensen, Writer of the Report

Jay Sorensen’s research and reports have made him a leading authority on frequent flyer

programs and the ancillary revenue movement. He is a regular keynote speaker at ancillary

revenue and airline retail conferences and has testified to the US Congress on ancillary

revenue issues. His published works are relied upon by airline executives throughout the

world and include first-ever

guides on the topics of

ancillary revenue and loyalty

marketing.

Mr. Sorensen has 38 years

experience in product,

partnership, and marketing

development. As president of

the IdeaWorksCompany

consulting firm, he has helped

boost airline revenue, started

loyalty programs and co-

branded credit cards, developed products in the service sector, and helped start an airline

and other travel companies. His career includes 13 years at Midwest Airlines where he was

responsible for marketing, sales, customer service, product development, operations,

planning, financial analysis and budgeting. His favorite activities are hiking, exploring and

camping in US national parks with his family.

About Eric Lucas, Editor of the Report

Eric Lucas is an international journalist whose work has appeared in

Michelin travel guides, Alaska Airlines Beyond Magazine, Epoch

Times, Westways and many other publications. Founding editor of

Midwest Airlines Magazine, he is the author of eight books. Eric has

followed and written about the travel industry for more than 30 years.

He lives on San Juan Island, Washington, where he grows organic

garlic, apples, beans and hay; visit him online at

TrailNot4Sissies.com.

Disclosure to Readers of this Report

IdeaWorksCompany makes every effort to ensure the quality of the information in this report.

Before relying on the information, you should obtain appropriate professional advice relevant

to your particular circumstances. IdeaWorksCompany cannot guarantee, and assumes no

legal liability or responsibility for, the accuracy, currency or completeness of the information.

The views expressed in the report are the views of the author, and do not represent the

official view of CarTrawler.

Eric, at his favorite summer retreat, Steens Mountain, Oregon.

Jay with sons Anton and Aleksei at Artist Point in Yellowstone

National Park.

CABIN LAYOUT IS A REAL ESTATE GAME

Premium economy has become a very attractive product for airlines to consider. I

have written this report to review why this “middle

cabin” has become a hot property and how

airlines can maximize its revenue potential.

An aircraft fresh from the factory can be

considered an empty canvas, or perhaps an

empty plot of land to be developed. Real estate

developers consider how much space to allocate

luxury condominiums, mid-market apartments,

and units priced for first-time renters. It’s crucial

to find the right mix because buildings are not

easily changed once built.

Similar practices also apply to the business of

designing aircraft interiors. The initial layout

chosen for an airliner can be very unforgiving if

changes are required for the placement of seat

tracks, overhead bins, and galleys. Economics

also play a significant role when the cabin space

allocated for a business class passenger might

instead accommodate four economy class

passengers.

Global network carriers have a reputation for complexity. For example, Emirates

operates a 4-class Airbus A380 featuring first, business, premium economy and

economy cabins. Significant space has also been allocated for a bar and lounge

area for first and business class passengers. It’s a flying village designed to serve

the short-term dreams and desires of a population of 484 passengers.

Premium economy has emerged as a property with high “curb appeal” with its oh-so-

attractive position of providing affordable luxury. For long-haul travelers, it’s an

upper middle class seat priced for the upper middle class. I believe we have entered

an era where premium economy has the potential to deliver more profits than

business class.

Rather like premium economy, Marvin

Gardens on the US edition of the

Monopoly board is positioned between

the cheapest and most expensive

properties. Image: Pre-patent game

card from 1935.

THE PANDEMIC BOOSTED PREMIUM ECONOMY

Covid led to millions of deaths, the disruption of cultures and institutions, and

changes to travel behaviors. The airline industry reacted quickly to the virus with an

array of defenses such as enhanced cleaning and sanitizing, passenger handling

procedures to minimize contagion, and technology to communicate government

travel regulations and passenger vaccination status. Post-pandemic, we have seen

a significant reduction in work-related travel and an increased urge by some

consumers to spend more on personal comfort and convenience. It’s these factors

that have boosted consumer demand for premium economy.

Signs pointing to a sustained decrease of work-related traffic abound in the media:

 Airlines in the US confess work-related traffic remains below pre-pandemic

levels with Alaska down 25 percent and JetBlue down 20 percent.

 Europe’s largest airline group, Lufthansa, had seen a post-pandemic traffic

rebound of 60 percent through mid-2023, and hopes for a 70 percent recovery

by year end.

 Etihad is relying on deploying more giant A380 aircraft to fill premium cabins

with leisure travelers, said the carrier’s VP for Europe and the Americas.

 Southwest lowered flight thresholds for elite status by 20 percent.

 Alaska Airlines is focusing aircraft capacity on leisure routes, and will trim

business-focused route capacity in the Pacific Northwest and California by 22

percent (year over year) for January and February of the 1

quarter of 2024.

The loss of work-related traffic is around 25 percent since the pandemic. It will

eventually recover to 2019 levels, but this will be due to normal annual traffic growth

and increased business activity. Online meeting services, notably Zoom, were

already in use at the beginning of the pandemic. Businesses embraced these tools

as a replacement for business travel. This practice enjoys significant staying power

in the post-pandemic era and contributes to the sluggish return of work-related

travel. Another factor is the carbon mitigation objectives announced by global

corporations. Travel, as a scope 3 emission, can be reduced through various

initiatives, one of which includes taking fewer business trips.

Airline executives have been keen to talk about blended travel, or “business-leisure”

trips, as representing an evolution of work-related travel. I think this activity has

always existed, but I agree, the pandemic has encouraged more of it. Business

travel revenue is another referenced statistic, with executives disclosing it’s close to

2019 levels. But I believe the gains are largely due to higher fares and inflation.

“Sluggish return of business travelers forces US airlines to rejig their networks” 02 August 2023,

Reuters.

“Europe’s Business Travel Rebound Slips Away From Airlines’ Grip” 06 August 2023, Bloomberg.

“Etihad Bets on Premium Leisure With Return of Apartments in Sky” 26 July 2023, Bloomberg.

“Southwest Airlines Announces Several Enhancements To Rapid Rewards Program For 2024”

Southwest 16 October 2023 press release.

Alaska Airlines 3

quarter 2023 earnings call transcript at TheMotleyFool.com.

The troubles associated with the global economy have forced some work-related

travelers to downgrade from the expense of business class. Premium economy is

the perfect place for these folks to land. Without it, many would buy lower yielding

economy fares, which represents a significant revenue downgrade for an airline.

Airlines are eager to fill the revenue and traffic hole created by these changes with

something . . . and higher spending leisure travelers are a timely choice.

“Premium” has emerged as a post-pandemic buzzword for airlines, and for the travel

industry overall. The word is liberally applied to a wide array of travel products, such

as first and business class, airport lounges, luxury hotels, big SUV rental cars, and of

course, premium economy. The pandemic gave consumers permission to spend

money to create more personal space while traveling. Larger seats, more seat pitch,

and airport lounge access deliver a sense of personal security and crowd control.

Delta has been very vocal about its desire to attract and dominate this market.

The upper-middle

class of the US is

an attractive

market for

premium-oriented

products. This

group is usually

defined as having

household income

in the $100,000 to

$350,000 range.

These folks need

not be very careful

about how they

spend money. The broad US middle class are great travel consumers, but with

household income ranging from $30,000 to $100,000, they are careful spenders.

The US economic system has not been kind to lower and middle income

households; their share of the country’s economic bounty has deteriorated over time.

However, the target market of upper middle income households has grown

considerably, representing just 13 percent in 1979,

and by my calculation jumping to

32 percent for 2022. That was nearly 42 million households for 2022, with total

income of more than $7.6 trillion. That is an attractive 54.7 percent share of 2022

US household income of $14 trillion.

It also represents a giant pool of affluent

buying power that the travel industry is eager to capture.

“The Upper Middle Class Continued to Grow from 2014 to 2019” report dated February 2021, The

Urban Institute.

“The Upper Middle Class Continued to Grow from 2014 to 2019” report dated February 2021, The

Urban Institute.

Based upon US Census Bureau average (mean) household income of $106,400 for 2022.

Low Income

(below $30K)

21%

Middle Income

($30-$100K)

44%

Upper Middle

Income ($100-

$350K)

32%

Rich ($350K+)

US Distribution of Households by Income Level - 2022

Data Sources: US Census Bureau Data, Urban Institute (definitions of income levels)

and IdeaWorksCompany calculations.

IT’S NOT YOUR IMAGINATION, THERE ARE MORE PREMIUM SEATS

The New York Times reported earlier this year that “Major US airlines are expanding

premium seating by 25% to 75% in portions of their fleets.”

The premium category

includes everything from first class to economy plus (extra-leg-room seating). Delta

has added 15,000 premium economy or business class seats to its daily schedule

since the pandemic. As a specific example, the airline removed 20 economy seats

and 6

business class

seats on its

long haul 767

aircraft to

create a 20-

seat premium

economy

cabin.

Other

examples

include

SWISS, which

will introduce

its largest premium economy cabin on long haul A350-900 aircraft in 2025 with 38

seats.

American recently disclosed it plans to grow its entire category of premium

seating by 43 percent between the 3

quarter of 2023 and 2026.

The complexity and lead time associated with cabin retrofits requires airlines to

carefully consider future market opportunities. Clearly airlines are anticipating a

larger haul of upper income passengers. There is ample opportunity here; as of the

summer of 2023, the slice occupied by premium economy on widebody aircraft was

a slender 4.6 percent. Look for airlines to follow Delta’s lead by converting a few

business class seats, and a bigger chunk of economy seats, to a premium economy

configuration on long-haul aircraft. It’s no wonder airlines are intrigued ─ United

recently disclosed in its 3

quarter 2023 investor call that Premium Plus is now its

most profitable cabin.

Global network airlines enjoy access to a waiting marketplace, but low cost carriers

(LCCs) are also reaching for premium passengers. Some, such as AirAsia X,

Condor, and FlyDubai, offer a lie-flat cabin similar to the global giants. The usual

LCC upgrade has been a premium economy seat which may offer amenities, such

as meals, on an a la carte basis.

“It’s not your imagination: First class is getting bigger” article dated 18 May 2023, New York Times.

“SWISS to enlarge Premium Economy cabin for its Airbus A350s” press release dated 11

September 2023 at SWISS website.

American Airlines, Q3 2023 earnings call transcript dated 20 October 2023.

First Class,

0.6%

Business

Class,

12.2%

Premium

Economy,

4.6%

Economy &

Extra Leg

Room,

82.6%

Seat Distribution on Widebody Aircraft

Top 50 Traditional Airlines

Source: CAPA, Fleet Database, week of 17 July 2023 schedules.

LOW COST CARRIERS UPGRADE THEMSELVES

LCCs don’t rely on the corporate travelers served by global network carriers. Rather,

they encourage their existing budget travelers to splurge on a nicer cabin

experience. But enticing a new category of customer has become increasingly

common. My recent conversation

with Charles Duncan, President of

Norse Atlantic supports this narrative:

"Premium allows Norse to attract

travelers who might not normally

consider flying a LCC. Our economy

cabin has an immediate audience

because consumers know us for low

fares, great value. You could

consider the traffic we carry in

premium to be incremental. Without

that cabin, we likely would not carry

those passengers. Also, the offer lifts the quality perception for the entire airline

because a two class airline carries more consumer clout."

That type of thinking allows LCCs to be very creative in the product sold to

consumers. Originally LCCs were purist in their product approach to premium

economy with most using the a la carte method for checked baggage, assigned

seats, meals and beverages. Over time, many have morphed to an inclusive style

with these items provided without extra charge. Norse Atlantic takes a blended

approach by selling branded fares for its premium class: Light, Classic, and Flextra.

The three fares include a base level of amenities for its transatlantic flights: large

carry-on allowance, two meal services, with drinks available throughout a flight,

priority check-in, and early boarding. It’s a model designed to encourage an easy

comparison with the premium economy class offered by global network carriers.

The 43-inch pitch for Premium class on Norse Atlantic

is more generous than the usual 38-inch pitch found

on global network airlines. Image: Norse Atlantic

Norse Atlantic uses a classic branded fare presentation; typical results would suggest 50 percent of

shoppers buy their Premium Classic fare.

THE LONG-HAUL PRODUCT IS GLOBALLY CONSISTENT

Seating offering a “38-inch pitch and 19-inch width, with a better-than-coach meal,”

just about sums up the global standard for premium economy. That’s more

generous than the usual 31-inch pitch and 18-inch width of long-haul coach. Other

amenities are often included, such as a couple of checked bags, early boarding, and

standard seat assignment. There are exceptions, with examples being British

Airways, Lufthansa and SAS charging fees for assigned seats.

Summary of Long Haul Premium Economy Services

20 Leading Global Network Carriers

Based upon review of airline websites and other sources November 2023

Regions

Airlines

Brand

Pitch

(inches)

Width

(inches)

Upgraded

Meal/Drinks

Other Notable

Amenities

Asia /

Pacific

Air China

Premium Economy

36-39

18-20

Cathay Pacific

Premium Economy

38-40

19.5-20



Japan Airlines

Premium Economy

38-42

18-19.3

Limited lounge access

Korean Air

Not Offered

Qantas

Premium Economy

38-42

19.5-20.5



Singapore

Premium Economy

19.5



Pre-select entree

Europe

Air France

Premium Economy

38-40



Fast track

British Airways

World Traveller Plus

18.5



Finnair

Premium Economy



Lufthansa

Premium Economy

38-39

18-19



SAS

SAS Plus

18.3



Airport lounge,

fast track

Turkish

Not Offered

Middle

East

Emirates

Premium Economy

38-40

19.5



Qatar Airways

Not Offered

Latin

America

Avianca

Not Offered

LATAM Airlines

Not Offered

North

America

Air Canada

Premium Economy

18-20



American

Premium Economy

18.5-19



Fast track

Delta

Premium Select

18.5-19.5



Fast track

United

Premium Plus

18.5-19



Fast track,

lounge discount

Notes: Premium economy might not be offered on all long-haul routes of an airline. Seat pitch and

width also obtained from SeatGuru.com and other online sources (rarely found at airline websites).

The provision of access to a lounge is largely excluded from premium economy.

SAS has made lounge access a point of distinction for its SAS Plus cabin. United

offers one-time access at a discount below the usual $59 price. A recent booking

query produced prices of $32 and $45.

Among the airline websites visited while researching this report, Japan Airlines was

found to have a very attractive premium economy seat. The seat mimics some of

the features found in business

class. Recline and leg rest

movement are motorized, and

large moveable panels increase

privacy. The seatback monitor

measures 16 inches across with

an AC power outlet and USB

charging ports available at all

seats. However, the catering

offer is shared with economy

class with the added amenity of

Champagne. Contrary to

standard practice, lounge

access is provided for

passengers departing on

international flights.

The global standard for premium

economy meals is a full tray,

featuring higher quality food

than economy, with china and

linen. The upgrade typically

also applies for the beverage

service, with most airlines

offering a wine selection that

bridges the gap between

economy and business.

Finding the right balance of

amenities is a continuing challenge. The comfort must be better than economy, but

the luxury should not match the business cabin. I’ve had many conversations with

cabin crew on flights equipped with premium economy. Flight attendants confess a

level of frustration, “The passengers expect business class style service from us, we

just aren’t equipped to deliver that in premium economy.” They have also indicated

premium economy passengers are the most demanding of all cabin classes. The

premium paid likely increases expectations for these former economy passengers.

Airlines reserve lounge access and extravagant multi-course meals for business

class as incentives to justify the big price leap to the business class cabin. But of

course, the most crucial amenity is the seat itself. Here again, compromise is the

solution sought by airlines. You might get a nicer pillow than coach class, and even

a light duvet, but the recline will be nowhere near the lie-flat experience of business

class.

The Japan Airlines premium economy seat on A350 aircraft

features a fixed shell which preserves space for the person

behind you when the seat reclines.

It's no surprise that Emirates offers a premium economy

meal with tremendous eye appeal.

MORE IS NOT ALWAYS BETTER

The old model of operating an airline in a low fare environment was to fill the cabin

with seats. LCCs would reduce seat pitch and width to the bare minimum.

Traditional airlines offered a modest improvement of coach class comfort to fortify a

better brand position. The ancillary revenue revolution taught the industry that a

good share of consumers would pay a premium for more comfort and convenience.

Thus, extra-leg-room seats were born, and these would eventually grow into a

separate premium economy cabin.

Designing an aircraft cabin layout, and creating the best seat products to fill it,

require decisions that have long term consequences. American learned the dangers

of this when its angled-flat business seats flew for too long, while competitors were

introducing dramatically better fully-flat seats. Airlines that don’t have a premium

economy cabin are very likely feeling pains of remorse. The question has become

“How do we maximize premium economy revenue?” The industry has passed the

point of debate regarding the viability of premium economy.

Which way to go? Does the carrier’s layout have too few premium economy seats?

This can be addressed with

higher fares. However, this

may spill consumers to

competitors. Too many

premium economy seats?

That’s actually a larger

problem because poorly

allocated real estate also

affects the economics of

neighboring cabins.

Discounting premium

economy fares to fill seats

will upset the delicate balance described earlier in this report. Business class

passengers might be more tempted to save money by downgrading, and economy

class might appear to be less of a bargain.

Sales per square foot measures retail productivity and reveals how effectively a

retailer uses its selling space to generate revenue. It is calculated by dividing total

sales revenue by the actual square footage of selling space. I’ve adopted this same

measurement to compare premium economy to other classes. Prevailing wisdom in

the airline industry places business class as the big money maker. That top-of-the-

hill position has been challenged by the forces described throughout this report. The

question has become, is premium economy up to the challenge? My analysis

reveals premium economy can be a revenue leader when measured on the price it

can fetch per square foot.

Main deck and on the nose. Lufthansa placed its A380 premium

economy cabin where one might usually find first class.

Let’s apply retail practice to the airline industry. Three components are required to

accomplish this: 1) average ticket price, 2) square feet per seat type, and 3) route

distance. The result of the analysis is “average price, per mile, per square foot.” I

used published fares to perform these calculations which provides acceptable results

for comparing cabins within a particular aircraft type for a specific airline. This is not

a passenger yield evaluation, which would allow comparison between airlines. The

method provides a high-level review of the relative potential of each cabin class.

The table below provides the results associated with the evaluation of three airlines:

American, Delta, and Norse Atlantic.

Cabin Class Space and Pricing Evaluation

Revenue Potential per Square Foot for Business, Premium Economy, Economy Plus and Main Cabin

American

Delta

Norse Atlantic

Aircraft Evaluated

787-9

A330-300

787-9

Routes Queried

Chicago – London

Philadelphia – London

Atlanta – Amsterdam

New York – Paris

Orlando – London

New York – London

Range of Fare Queries

15 roundtrip dates for each route from October 2023 to June 2024.

Square Feet Calculation per Seat Type

Business

18.0

Type not offered

Premium Economy

8.4

7.8

9.3

Economy Plus

6.4

Type not offered

Main Cabin

5.3

5.7

5.3

Revenue Potential per Square Foot – Indexed to Premium Economy

Business

136

Not applicable

Premium Economy

100

Economy Plus

Not applicable

Main Cabin

113

Allocation of Square Feet – Premium Seats and Main Cabin (for aircraft type queried)

Business, Premium

Economy, and Plus

47%

45%

26%

Main Cabin

53%

55%

74%

Distribution of Seats – Premium Seats and Main Cabin (for aircraft type queried)

Business, Premium

Economy, and Plus

30%

28%

17%

Main Cabin

70%

72%

83%

- Notes for Fare Analysis: Lowest fares for nonstop flights on specific aircraft queried on 10 and 17

October 2023. Calculations include carrier surcharges, but exclude all government taxes/fees. For AA,

Main Cabin Extra based upon Main Cabin fare plus seat fee for lowest priced Main Cabin Extra seat.

- Notes for Seat Calculations: Square feet includes space on cabin floor occupied by seating area and

aisles. Calculated using aircraft maps, Boeing and Airbus specifications, and seat pitch and width

disclosures by airlines and other online sources. Economy Plus is a zone of extra-leg-room seats.

For each carrier, a specific aircraft type was selected for square foot calculations.

This was accomplished by reviewing seat maps, LoPA drawings (Location of

Passenger Accommodations), aircraft manufacturer measurements, and seat

specifications found at the airline websites, or online services such as

SeatGuru.com. The area for each seat type includes the cabin space occupied by a

seat and adjacent aisles. Galleys and toilets were not included because these often

serve multiple cabins.

Fares were collected for a range of roundtrip itineraries from October 2023 through

June 2024 using different days of the week (connecting fares were not included).

Admittedly, the queries were made during a single week in October and prevented a

more thorough examination of seasonality. The exact same process was used for

each carrier to provide an apples-to-apples comparison. To prevent readers from

equating the outcome with “passenger yield” an index was created, which is tied to

the premium economy result. I can disclose the “average price, per mile, per square

foot” for premium economy seating ranged from 1.6 cents ($0.016) to 5.3 cents

($0.053) for the three carriers. The consideration of load factor for each cabin is a

missing element. However, a carrier’s available fares do provide a high-level

reflection of whether demand is high or low for seats.

The results from the three airlines are very different. Delta supports the hypothesis

that premium economy can perform better than business class. With the index set at

100 for Premium Select, the performance of Delta One business class is lower with

an index of 88. With American, the opposite is true. With the index set at 100 for

Premium Economy, the index for Flagship Business class is higher at 136. For this

particular sample of American’s operations, the prevailing wisdom continues to

prevail. Norse Atlantic provides yet a third type of outcome, with plain economy

providing the best opportunity for the operations queried.

The index is a simple indicator and measures revenue potential for a cabin class.

Airlines have various levers for manipulating financial outcomes. The initial design of

a seat and the layout of a cabin are long term decisions that require significant

capital investment. Shorter term decisions include pricing, service design, marketing

and promotion. Factors beyond the index include competitive pressures, brand

positioning, and a carrier’s reputation with its customers. When all of these elements

are considered together, the index reveals where management might want to direct

its efforts. The index result for each cabin can be interpreted as a strength or

weakness.

Delta could interpret the relative strength of Premium Select as a call to increase

cabin size because it represents the best allocation of cabin space. The airline could

also choose to reduce premium economy fares to align the index closer to the

business and economy cabin results. American could reallocate space from the

economy cabin to better-performing premium economy and business cabins. The

Norse Atlantic results are fascinating because they suggest their premium is

underappreciated by consumers, and underpriced by the airline.

Norse Atlantic might be facing the problem of having too many premium economy

seats, which might explain the lack of pricing power. The airline inherited the 787

aircraft cabin layout and didn’t start with a clean sheet. But perhaps there’s an

opportunity here for the airline to upgrade its service, promote it to self-employed

business travelers, and offer loyalty benefits. This would place Norse Atlantic closer

to global network carriers, and perhaps allow the airline to increase premium

economy fares and traffic. One intent of this report is to engage airline management

teams in the evaluation of how to better allocate cabin space in an era of premium

economy awareness.

AN INDUSTRY MOVING TO OPTIMUM RESULTS

The best measurement of economic performance is often profitability. The index

developed for this report largely neglects yield and ignores costs. These factors are

not publicly disclosed by airlines, but are certainly available to their management

teams. “Profit per square foot, per mile” when calculated for a class of service would

provide an accurate assessment of the best cabin allocation. The method in this

report, and the suggestion of basing it on profitability, recognizes the finite space of

the aircraft cabin. The challenge for management is to make the best use of that

space.

In theory, optimum results would be reached when all cabins produce the same

profitability per square foot, per mile flown. This parity would reflect the perfect

allocation of aircraft space. In actual practice airlines attempt to accomplish this

today. The development of ancillary revenue and the introduction of premium

economy is disrupting the status quo, and this requires continuous evaluation of

cabin economics.

I believe the future will allocate seats in a 45-50-5 ratio; 45 percent of seats in the

main cabin, 50 percent for extra leg room and premium economy, and 5 percent as a

top product, such as business class. This is a big change from current practice. But

it aligns with my experience of consumer behavior; 45 percent of consumers only

consider the lowest fare, 50 percent will pay a premium for more comfort and

convenience, and 5 percent seek the very best. The distribution of income in the

US, described earlier in this report, provides demographic support for this seating

configuration and the revenue opportunity.

Improvement is only achieved when results are measured, new strategies are

developed, and the status quo is challenged. This report hopes to encourage

dialogue on how best to proceed. Premium economy for long haul routes opens the

door to gain more revenue from the sizeable portion of consumers who are ready,

willing, and able to spend a bit more for a better experience. They are upper middle

class consumers who seek an upper middle class travel experience. Revenue

magic occurs when airlines sell services that align with the buying power of individual

consumers, while delivering great value and quality.