In the comfort zone

Premium economy seating is on the rise, writes Clive Dorman.

It took about a decade longer than the rest of the world for Qantas to introduce premium economy, an intermediate class of travel halfway between economy and business class in service and comfort that has become all the rage around the globe.

Now, the national carrier can't get enough of premium economy as it attempts to negotiate a path through the end of the global financial crisis, which is still badly affecting air travel in Europe and the US.

Qantas recently announced it would introduce premium economy on its Boeing 747s flying to Tokyo and Frankfurt. Qantas is retro-fitting six two-class Boeing 747s to include 40 premium economy seats, with the new offering to be available on the Tokyo route from next month and the Frankfurt route from February.

On 747s and A380s, Qantas already offers premium economy on flights to Bangkok, Hong Kong, Singapore, Johannesburg, London, Los Angeles, San Francisco and Buenos Aires.

Airline industry analysts have been warning that, with the world economy so weak, business travellers will trade down from business class - which costs up to seven times the discount economy rate - to premium economy, which is only about double the price of economy. There have also been warnings that the trading-down trend - to cheaper seats and cheaper airlines overall - could be permanent.

However, Qantas maintains there are hundreds of thousands of leisure travellers who are prepared to pay $4000 instead of $2000 for a return ticket to Europe, for example, in exchange for a 40-inch-pitch (102-centimetre) premium economy seat instead of 31 inches and better food and drinks.

In May, Qantas was awarded the world's best premium economy class and world's best premium economy seat in the prestigious Skytrax World Airline Awards.

''One of the key considerations was would people take the opportunity to down-trade from business to premium economy,'' Qantas group executive commercial Rob Gurney says. ''We tested that hypothesis in research before we went to premium economy [in 2008]. We felt that there was fairly low risk, particularly given the development and quality of the business-class product. We felt that there was more of a natural gap in the product range that premium economy slotted into rather than an opportunity for premium customers to downgrade.

''Since we launched premium economy, we've been tracking the profile of the customers that are travelling and very few of the customers are down-trading customers. What we are seeing is a significant amount of trading up, virtually no trading down.''

Virgin Blue's new V Australia international airline is also enthusiastic about premium economy, while Virgin Blue itself is the only carrier to offer domestic premium economy in Australia. However, new chief executive John Borghetti won't say whether premium economy will survive Virgin Blue's domestic product makeover, tipped to be announced later this year, with the introduction of a separate business class.

More from Clive Dorman at the Travellers' Check blog.

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