Why are you so tempted by the Premium-Economy upgrade
Let’s say you receive an unexpected financial windfall. What is the first thing you spend money on? If it’s a lavish vacation, how do you get there? Americans top the list of consumers who say they’re interested in private travel, so there’s a hint. Many of us would rather opt out of the commercial flying experience, but the odds of hailing a private jet are a lottery for anyone outside of the 1%. Still, that doesn’t mean that commercial flight lacks its own ruthless class system.
As with life at ground level, social mobility in the sky is guaranteed by money and a multitude of secondary considerations, such as “loyalty”, which also mean money. The majority of us sit at the bottom of the ladder, the main cabin, which accounts for about 70% of the seats on a Boeing 737. And the airlines don’t let us forget. Every call to the boarding area registers our modest station, sorting passengers with all the sensitivity of industrial agricultural equipment. Each full upper locker mocks our sad passage back past first or business class. On occasion, some of us may use the corporate card for relative convenience, but when traveling on your own, you’re more than likely faced with the bald reality of the 28F economy seat.
Or maybe, just maybe, you dive a little deeper into your pocket and spit out the bones to move around in a slightly sexier neighborhood: premium economy. Although not as plush as a business class sleeper, the premium (which has different names depending on the airline) offers various comforts: a few extra inches of legroom, or a toiletry bag with Malin+Goetz products, or a “chef-inspired” meal with craft beer, to name a few perks across carriers. In recent years, an emerging subset of travelers has shown enthusiasm for the slightly more refined service of the premium economy. “One of the trends that everyone in the airline industry is talking about these days, especially coming out of the pandemic, is a greater willingness on the part of leisure travelers to buy a seat in premium economy class,” said Rob Britton, adjunct professor at Georgetown University. and a former general manager of American Airlines, told me. Business travel, the bread and butter of airlines, has fallen off a cliff in 2020, and those companies are now seeing a lifeline among millennial yuppies. “The 35-year-old couples who go to Paris fill the void.”
In the mid-2000s, when a major aircraft manufacturer was designing a new model, it was studying the cost per square meter of real estate in the most expensive markets: New York, Paris, London. Then he looked at the cost per square inch of planes. There was no comparison, Uzma Khan, a marketing professor at the University of Miami, told me. “From an airline perspective, what is the most expensive thing to give you? Real estate in the air. In this regard, airlines operate as a kind of landlord, calculating the expenses of transporting a single passenger from one place to another and adding a healthy surcharge on top of that.
Historically, seats in the front of the aircraft subsidized operations, as tailored flyers from Bain and Deloitte and Baker McKenzie reliably purchased more expensive business class tickets. Still, carriers have clung to thin margins. And in 2008, rising fuel prices and falling demand prompted airlines to decouple standard amenities from economy tickets to keep prices competitive. Over time, they’ve caught up with it not only selling credit card miles, corporate contracts and freight, but also using the premium economy to sell the faint smell of pampering to vacationers. like Kelsey Masters, a project manager who lives in New York.
By her own admission, Masters is terrified of flying, but she makes frequent trips across the country to see friends and family. She described her shopping habits to me with a weary acceptance that characterizes her general feelings about pandemic air travel: Sixty dollars to upgrade? I got a little more legroom and a free drink, and can I just be a little calmer? This seems like a very good thing right now. Rather than splurge in the planning stage, she tries to buy the cheapest fare up front and lets the circumstances of the day of travel guide her upgrade decisions. Worsening stressors from the airport, the trip itself, or even a few restless nights of sleep in a friend’s living room “will make me start to reevaluate the opportunity cost of the dollar,” he said. she declared.
The premium economy has become a major revenue driver for airlines, which, according to Counterpoint Market Intelligence, an aerospace market research firm, are expected to triple their premium seat inventory by 2025. But travelers like Masters n were not the original target. Britton explained that the premium economy was not designed to attract midshipmen across flight class lines; carriers originally designed it to make up for the bruised egos of former business class members when the corporate world began to seriously self-audit and cut employee travel budgets. A recent report by Jay Sorensen, an industry consultant, noted that “the apparent discovery of a new breed of high-end leisure traveler” is a welcome surprise for these airlines. It was like a small miracle: the airlines had once again wrung a new social class out of flying, just as they had done with first and business class. And they were able to do so, in part, because of a phenomenon called “payment penalty.”
According to Khan, people often feel “actual physical pain” when paying for something. But humans can have short memories. If airlines create sufficient distance between the initial ticket purchase and the upgrade option, passengers are more likely to view the latter as a stand-alone cost. “A lot of upgrades happen because now you’re either at the airport or checking in, and they give you an option. You can’t even remember exactly how much you paid for your flight when you booked it, then that pain is gone,” Khan said. Basically, you don’t take into account the full amount because you’ve already internalized the original amount.
At travel time, about $45 more to upgrade a short-haul flight, even modestly, doesn’t seem so decadent, especially when the threat of suffering from the basic economy looms. In 2014, antitrust scholar Tim Wu coined the phrase calculated misery to describe basic economy conditions, positing that airlines deliberately provide substandard service to coerce customers into paying for amenities that were previously free – seat selection, checked baggage and route changes, for example. “It’s just a matter of physical discomfort that translates into emotional debt,” says Wesley Kang, co-founder of Nimble Made, an e-commerce clothing brand, which flies frequently for recreation and family visits. “The less you move, the less you have to adapt, the less inconsiderate you are to the person next to you.”
There is, of course, another prevailing view of the premium economy, which is that it is simply a clumsy attempt to get passengers to pay more for a slightly better experience. This attitude highlights the pomp and buffoonery of the premium economy. After all, a seat upgrade does not get you to your destination faster or safer. The research carries this line of thinking to some extent. Khan mentioned several studies that have been conducted to determine how much space colors the overall passenger experience. An aircraft manufacturer convened focus groups to try out different seat configurations on its prototype, sometimes offering more leg room, sometimes more elbow room. “It had no impact on customer satisfaction,” Khan said. “Where people feel the difference is if you give them four more inches at eye level. Because the perception of space is what matters.
One would assume that the rise of the premium economy was culturally predicted. The coveted Millennial-yuppie flyer claiming “nicer” seating fits the idea that they are daring go-getters who seek experiences rather than things. Plus, the confluence of pandemic burnout, discretionary income, and the aforementioned “screw in” attitude toward buying petty luxuries creates the perfect environment for low-stakes indulgence. Despite what travelers may know about seat upgrade marketing tactics, many still think the extra expense is worth it. And perception is reality. It turns out the airlines figured out how to capitalize on that fact.