SIA's new premium economy among the 'poshest'

Experts feel premium economy should have come sooner

SINGAPORE - The new premium economy class from Singapore Airlines (SIA) is set to be one of the "poshest" in the industry, though it should have been introduced sooner, analysts told The Straits Times.

The cabin will launch in August with enhancements like wider seats that recline further, extra legroom and better food - all for around 20 per cent more than a regular economy class ticket, excluding promotional fares.

Around 30 airlines - including Qantas, Air France, British Airways and Lufthansa - currently offer a premium economy product.

Singapore Management University's Assistant Professor Terence Fan, who specialises in transport, said that although many carriers have yet to introduce one, "SIA is, to some extent, playing catch-up".

He added: "Within the premium economy offerings, the variation is huge. So while SIA is late, its product seems to be comparable with that of Qantas, being the poshest in the industry."

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SIA had offered premium economy class on its non-stop flights to the United States in 2004.

In 2008, these flights were made all business class, until they were axed in 2013 due to lack of demand.

Mr Shukor Yusof of aviation consultancy Endau Analytics said: "SIA should have taken the opportunity back then to offer the product on other aircraft and routes, but perhaps they did not see the need at the time."

The gap between premium economy and business class on SIA is expected to be significant, with a minimal risk of business class travellers downgrading and eroding revenue in the process.

It is more likely that economy class travellers who are willing to pay a premium for a better experience will upgrade, which should mean better yields and margins for SIA.

Its spokesman Nicholas Ionides told The Straits Times: "Our studies have shown us that the customer profile for premium economy is likely to be different from that of business class."

The new class will launch first on flights to Sydney, with more destinations including London, Frankfurt, Hong Kong and Tokyo to be added later.

It will initially be introduced on 19 Airbus 380s, 19 777-300ERs and the airline's first 20 A350s.

The total investment for the new cabins is an estimated US$80 million (S$108 million).

SIA has studied a premium economy offering several times over the years, Mr Ionides said.

Based on route economics and customer trends, and the increasing popularity of premium economy, the airline decided this was the right time to launch.

UOB Kay Hian analyst K. Ajith said that with rivals such as Gulf carrier Emirates expanding aggressively, it is important for SIA to expand its offerings to appeal to more customers.

He said this was why SIA started long-haul budget carrier Scoot and grew its stake in regional budget carrier Tigerair to more than half.

British Airways was among the first carriers to offer a premium economy class about 15 years ago.

The airline's South-east Asia head Robert Williams said it did so to "offer something for every pocket", adding: "We have the product fitted on all our long-haul aircraft, including the ones we fly to Singapore, and we get a good mix of leisure and business travellers." In Asia, it is mainly North-east Asian airlines like Cathay Pacific, EVA Air and All Nippon Airways that have similar offerings for a growing middle class.

karam@sph.com.sg