Third time the charm?

It is perhaps churlish to cricitise seats that have few things inherently wrong with them, apart from the lack of legrest, which has quite a bit of cachet when trying to differentiate between premium economy seats that look and feel very similar across airlines. There’s power, and there’s on-demand entertainment, and there are fewer seats across each row than in economy.

But Virgin Australia’s massive improvement in business class from a 2-3-2 fully flat bed to the world-leading B/E Super Diamond outwardfacing herringbone fully flat bed with direct aisle access means that the gulf between its previously decidedly average business class and its same old premium economy seats has widened.

Virgin Australia seems to be hoping that the soft product will win out, since it is installing a “premium larder” minifridge, promising “a plated meal service inspired by business class, tailored to the guest and accompanied by a selection of wines from our Business Class cellar. ” Many passengers like browsing the self-service options available, popularised with British Airways’ old Club World “raid the larder”.

But only about half as many flyers will be able to book it. The existing premium economy cabin covers five rows in a 2-4-2 configuration for 40 passengers, but the new cabin contains just 24 seats, which works out as the equivalent of three rows. It’s surprisingly few given that Airbus EVP strategy & marketing Kiran Rao calculated that airlines can (and do) charge twice the economy price for a premium economy seat, for what certainly isn’t twice the space.

Of course, Virgin Australia might not feel the need to innovate, given that Qantas is using premium economy seats that started flying before V Australia, and given that the red-tailed A380s and 747s are Virgin Australia’s only competition in premium economy to the US or to a Gulf hub for onward connections.

A lack of competition is unlikely to be the case forever, though. At Airbus’s last count in June this year, 27 airlines now offer a full premium economy product (excluding the US “economy plus” style economy seats with just a bit more legroom). Compare that with just nine in 2008 when V Australia’s premium economy seats were announced, and the adoption rate is trending ever steeper.

It’s curious that there’s been so little innovation in premium economy.

That’s one of the reasons why it’s curious that there’s been so little innovation in premium economy, and not just by Virgin Australia.

Way back in 1992, Virgin Atlantic’s Mid Class on the Boeing 747 was essentially the same as in Virgin Australia’s 777‑300ER (and almost every airline’s premium economy cabin) today.

Even with the rise of premium economy in the last decade, on both Boeing and Airbus widebodies we’re seeing catalogue-only selections of seats from just a couple of manufacturers across every carrier, no matter how many branded cheatlines or airline logos they imprint onto the same seating material. It’s hard to differentiate when you’re offering the same thing as everyone else and trying to cast it (and price it) at a premium.

Air New Zealand’s Spaceseats fell flat, with the Kiwi carrier choosing the same standard seat as everyone else for its Dreamliners. And, perhaps crucially, neither Virgin Australia’s nor Qantas’s connection partners from their US or Gulf hubs offer a premium economy product. But with both the Australia-Gulf and Australia-US markets the ultra-long-haul section of connecting flight pairs, it’s surprising that we haven’t seen innovation to allow passengers to vote with their wallets. Is that perhaps due to the global distribution systems, which limit airlines to a four-class (first, business, premium economy, economy) product range? If an airline can’t sell an upgraded premium economy product, it’s fair enough if it’s equally hard to sell investing in new seats in that product category.

And so to the bottom line: price. Given that Virgin Australia’s main market in premium economy is trans‑Pacific and its main competition in the class is Qantas with a very similar seat, it’ll be telling to note whether the price for the new cabin increases or not. If Virgin Australia can command a pricing advantage for an extra three inches of legroom, good on it.

If not, for an airline like Virgin Australia that needs to outcompete Qantas, and as the sister airline to Virgin Atlantic – which introduced the entire concept of premium economy as Mid Class 27 years ago – it’s hard to see how treading hard product water helps win the passenger experience race.