Can Premium Economy Save Your Company Thousands of Dollars?

Traditional first class on global flights is becoming more and more rare, but premium economy is becoming a more attractive (and affordable) option.

Airlines are adding new premium economy products for a simple reason: premium economy products are in demand, especially by global business travelers who often take trips internationally.

As airlines respond to the growing demand for premium economy, that response will create implications for companies, Travel Managers and Travelers. Here’s a look at everything you need to know about the growth of premium economy on international routes — and what it means for business travel.

Premium Economy May Limit Traditional Economy Options

As airlines add premium economy to more and more routes, they aren’t adding new seats to planes. Rather, they are retrofitting planes to include a new level of service — and they are carving that new level out of traditional economy.

If you’ve become accustomed to booking last minute and easily finding an economy seat from Chicago to London, you may find your options limited in the future. More premium economy seats means fewer traditional economy seats.

But the addition of premium economy could be good news for companies who typically place executives and others in key management roles in business class or first class for international flights. They can now book premium economy at significant savings without losing much in the way of amenities. Upgrades from premium economy to business class or first class are also likely for business travelers who often take international trips.

How Premium Economy Should Affect Travel Policies

As of now, few companies are responding to the influx in premium economy options in their travel policies. But there’s a huge opportunity for companies that offer business class or first class to key personnel on international flights.

Premium economy is an ideal middle ground. For important team members flying to international destinations, premium economy delivers comforts and adequate amenities. Consider adding language to your travel policy that outlines “the next class of service above economy” as what should be booked for international flights. This will allow team members to book premium economy when it’s available, but it will continue allowing them to book business class when premium economy is not available.

Where Can You Find Savings?

The difference between premium economy and business class is where businesses can save thousands. A look at recent fares for flights from New York’s JFK International Airport to London shows the following:

“The fare difference between premium economy and business class is about $6,000, while the increase from regular economy to premium economy is only $500,” said JTB Business Travel’s Aash Shravah. “If a company typically spends $7,380 for a seat in business class, they can save $6,000 for each ticket they buy in premium economy.”

Even if a company only authorizes economy seats on global flights, there’s a huge, non-monetary benefit to premium economy. “They can spend $500 more and give their travelers a good experience that allows them to arrive more refreshed, energized and productive when they reach London.”

What Airlines are Embracing Premium Economy?

What airlines are currently expanding their premium economy options? Here’s a brief list of the carriers taking action:

• United: United is reconfiguring 21 Boeing 767-300ER aircraft to include an additional 22 seats in its Premium Plus cabin.
• American: American has completed the addition of premium economy on 100 of the 124 planes on which it is planning to include this new level of service.
• Delta: Delta has announced plans to offer a Premium Select cabin on all of its wide-body planes by 2021.

Other airlines are currently expanding premium economy options, and still others are likely to expand premium economy in the future.

The Power of Negotiation

Businesses have a huge opportunity to negotiate premium economy rates. Airlines are open to securing business travelers as they introduce this new level of service on many routes, and companies may be interested in providing the premium economy experience to their travelers (at significant savings over business or first class).

Start approaching airlines sooner rather than later about negotiating premium economy fares on international flights. Then, once your existing contracts expire, you’ll be able to create new policy language that addresses premium economy and start offering this as an option to your international travelers.

Find the Best Fares

It’s hard for any one company to negotiate its own rates and to deal directly with multiple airlines. At JTB Business Travel, rate and fare negotiation is just one of many services we offer as a comprehensive corporate travel agency.

When you’re ready to look at premium economy, we’re ready to help you negotiate the rates you want. Contact us today and learn more about how we can help you save money on airline fares, hotel stays and much more.