Business travellers are choosing to fork out a little more to upgrade from economy to premium economy seats – here’s why

Premium economy seats have become increasingly popular among companies and business travellers who want the extra comfort while keeping within budget.
Singapore Airlines

Premium economy has become the fastest growing cabin segment for business travellers in Singapore as companies seek to strike a balance between providing their employees additional comfort while in the air and staying cost-effective.

According to a study conducted by global travel management company Carlson Wagonlit Travel (CWT) and travel commerce platform Travelport, the number of premium economy seats booked for corporate travel from Jan 1, 2015 to Dec 31, 2017 had increased at an average rate of 157% year-on-year.

On the contrary, corporate bookings for other cabin segments – first class, business class and economy – recorded negative growth over the same time period. The average annual growth rate for first class slid by 2% while business class and economy fell by 1% and 6% respectively.

The study involved an analysis of over 1.3 million bookings made during the three-year period and took Singapore as the point of origin.

CWT Solutions Group director for Asia Pacific, Richard Johnson, said: “One can easily see the appeal that premium economy has for corporate travel programmes. It gives travellers that much-needed extra comfort versus economy class on medium-to-long-haul flights, while costing their companies significantly less than a business class ticket.”

A steady increase in the seat share of premium economy as a proportion of total bookings was also observed as the cabin class comprised 7% of all corporate travel bookings by the end of 2017, up from 1.23% in 2015.

While economy class seat share saw a marked decline from 60.27% in 2015 to 54.46% in 2017, business class bookings remained largely stagnant, comprising 37.66% of corporate travel bookings in 2017, compared with 37.59% in 2015.

Johnson noted that the increase in premium economy bookings apparently came largely at the expense of economy class bookings rather than business class. He attributed the trend to companies prioritising traveller comfort and productivity over travel costs as stress from flying long distances could prove detrimental to employee well-being.

Based on findings from the Travel Stress Index which was put together by CWT, flying economy class on medium-to-long-haul flights was highlighted as the third strongest stress-inducing factor for business travellers. The consequences of suffering such stress include inefficient use of time and lowered productivity.

“When you look at corporate travel policies, we have seen more companies allowing their employees to travel premium economy over the last few years,” said Johnson.

“Still, only around a quarter of our clients have policies that explicitly allow their travellers to book this cabin class, suggesting that there’s a lot of room for growth for premium economy in corporate travel.”

Airlines are beginning to take notice of the trends and appeal of premium economy class to their customers – particularly so among those flying to and from Singapore.

At the end of 2017, 20% of airlines flying into Singapore were found to offer premium economy seats and the service was made available on more than 30% of routes from Singapore.

In order to accommodate the rising demand, airlines have also increased the supply of premium economy seats at a steady pace by sacrificing some from economy and first class cabins.

The number of premium economy seats available as a proportion of total airline seats rose from 2.47% in 2015 to 3.55% in 2017 whereas economy class seats dropped from 85.89% to 84.61% while first class seats declined from 0.84% to 0.73%.

“With this trend we see, it has become even more imperative for corporates to work with technology partners and travel management companies who are able to provide accurate and comprehensive content choices for their travellers,” said Mark Meehan, Travelport’s managing director for Asia-Pacific.

“Technology such as Branded Fares and Ancillaries, which can provide access to rich images of airline seat options and other airline products, will give corporates better value and coverage of available airline content.”