Economy X should tick some boxes for corporates

Virgin Australia on 30-Mar-2017 announced the launch of its new Economy X product, making it the only airline with an enhanced economy domestic offering.

The Economy X product, which will roll out from 21-May-2017, boasts enhanced pre-flight and in-flight services.

Virgin Australia's entire fleet of 75 Boeing 737 aircraft is being reconfigured to provide extra legroom in the first three rows of the Economy cabin. Economy X features between 34 inches and 39 inches of legroom, compared to 31 inches for the carrier's standard economy class seat. The existing exit rows, which already have more legroom, will also be included in the new class.

Guide to Economy X by aircraft type

Fig. 1: Economy X configurations by aircraft type Source: Virgin Australia

Economy X effectively adds more seats and applies a new name to the previous "extra legroom charges" levied on exit-row seats. Those charges ranged from AUD20-AUD70 on domestic and short-haul international services and could be added to the original booking or subsequently up until check-in.

Economy X upgrade fees

Long haul:

Fig 2.: Economy X upgrade fees Source: Virgin Australia

Economy X will also replace Economy Space + on long-haul international flights. Economy Space +, introduced on 16-May-2016, consists of the first five rows and the exit rows of the main cabin on Virgin Australia's Boeing 777-300ERs on the United States and Middle East routes.

Where the previous upgrades were priced at AUD135 to AUD165 one-way, Economy X costs AUD109 to Hong Kong and AUD149 to the US.

Besides the extra legroom, Economy X passengers will also be able to use the airline's premium check-in and boarding - services highly valued by corporate travellers.

Additional benefits on long-haul international flights include designated overhead locker space, guaranteed first meal choice, and premium noise-cancelling headset. These additions had also been bundled into the Space + upgrades.

Economy X is free of charge for Velocity Frequent Flyer Platinum members, who will be offered the product at the time of booking or where available at any time before check-in, while their companions travelling on the same booking will also be eligible.

Economy X meets the need for premium inclusions at discounted prices

The new offering will appeal to corporates keen to stretch their budgets without compromising traveller convenience.

At a time when it is difficult to justify luxury travel, corporates are increasingly booking their travellers on Premium Economy to ensure more comfort and convenience without the price tag of Business Class.

Both Virgin and Qantas have stepped up their international Premium Economy offerings. Qantas' new Dreamliner contains a 28-passenger Premium Economy cabin, while Virgin last year (16-May-2016) introduced major improvements to its Premium Economy cabin, which now features 24 seats and claims "more legroom than any other Australian airline".

Legroom is crucial to traveller comfort on 13-hour flights, but less so on short-haul flights. With most domestic flights in Australia lasting less than three hours, corporates don't feel the need to upgrade their travellers to Business Class. But they will appreciate the value of a few inches of additional legroom. Most business travellers will also value the increased efficiency and time savings of the new premium check-in and boarding, although Velocity Gold and Platinum members already enjoy those privileges in addition to access to Virgin's dedicated Lounges.

The new service is even more appealing since it comes at no additional charge for top-end loyalty clients, further reinforcing the value of Virgin's frequent flyer programme.

However, Economy X does provide Virgin with an opportunity to improve yields, by adding value to the economy cabin without losing capacity.

It also gives the airline a point of difference in the market, with no similar offering yet available from rival Qantas.

Economy X provides an opportunity to upsell

Premium Economy has grown as an alternative to Business Class on long-haul, playing into the rising pressure for corporates to reduce travel spend. Where organisations might previously have been willing to incur the added expense of Business Class to ensure traveller comfort and convenience, the availability of a premium service at a lower pricepoint makes Business Class increasingly difficult to justify.

On the other hand, the availability of an enhanced economy product provides organisations with the opportunity to improve the travel experience without significant outlays. Corporates will certainly opt for Economy X where it is available at no additional cost for its Platinum travellers, but once that is added to the travel policy, it is difficult to refuse the upgrades to non-Platinum staff.

The new class will be seen as a win-win for travellers, corporate customers and the airline, delivering an enhanced service, mostly at no cost to travellers, but, at the same time, entrenching Virgin's loyalty programme and a competitive advantage over Qantas, which must surely match this offering at some point.