There’s a buzz around premium economy among transpacific operators, but Korean Air will not join the party

Korean Air has looked over the years at introducing a premium economy product, which has become mainstream among transpacific operators. However, Korean has so far decided against adding a premium economy cabin on any of its long-haul aircraft and will therefore remain the largest transpacific competitor without a premium economy option.


Summary:

  • Korean Air has no plans to introduce a premium economy product, concluding it is better off offering a relatively spacious economy class product;
  • The South Korean carrier has become the largest transpacific airline without premium economy as most of its competitors have introduced the product;
  • Fifteen out of the top 20 transpacific carriers now offer a premium economy product, including Korean Air’s JV partner Delta Air Lines.

There are now 15 airlines operating between Asia Pacific and continental North America that offer premium economy product. Korean is by far the largest without a premium economy product and is the fourth largest overall.

In addition to Korean the only top 20 transpacific airlines without premium economy are Air China (number 9), China Eastern (number 10), Asiana (number 12) and Hainan (number 16). United Airlines, Delta Air Lines, Air Canada, Cathay Pacific, Japan Airlines, American, EVA Air, All Nippon Airways, Qantas, Philippine Airlines, China Southern Airlines, China Airlines, Air New Zealand, Singapore Airlines and Virgin Australia (in order based on current transpacific capacity) all now have premium economy products on at least some of their widebody aircraft.

Korean’s new transpacific JV partner, Delta, introduced premium economy late last year and plans to offer the product on all long-haul aircraft by 2021. Delta is the second largest airline in the Asia Pacific-North America market after United, which introduced premium economy on its first aircraft in June and will start selling the product next year.

The Delta-Korean combination is the second largest transpacific JV, behind United-ANA and ahead of American-JAL. American introduced premium economy in late 2016 while JAL and ANA have had premium economy for several years.

Not offering a premium economy option puts Korean and the Korean-Delta JV at a possible competitive disadvantage, particularly in the corporate segment. Korean’s  president Walter Cho acknowledges premium economy could help it attract more corporate traffic but believes that overall it would negatively impact the airline’s profitability.

“Our economy class is very close to other airlines premium economy. To [add premium economy] we have to reduce our economy class pitch and I don’t want to do that,” he explained at a media briefing during last month’s Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Jeju.

Korean offers 34-inch pitch in economy across its long-haul fleet, which consists of Airbus A380s, Boeing 747s, 777s and 787s. Mr Cho pointed out that Delta and other airlines have only slightly more pitch in premium economy. Korean does not want to reduce economy pitch as it is an important part of its service offering and has concluded the gap between premium economy and economy would therefore be too small to effectively sell.

Premium economy of course also provides a wider seat and typically a higher level of service, including dedicated check-in, priority boarding and upgraded meals. However, Korean is concerned the yield and load factor in a premium economy cabin would not be sufficient to offset the loss of regular economy revenues resulting from a smaller economy cabin.

“We already have the lowest seat number on our A380. If we do put in premium economy it will go further down and that will impact our profitability,” Mr Cho said. “I’m not too optimistic how to do it.”

While this may be bad news for corporates with premium economy policies, economy class passengers will be happy there is still an airline refusing to follow the global trend of reducing economy seat pitch and width. In addition to maintaining a 34-inch pitch, Korean has kept all its 777s at nine abreast in economy. Mr Cho pointed out that he is “a very tall guy and if I cannot fit in the seat we don’t put it in.”