The transformation of Air India is a long-term story, but many insights will flow at this point in time from the airline’s move to become a first-rate carrier from the bottom-rated carrier it was. The airline will merge Vistara with itself and is also working on a massive upgrade of widebody aircraft, which will also be the phase when the airline adds a Premium Economy Cabin to its widebody aircraft.
Air India will start adding Premium Economy seats to narrowbody aircraft.
In a story that Hindu Businessline first published, it was revealed that Air India will now add a Premium Economy cabin to some of its A320neo aircraft. While the aircraft’s layout is unknown, Hindu Businessline indicates that 27 existing Airbus A320neos will undergo a retrofit starting in early 2024 (these would be the aircraft leased before the privatisation). Additionally, another 25 A320neos leased from the order book of lessors will be fitted out with a premium economy cabin.
Why now? I can only think of two reasons:
- Vistara has a Premium Economy, and the load factors have been very nice over the past one to two years. Even when fares were capped, they were only so for Economy and not Premium Economy. So, as the merger process moves forward, Air India wants to be ready to have a Premium Economy cabin across the carrier on Metro Routes. Air India will transition non-metro routes to Air India Express.
- Aircraft typically fill up back to front; hence, Premium Economy bookings usually come in the near term to departure, which means the airline can price them the way they want to and command an even higher premium for PE.
Remember, real estate on an aircraft is limited, and you are physically limited by how many passengers you can carry on a plane. Premium Economy must justify its existence, given that the airline will typically remove six economy seats to accommodate four rows of Premium Economy (five rows in Economy will usually give way to four rows of Premium Economy, depending on the legroom the airline wants to provide).
It will be interesting to see how quickly this Air India Premium Economy cabin enters and makes its way on the plane.
Air India will move forward with a plan to implement Premium Economy on their Narrowbody aircraft. The fitout will be done on 27 A320neos (leased) currently in service and on new A320neo aircraft entering service soon. The layout and number of seats is not known at the moment.
What do you make of the move by Air India to introduce Premium Economy on their narrowbody aircraft?
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