Emirates President Sir Tim Clark has issued a stark assessment of the state of economy class air travel, describing it as a product “stuck in the 1990s” and long overdue for reinvention.
Speaking at the International Air Transport Association (IATA) conference in Delhi, Clark acknowledged that the airline industry has largely neglected economy class for decades, investing instead in premium cabins.
“Could we make economy seats a lot more comfortable with more features, functionality and products? Yes, we could, and I think we’ve been a bit slow,” Clark said. He referenced extensive efforts in the 1990s to improve seat design and ergonomics, which halved the weight of seats and improved comfort. “But after that,” he admitted, “we stopped. We concentrated on the premium products.”
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However the airline industry has not gone overboard on spending money on economy class because of passenger demand for lower fares. Compared to average weekly earnings the costs to buy a return trip from Sydney Australia to London has dropped from 2.72 times average weekly earnings in 2000 to 1.20 today.
Business class has declined from 9.38 to 5 times average weekly earnings.
One area where the industry made strides—without Emirates initially—was premium economy, now one of the most profitable cabin classes across global airlines. Industry watchers have called it the greatest missed opportunity of the past 30 years.
A Late, Costly Adoption
Emirates, despite being a global leader in aviation, hesitated to adopt premium economy out of concern that it might cannibalize business class revenues. That hesitation cost the airline dearly. Had Emirates introduced premium economy in 2012—as many industry experts urged—it could have generated an estimated $35.8 billion in additional revenue over a decade.
In the ten years to FY2020, Emirates flew 478 million passengers. If just 5% had opted for premium economy at an average of $1,500 more per ticket, the total incremental revenue would have approached $36 billion.
“We at the airline had been absolutely shocked at the level of demand for the seats,” Clark admitted at a 2022 aviation conference in Sydney. “People have been clamouring to get into them. They have been paying whatever we’ve asked.”
Industry-Wide Hesitation, Missed Profits
Emirates wasn’t alone. As far back as 1996, this author proposed premium economy configurations to Cathay Pacific and Qantas for the 747. It was a 15 per cent increase in space for a 40 per cent hike in fare. At the time business class was three times the economy fare. Both rejected the idea. Qantas’ then-CEO James Strong dismissed it, saying, “We couldn’t make the business case,” despite Australia’s reputation for long-haul travel and tall passengers.
British Airways, however, embraced the concept in 2000 with its “World Traveller Plus” cabin, a move former CEO Rod Eddington described as “extremely popular” in a 2003 interview, with the author, he asked that it not be widely publicized to avoid tipping off competitors.
Air New Zealand followed suit in 2004, initially fitting just 12 premium economy seats on its Boeing 747s. That number quickly expanded to over 50 seats on newer aircraft models. Qantas came around in 2008 with its A380s and later retrofitted its 747s. Cathay Pacific and Singapore Airlines eventually adopted the cabin in 2012 and 2015, respectively.
Premium Economy: A Class of Its Own
Premium economy has proven to be a golden middle ground—more spacious and refined than economy, but far less costly than business. A 2015 academic study by Hugon-Duprat and O’Connell found leisure travelers were willing to pay 30% to 50% more for the upgrade. That same study showed premium economy seats cost 1.6 times more to produce than economy, compared to business class seats which cost 3.5 times more.
Despite the increased cost, premium economy delivers strong margins. Lufthansa reported in 2022 that its premium economy cabin was 6% more profitable than business class and 33% more profitable than economy. Boeing’s ICAS simulation model further confirmed that premium economy yields the highest revenue-to-cost ratio of any cabin, generating 2.3 times more revenue than its production cost.
A Psychological and Financial Upgrade
The success of premium economy also stems from intangible benefits. Market analysts at Counterpoint Intelligence note that many passengers are willing to pay more not just for extra legroom and quieter cabins—but for the sense of elevated status. “Long-haul air travel is still a class experience,” they said. “Premium economy offers an affordable escape from economy and a boost in social perception.”
That perception, combined with physical comfort, has made premium economy especially attractive for flights over five hours. The cabin has become essential for airlines aiming to balance profitability with customer satisfaction on long-haul routes.
