SIA's premium economy attractive for corporate travel


Premium economy accounted for 7% of business travel bookings in Singapore in 2017 compared to only 1% in 2015, driven by the introduction of a premium economy product by Singapore Airlines (SIA). The increase in premium economy bookings has not come at the expense of business class bookings, which have remained steady as SIA has rolled out its premium economy offering.

SIA currently has 63 aircraft with premium economy seats, representing almost 60% of its total fleet. SIA is slated to add another 11 premium economy aircraft by the end of 2018.

The total number of premium economy seats on the SIA fleet will increase by more than 40% over the next six months, driven primarily by the delivery of seven A350-900ULRs. The A350-900ULRs will feature an unprecedentedly large premium economy cabin with 94 seats and will be used exclusively on nonstop routes to North America.

  • Premium economy accounted for 7% of business travel bookings in Singapore in 2017, up from 1% in 2015.
  • Singapore Airlines (SIA) has introduced premium economy on 63 of its aircraft, representing almost 60% of its total fleet.
  • SIA plans to add another 11 premium economy aircraft by the end of 2018, increasing the total number of premium economy seats by over 40%.
  • SIA has successfully avoided cannibalizing business class bookings, with business class accounting for the same proportion of business bookings in 2015 and 2017.
  • More than 10 foreign airlines now offer premium economy on some Singapore flights, but SIA remains the largest player with over 30 routes offering premium economy.
  • SIA's premium economy capacity is set to increase significantly with the delivery of seven A350-900ULRs, which will be used exclusively on nonstop routes to North America.


  • Singapore point of sale business travel booking data indicate that premium economy has grown rapidly, and it accounted for 7% of total business bookings in 2017.
  • More than 10 airlines now offer a premium economy product in the Singapore market, but Singapore Airlines is by far the largest player and now offers premium economy to more than 35 destinations.
  • Singapore Airlines began introducing premium economy in 2H2015 and now has 63 aircraft with a premium economy cabin.
  • Singapore Airlines will have 74 aircraft with a premium economy cabin by the end of 2018, making it one of the world's largest premium economy airlines.

Premium economy corporate bookings grow rapidly in Singapore

Premium economy accounted for approximately 7% of all business travel bookings in Singapore in 2017, according to a recent Carlson Wagonlit Travel (CWT) and Travelport study. In 2015 premium economy accounted for only slightly more than 1% of all business travel bookings in Singapore, whereas in 2016 the proportion was approximately 4.5%.

The surge in premium economy bookings since 2015 is an indication that SIA's premium economy product has been well received by the corporate market. SIA introduced premium economy in Aug-2015 and has since gradually incorporated the product across its long haul fleet, which is also used on some regional routes.

SIA did not have a significant impact on premium economy bookings in 2015 because in the first few months of offering the product it only had five aircraft fitted out. SIA currently has 62 aircraft fitted with premium economy seats, including 24 777-300ERs, 21 A350-900s and 18 A380-800s.

Singapore Airlines fleet: premium economy and non-premium economy as of 20-Jun-2018

Aircraft with premium economy

Number of aircraft

in service

Airbus A350-900XWB 21
Airbus A380-800 18
Boeing 777-300ER 24
Aircraft without premium economy

Number of aircraft

In service

Airbus A330-300E 21
Boeing 777-200/200ER 16
Boeing 787-10 5
Boeing 777-300 5
Boeing 777-300ER 3

SIA succeeds at avoiding cannibalisation of business class

SIA reduced economy class capacity on the 777-300ER and A380 fleets to make room for premium economy. Business class capacity was maintained on the A380 and increased on the 777-300ER.

SIA has tried to avoid cannibalising business class bookings, focusing instead on persuading economy passengers to trade up to premium economy. SIA was initially hopeful that corporates in Singapore would adopt premium economy policies, enabling employees that would normally fly economy class to fly premium economy on longer flights. Some corporates in Singapore already had premium economy policies and SIA was at a competitive disadvantage with these accounts, since some employees opted for premium economy on other airlines when available.

SIA seems to have been successful at avoiding business class cannibalisation. Business class accounted for the same proportion of business bookings in Singapore in 2015 and 2017 - slightly less than 38%. In fact, the proportion of economy bookings declined from more than 60% in 2015 to slightly above 54% in 2017, according to the CWT and Travelport study.

The 6ppts drop in economy bookings and coinciding 6ppts increase in premium economy bookings is a clear indication that corporate passengers have generally traded up from premium economy rather than down from business class - exactly the outcome SIA was hoping for.

Proportion of business travel bookings in Singapore by cabin class: 2017 vs 2016 and 2015

Singapore corporates embrace premium economy

The CWT and Travelport study, which was conducted by analysing over 1.3 million Singapore point of origin bookings over the three-year period, concluded that "premium economy is the fastest growing cabin segment for business travelers in Singapore". This is hardly a surprise, given that premium economy was previously only available on a limited number of routes from Singapore. However, the data shows that Singapore's corporate sector has embraced premium economy as availability has increased.

"One can easily see the appeal that premium economy has for corporate travel programs", CWT Solutions Group Asia Pacific Director Richard Johnson stated in a 19-Jun-2018 press release. "It gives travelers 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."

"It's interesting that the increase in premium economy bookings seems to have come largely at the expense of economy class, and not business class", added Mr Johnson. "This makes sense, given the trend we're seeing where companies are looking beyond travel costs and paying more attention to traveler comfort and productivity."

Numerous airlines also increase their premium economy offering

Prior to Aug-2015, premium economy was only available in Singapore from a relatively limited pool of foreign airlines.

More than 10 foreign airlines currently offer a premium economy seat on at least some of their Singapore flights (excludes airlines offering an extra legroom product but a regular economy seat). However, combined these airlines operate less than 30 daily flights from Singapore with a premium economy offering.

Three years ago, there was a smaller number of foreign airlines offering a premium economy product in Singapore - and fewer flights. LOT Polish Airlines became the latest airline with a premium economy product in the Singapore market in May-2018, when it launched services from Warsaw using three-class 787-8s. Philippine Airlines also introduced a premium economy product in the Singapore market in late 2017, when it began operating some of its Singapore-Manila flights with newly retrofitted A330-300s.

Other foreign airlines offering a premium economy cabin in the Singapore market include Air France, Air New Zealand, All Nippon Airways, British Airways, Cathay Pacific, China Airlines, EVA Air, Japan Airlines, Lufthansa and Qantas. Lufthansa and Qantas have both added premium economy capacity in Singapore this year.

Qantas resumed Singapore-London flights in Mar-2018 after a five-year hiatus, using four-class A380s. At the same time, Qantas reintroduced the A380 on Sydney-Singapore and Melbourne-Singapore, replacing two-class A330s that are not fitted with premium economy. Lufthansa launched Singapore-Munich in Mar-2018 using A350s with premium economy, supplementing its long-standing A380 service on the Singapore-Frankfurt route.

SIA has over 30 premium economy routes from Singapore

However, SIA has been by far the biggest driver of premium economy growth in the Singapore market. SIA currently has over 30 routes from Singapore with premium economy while foreign airlines offer only 15 routes, nearly all of which are also served by SIA.

The number of SIA destinations with premium economy is more than 35, when destinations that are not currently served nonstop from Singapore (Cape Town, Houston, Los Angeles, New York and Stockholm) are included. SIA has a total of 61 destinations and therefore is now providing a premium economy option on more than half its network.

SIA has introduced premium on all routes over 11 hours. Christchurch and Istanbul are the only remaining SIA routes over eight hours that do not yet have premium economy.

SIA has unveiled plans to introduce premium economy on the Singapore-Christchurch route in Jan-2019 as A350s replace 777-200ERs. Istanbul will also have to be upgraded within the next year or two, assuming the route is maintained, because SIA is phasing out its 777-200ER fleet. After the upcoming completion of 777-300ER retrofits, the 777-200ER will be the only long haul aircraft in the SIA fleet without a premium economy cabin.

SIA also currently offers a premium economy product on 15 routes of less than eight hours. However, on most of these routes premium economy is only available on some flights.

SIA continues to expand premium economy capacity

SIA continues to expand its premium economy offering, which should result in continued increases in premium economy bookings in 2018 and 2019. The premium economy portion of business bookings in Singapore could potentially exceed 10% in 2019.

SIA's premium economy fitted fleet will increase from 63 aircraft currently to 74 aircraft at the end of 2018 as seven A350-900ULRs and one A380 are delivered, and as the last three 777-300ERs are retrofitted. SIA will end its current fiscal year on 31-Mar-2019 with 63% of its total fleet fitted with premium economy (74 of 117 aircraft).

SIA began the current fiscal year on 1-Apr-2018 with 58% of its fleet fitted with premium economy (62 of 107 aircraft). In the current quarter the airline has put six aircraft into service, including five 787-10s (which do not have premium economy) and one A380.

SIA will soon complete 777-300ER retrofits

SIA began retrofitting its A380 and 777-300ER fleets with premium economy in 2H2015, and in early 2016 began taking delivery of A350-900s with premium economy included upon delivery.

SIA had retrofitted all 19 of its original A380s by mid-2016, including five aircraft that are no longer in service. These five aircraft are being replaced by five new A380s; four of these aircraft have already been delivered (including one which was delivered earlier this month), and the last aircraft will be delivered later this year.

The 777-300ER retrofit programme has taken much longer, and will finally be completed later this year. SIA has been installing 28 premium economy seats on its 777-300ERs while increasing the business class cabin and reducing the first class and economy cabins.

SIA's A380 fleet was initially retrofitted with 36 premium economy seats with the removal of 66 economy seats. The A380 premium economy cabin has been expanded to 44 seats on the newly delivered A380 as part of a new higher density configuration that also includes more regular economy seats. Through retrofits, SIA similarly plans to increase the premium economy cabin (and regular economy cabin) on the 14 older model A380s that are remaining in its fleet.

See related report: Singapore Airlines A380: seat density increase, new cabin products to improve fleet profitability

Premium economy capacity to increase significantly as A350-900ULRs are delivered

Currently there is a total of 1,856 premium economy seats in the SIA fleet, consisting of 672 seats on 777-300ERs, 504 seats on A350-900s and 680 seats on A380-800s. This will increase by 42% over the next six months as the last three 777-300ERs are retrofitted, one A380 is delivered and all seven A350-900ULRs are delivered.

SIA is slated to end 2018 with 2,642 premium economy seats across its fleet, consisting of 756 seats on 777-300ERs, 504 seats on A350-900s, 724 seats on A380-800s and 658 seats on A350-900ULRs.

As CAPA highlighted in a May-2018 analysis report, SIA has selected a low density all premium configuration for its A350-900ULRs, with 94 premium economy seats and 67 business class seats. These aircraft will be used exclusively for ultra long haul nonstop flights from Singapore to the US.

See related report: SIA corporate, premium advantage with Newark nonstop return

The total number of premium economy seats on the SIA fleet will increase by another 4% as the 14 A380s are retrofitted, lifting the total number of premium economy seats to 2,754. SIA plans to retrofit these aircraft between late 2018 and 2020. However, the number of aircraft with premium economy seats will be flat, at 74 aircraft, from late 2018 until 2021 as SIA is not expected to take delivery of any additional aircraft with premium economy seats until 2021, when its first 777-9X is delivered.

Premium economy to account for 8% of seats on the SIA fleet

Premium economy currently accounts for approximately 6% of the more than 30,000 total seats in SIA's current active fleet. The proportion of premium economy seats will increase to 8% by the end of 2018, due mainly to the delivery of the A350-900ULRs.

Premium economy's proportion of seat capacity at SIA is much lower because the average stage length for the premium economy fleet is much longer than the average stage length for SIA's regional fleet, which is not fitted with premium economy. The A350-900ULR fleet will result in an even longer average stage length for the premium economy fleet, since these aircraft will only be used on nonstop flights to North America.

However, premium economy has a disproportionately large significance for SIA strategically and is now generating meaningful revenue. The roll-out of premium economy has significantly improved SIA's position in the corporate market. This position will improve further as SIA resumes long haul expansion with the premium focused A350-900ULR.

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