Are You Sitting Comfortably? Commercial Airlines Adopt More Cost-Conscious Approach to Seating Classes as Installed Base Passes 3 Million Seats

Tuesday, July 9, 2013 10:58 am EDT


"In addition, passengers rarely pay the advertised ticket price in first class, instead securing their luxury seat through upgrades using air miles. All of this makes first class a tricky business proposition at a time when airline revenues are squeezed more than ever before."

LONDON (July 9, 2013)—The traditional “First – Business – Economy” seating layout of many commercial aircraft is set to change over the coming decade, with premium economy becoming an increasingly important seating class, according to the latest findings from IMS Research, now part of IHS Inc. (NYSE: IHS).


As commercial air travel becomes ever more competitive, airlines are examining new ways to appeal to passengers. A recently published report from IHS examining the aircraft seating market projects that the largest growth in the next decade will be seen in premium economy and business class seating. The global installed base for commercial airline seating exceeded 3 million units in 2012.


Shipments of premium economy seating are forecast to grow to almost 70,000 in 2022, up from 14,000 in 2012, equivalent to a 10-year compound annual growth rate (CAGR) of 17.1 percent. Premium economy is a relatively new class of seating that fits between traditional business and economy classes. It often will offer increased legroom, enhanced dining options and more attentive on board service.


Meanwhile, shipments of business class seating are predicted to rise to 77,000, up from 32,000, yielding a CAGR of 9.3 percent. For its part, economy class seating is forecast to continue to represent the vast majority of all shipments, growing at a 6.1 percent CAGR to reach 670,000 seat deliveries in 2022.


With the global commercial aircraft fleet projected to grow at a CAGR of 4.0 percent from 18,942 at the end of 2012 to 28,016 at the end of 2022, premium economy and business class seating installations will considerably outpace the market. In contrast, first and ‘business/economy’ class seating is predicted to grow at CAGRs of just 1.6 percent and 0.6 percent, respectively. Because of this, a reduction will occur in the overall prevalence of first and business/economy cabins during the coming decade.


Business/economy is a seating class that has been most widely adopted on narrow body aircraft in Western Europe. The seats used in the business and economy sections are exactly the same. However, in the business class section, the middle seat is not sold, with moveable armrests and a central tray over the vacant middle seat often used to provide enhanced seat width and storage options for passengers seated in the aisle and window seats.


“In part, the global economic slowdown has helped to instigate this change, with the high ticket price of long-haul first-class seating proving to be in stark contrast to cost-cutting measures implemented by governments around the world,” said Heath Lockett, senior analyst, aerospace electronics at IHS. “In addition, passengers rarely pay the advertised ticket price in first class, instead securing their luxury seat through upgrades using air miles. All of this makes first class a tricky business proposition at a time when airline revenues are squeezed more than ever before.” As a result, many major airlines have either stated that they will downsize or completely remove their first-class cabins.


Concurrently, service levels in business and premium economy cabins have been steadily improving, heralded most notably by the introduction of lie-flat beds in business class.


“Until recently, premium economy seating wasn’t entirely dissimilar to economy, save for the addition of a couple of inches of seat pitch or a slightly more comfortable seat,” Lockett continued. “However, that situation has evolved rapidly in recent years. The premium economy cabins of airlines such as Air New Zealand and Virgin Atlantic now almost equal the luxury found in some business-class cabins—a trend certainly expected to continue, particularly as business class becomes the ‘new’ first class.”


Given differing success rates of the seat classes, it is expected that the traditional “First - Business – Economy” model will gradually transition to a more cost-conscious “Business - Premium Economy – Economy”  model in order to meet the needs of the travelers of the future.


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About IHS(


IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today's business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs 6,700 people in 31 countries around the world.


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