Features

Interview: Iberia's CCO on new premium economy seat

21 Apr 2017 by marisacannon
Iberia Marco Sansavini

From this summer, Iberia will be rolling out its new premium economy seat, gradually retrofitting the cabin on its A330-300 and A340-600 aircraft over the next two years.

The first routes to feature the seat will be Madrid to Chicago, New York and Bogota, but the airline plans to fit the cabin on all of its wide-bodied aircraft in due course, offering the seat across its entire long-haul network.

Business Traveller met with Iberia’s chief commercial officer Marco Sansavini at the launch event in Madrid to find out more about premium economy perks, Avios earning rates and whether the seat is good enough to tempt economy passengers to “buy up”.

Why are you introducing premium economy now?

Iberia has been through a profound restructuring process, where our focus has been on being best in class and state of the art in our core products, which are economy and business. The first phase of the transformation took three years, refurbishing the long-haul fleet, which finished in October last year. During that process, we found that both products were increasing our NPS (net promoter score) by around 20 points. We had a pretty out-dated product before, so it was necessary.

Business class has improved so much in this time, and the gap between economy and business class has widened so much that we realised there is a group of people in economy that are saying, “I simply can’t afford business, but if you offer me something closer or in between, I’m prepared to pay for it”.

We looked at how much people were willing to pay, the economics and costs of retrofitting and the group experience, such as BA’s experience with premium economy. After we did the math, we saw that there was a space for the product, and we started planning and implementing it about a year and a half ago. We started selling the seat in January, and now the first aircraft has left the maintenance facility.

IBERIA-turista premium-Entrete_alta

Why did you decide on the Recaro PL3510 for the seat?

From the group perspective, we have a common seat with BA, and from a purchasing perspective, buying jointly is an advantage [BA and Iberia have recently announced a joint order of 9,000 PL3510 seats to be fitted on their A320neo and A321 short-haul aircraft]. You have to consider that we are very complementary in our network with BA so offering a similar proposition when we sell jointly is very powerful, so it was obvious to come to a common solution with BA.

Following the launch routes, which others will the seat be introduced on?

We plan to retrofit all of our [long-haul] planes by summer 2018, so all the services that operate with A340s and A330s, will have the cabin. Where do we operate the A330-200 to? To Asia and some Central American destinations, while South America and North America are served by A340-600 and A330-300s. [South America] is the backbone of our network, we are the largest operator between Europe and South America with 20 destinations and 250 frequencies. We also serve five destinations in North America.

Will you be operating premium economy fitted aircraft on the MAD-LHR route?

The Madrid-London route is what we call a “trunk route”, or a hub to hub connection, so we have a lot of passengers that take that connection – not only to do that route, but to connect to Spain or Asia or from the UK to Latin America. It’s a dense route, and so we operate fewer flights and use a larger aircraft, such as the A340-600. The reason why we operate that aircraft is because there is heavy cargo traffic that we share with BA and IAG, flowing from Asia and Latin America and connecting in London, and only the larger aircraft can transport that cargo. We operate one A340-600 in the afternoon between Madrid and London, which will be retrofitted, so yes, it will be available.

Will you sell it at the normal economy fare (on European routes) and use it for upgrades ?

We haven’t considered this yet, because we don’t have a premium economy pricing structure for Europe, so I think we will just sell it as economy and upgrade our most loyal customers. In Europe, we sell our emergency exit seats with an additional charge, so premium economy might fall into that category.

Are there any boarding or luggage benefits?

If you are a premium economy passenger, you won’t have a separate check-in counter, but you will be offered “preferential check-in”, which means you share the same counter as economy passengers, but there is a separate queue, so that you have priority. Passengers won’t have fast track or access to the lounge, but there is priority boarding, where they will be offered boarding at the same time as business passengers, and [like business], you’ll get two pieces of luggage instead of one.

Will Iberia Plus members be able to redeem from and upgrade with points to premium economy?

Iberia Plus members earn Avios proportionally to the cabin that they’re in. We have three booking classes in premium economy, and the highest earning class is 150 per cent of miles flown. In terms of upgrades, you can buy upgrades to premium economy with Avios, like you can in business. For any passenger that receives an upgrade proposal [depending on availability, Iberia invites passengers to upgrade at a special rate via email or at check-in], we will now offer two upgrade proposals, one to premium economy and another to business.

See below for fare classes and Iberia Plus earning rates.

Class of travel Elegible fare class Avios awarded Minimum Avios
First F* 300% 1.500
250% 1.250
Business J/C/D 250% 1.250
R/I 150% 750
Premium Economy W 150% 750
E/T 100% 500
Economy Y/B/H 100% 500
K/M/L/F/V/S/G**/Z/N 50% 250
Q/O/A*** 25% 125

How great is the risk of the new product cannibalising your business class?

Looking at all our analysis and the experience of BA and the industry, the number of customers that decide to buy down from business class, is very limited. When it happens, they try it, but then often, they decide to go back. As you saw, business class is an incomparable service, compared with even premium economy, and we believe that the demand will come primarily from those wanting to buy up.

iberia.com

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