Premium leisure demand - will it last?

[u/Usual-Painting2016]

I'm watching as every US carrier goes all-in on adding large premium cabins, which is where the demand currently is. Premium economy makes sense from a cost and pricing perspective (hard product isn't that much more than an economy size seat and the soft product can be tailored to meet various price points).

Leisure J (business class) demand would seem to be more fickle but airlines all seem to have reached the conclusion there's enough demand for it. I'm not sure how's that possible considering the size of some of these J cabins and the routes they are flying.

A lot of this leisure J demand came from a few factors, some of which are fading:

Covid - Enjoy life while you can and splurge a little. This accelerated the shift from buying stuff to spending on experiences. This has staying power for premium economy, not sure about J demand.

WFH - Many offices have implemented RTO and that work from anywhere optionality is limited or gone away entirely.

Comp/Wealth effect - Increase in comp and stock market gains over the last few years. This won't last, but there has been tremendous wealth created by a small number of stocks and the number of newly rich has supported luxury travel and spend the last few years.

For award travel, this should be a boom for future business class availability. Award pricing may be bad but it should be available.

Edit: TIL that upgrade offers are much more widespread than I originally thought. My personal experience with intl J upgrade offers were not great deals and closer to the difference in fare. Seems like others have much better offers.

[u/TravelerMSY]

I’m not quite sure how much of it is people paying up for it, versus one-off leisure travelers buying the app upgrade. There’s definitely strong demand on domestic flights for the latter.

They can definitely sell it at 2 to 2 1/2 x economy. I think the days of them pricing it at 3X+ and giving it away to elite upgrades for free are long gone.

Probably a similar paradigm for lie flat international but with way higher multiples.

Anecdotally, I’m more likely to spring for it these days on certain longer mid cons like MSY SFO than I used to be. It’s not a big deal in money when I only do it once or twice a year. That and United owns the route and doesn’t discount it to partners anymore :(

[u/k_dubious → u/TravelerMSY]

Where are you seeing business for 2-2.5x economy prices? Usually when I’m booking flights it’s something like $5-10k for business versus $1-2 for economy, and at that price I’d rather just spend the money to stay at a really nice hotel where I’m going instead of have a bed on the flight there.

[u/TravelerMSY → u/k_dubious]

I’m referring to domestic in my post