Almost two years ago, American Airlines (NASDAQ:AAL) finally introduced a true premium economy seating option, which it calls "Main Cabin Extra". However, merger partner US Airways has continued to buck this industry trend, and has no premium economy section on its planes.
That's about to change. While the new American is led by former US Airways executives, they have opted to install extra-legroom seats in the US Airways economy cabin, according to the Associated Press. As the two airlines integrate, Main Cabin Extra will be rolled out across the combined mainline fleet, as well as on larger regional jets.
Joining the crowd
American's Main Cabin Extra seats offer an extra four to six inches of legroom compared to American's standard coach seats. When it introduced this feature in early 2012, American joined fellow legacy carriers United Continental (NYSE:UAL) and Delta Air Lines (NYSE:DAL), which also have premium economy sections.
United Airlines rolled out "Economy Plus" in 1999, becoming the first U.S. carrier to offer extra-legroom coach seats. Following its merger with Continental a few years ago, the combined company decided to keep the concept and roll it out to Continental's planes.
Around the same time that United was deciding whether or not to keep Economy Plus, Delta announced plans to add a few rows of "Economy Comfort" seats on long-haul international flights. Later in 2011, Delta decided to expand the concept to its domestic mainline and large regional jet flights as well.
Premium economy seats can be valuable for airlines in two ways. First, they are frequently used as a complimentary upgrade to reward the airline's best customers and passengers who paid the full unrestricted fare. Second, they serve as a source of high-margin ancillary revenue from casual fliers who are willing to pay extra for the additional legroom.
From a network perspective, US Airways couldn't match United and Delta, so trying to mimic them by adding premium economy seats would not have had much effect. Instead, US Airways relied on dominating its few hub cities to generate business traffic. By contrast, American Airlines is competing directly with United and Delta. As a result, it's critical for the combined carrier to at least match the amenities that United and Delta provide for high-value customers.
The price of extra legroom
Unfortunately, there are only two ways to fit extra-legroom seats on an airplane. You can either reduce the distance between the remaining rows (seat pitch), or remove rows of seating. So far, American Airlines hasn't revealed which of the two routes it will take. However, my money is on reducing the economy class seat pitch.
The new American/former US Airways management team has been adamant about keeping costs down, and executives recently disclosed plans to add seats to several American Airlines aircraft types. Company president Scott Kirby stated that many of American's planes had fewer seats than similar aircraft at United and Delta, and a move to slim-line seats will allow American to add seats without compromising passenger comfort.
It would be incongruous for American to add rows to the former American Airlines planes while simultaneously removing rows from the former US Airways planes! Instead, through the use of slim-line seats, it should be possible to add legroom to a few rows in the front of the US Airways economy cabin without squeezing passengers in the back of the plane too much.
Foolish bottom line
In the tight race between American Airlines, United Continental, and Delta Air Lines for airline industry dominance, none of them can afford to fall behind from a "product" perspective. United and Delta have both committed to premium economy seating as a perk for high-value customers and an opportunity to earn ancillary revenue from everyone else. As a practical matter, American had no choice but to follow.
Economy class rows in US Airways planes will probably end up a little closer together to make room for the extra legroom seats. Fortunately, the addition of slim-line seats will allow the airline to squeeze rows closer together without reducing legroom too much. That should help cushion the blow for those of us who can't afford to upgrade.
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Adam Levine-Weinberg is short shares of United Continental Holdings. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.