Premium economy travel has to add value - CNBC Africa

Premium economy travel has to add value

Special Report

by admin 0

Premium economy must add value to the experience. PHOTO: Getty Images

“Premium economy has been a recent evolution [on] how to differentiate or segmentise modes of demand into a perspective of value-additions to make the travel experience better, to engage the return value of an amount spent per person into a benefit,” said Emirates Southern Africa regional manager, Fouad Caunhye.

(READ MORE: Africa’s aviation future lies in safety and affordability)

“The value engagement has to be holistic and has to be provided across all travel bands, where our ‘economy’ can be equivalent to whatever airlines will term ‘premium economy’. Having said that, it’s simply a way to extract elasticity’s where we are better positioned. That as well as other similar ventures will be there to stay for deeper differentiation.”

Premium economy travel, considered to be the middle ground between economy and business class, has seen a recent upsurge, supported by positive developments in the global as well as African business environments.

[video]

“Africa, slowly but surely, is reaching critical mass concerning elements of business travel – affordability, new growth, 22 countries which are crossing the GDP per capita of 1,000-dollar levels which access the new club of middle-class countries,” Caunhye indicated.

“We have seen qualitative as opposed to quantitative evolutions in the business demand sector. More globalised opportunities, which have not worked well in the past, are probably working better in these sectors today.”

(READ MORE: Lack of liberalisation hurting Africa airline industry)

Caunhye added that while the cost of air travel in Africa is seen as a hindrance, it must be put into perspective.

“Think of the relationship of kilometres flown from origin markets to source markets and vice versa. Based on the average level of air fairs themselves, if you put things into perspective, there’s no less than 9, 10 and 11 hours from main markets, whether inbound or outbound – the fairs are more or less within perspective,” he said.

“There’s also another element and this is what airlines rely on for their long [to] medium term profitability – the yield extraction per passenger per seat. When you look at an environment of costs being geared in high-value currencies, whether it’s leasing [or] financing costs, the main cost driver today being fuel, the revenues being made in comparatively lower-performing currencies, there’s an equation that needs to be made there.”

Comments