Multifold uptick in premium economy and business class seats selection


Indian travellers are driving demand for premium air travel, witnessing substantial growth with a 2x increase in premium economy and 3x surge in business class selections

Indian travellers are propelling the demand for premium travel experiences, marking a substantial double-digit growth with a 2x increase in premium economy and a remarkable 3x surge in business class seat selections. This changing trend, although constituting only a quarter of total airline seats, is significantly altering the contours of India’s air travel landscape, particularly in international short-haul routes experiencing an unprecedented 800 per cent rise.

According to industry players, this trend was fueled by rising disposable incomes and a growing desire for refined travel experiences. India’s domestic air traffic rebounded impressively, reaching 137 million in FY23, almost returning to pre-pandemic levels. However, the majority of this resurgence, over 80%, is being served by low-cost carriers (LCCs), leaving minimal room for premium segments. Business and first-class seats constitute a mere 1% of the total domestic airlift, but notably, these segments are witnessing double-digit year-on-year growth, outpacing the overall single-digit growth in domestic airlift for 2023, according to insights from travel consultancy firm Videc.

On the international front, where full-service carriers (FSCs) dominate the market, India’s airlift experienced substantial growth in 2023 compared to the previous year. Yet, it’s crucial to note that a significant part of this growth is attributed to the recovery to pre-pandemic levels, after a period of inflated airfares in 2022 due to high demand and constrained supply.

Rajesh Magow, Co-founder & Group CEO of MakeMyTrip, attested to this shift, stating, “We have observed a 3X growth in booking of premium economy on domestic flights compared to the pre-pandemic period. For international flights, this surge is almost 1.5-2X over the same period on our platform.”

Cleartrip, too, registered an upward trend in premium seat selections, primarily on international routes. Gaurav Patwari, VP – Air Category, Cleartrip, notes, “There was a 32% decrease in domestic and a 15% increase in international selection of premium economy seats and business class seats during July-September 2023 and October-December 2023, respectively.”

Highlighting specific routes, Patwari identified key international routes like Mumbai-Dubai, Delhi-Kathmandu, and Delhi-Bangkok experiencing a noteworthy 75% increase in premium bookings. In contrast, domestic routes like Delhi-Bengaluru saw a 20% increase, indicating a growing preference for elevated experiences on international travel, particularly for short-haul destinations.

Rikant Pittie, Co-Founder of EaseMyTrip, adds weight to this observation, noting an 800% surge in the premium economy class on routes like Delhi-Dhaka. Additionally, he reports a 400% increase in business class bookings for routes like Mumbai-Bangkok, signaling a growing appetite for luxury among affluent travelers. This shift denotes a departure from pure price sensitivity, with passengers now prioritizing comfort, personalized experiences, and a touch of exclusivity.

Magow points out that 70% of premium economy bookings occur within days of travel, suggesting a corporate-driven demand for comfort and productivity on short trips. This transition extends beyond mere numerical growth, reflecting a fundamental change in travel style, with consumers increasingly seeking a blend of luxury and practicality. BusinessLine had reported Air India was contemplating the addition of a four-class configuration, encompassing first class, business class, premium economy, and economy seats on its fleet of 20 A350-1000s. IndiGo, too, is reportedly exploring the introduction of business class on select aircraft, reflecting the industry’s response to the evolving preferences of travelers.

Virendra Jain, Co-founder and CEO of VIDEC Consultants, underscores the rising purchasing power of average Indians, stating, “As India’s affluent population grows, the preference and ability to purchase high-end travel products will increase.” Jain anticipates increased choices for premium air classes as the Tata Group’s vision unfolds and the technical and operational consolidation of its airline brands materializes.

EaseMyTrip suggests continued dominance of domestic travel in major metropolitan cities, including Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, and Kolkata. Internationally, the Middle Eastern market, led by Dubai, is expected to remain robust. Additionally, London in Europe, New York in the US, and Dallas are anticipated to experience significant air traffic from India.

Read original story on The Hindu Businessline.