Tata owned Air India unveiled its plan for a three class configuration on its narrow-body A320 aircraft with the first two registered VT-RTW and VT-RTZ taking to the skies starting July 01, 2024. As part of its efforts to refresh the offering, the focus has been on the international sector for a while, until this announcement.

Air India intends to offer this configuration to its entire full service narrow-body fleet over the next year.

The aircraft will be configured with 8 Business class seats (2 rows); 24 Premium Economy (4 rows) and 132 Economy class seats – a configuration which is the same as that of Vistara’s A320neo’s. Vistara is set to merge with Air India by the end of March 2025. The upgrade is not just in terms of the configuration, but will also see Portable Electronic device holders and USB chargers making an entry, again similar to that of Vistara’s newer aircraft. The airline intends to offer this configuration to its entire full service narrow-body fleet over the next year. It is an ambitious target to meet in current times where “supply chain constraints” is the buzzword. Interestingly, Air India has been operating some of its newly inducted aircraft in mono class, all economy configuration while its low cost subsidiary has been inducting aircraft with dual class and selling the business class cabin as business class offering.

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What’s on offer and where will the planes be deployed?

The aircraft features mood lighting, The new Business cabins offer feature-rich 40-inch ergonomic seats with deep 7-inch recline, an adjustable armrest, footrest and backrest, a tray table deployed at the push of a button that includes a PED holder and is extendable and multiple charging ports. The premium economy section has four-way headrest, wider seat pitch and a 4-inch recline, along with PED holder and USB charging port. The economy class has a seat pitch which is 28-29 inches and a 4-inch recline and also comes with PED holder and USB charging port.

The airline is deploying flights on the Delhi – Bengaluru sector along with one flight on the Delhi – Chandigarh – Delhi sector. A longer sector adds more value to premium economy passengers and helps with sales. Additionally, the airline has been deploying the A350 on domestic routes since January. The A350s have the Premium Economy class and that would have given sufficient insight into the demand patterns. Not to forget the history of plethora of data which Vistara gets along with its premium economy offering – which was changed twice since inception to better adjust to market realities.

A path towards premiumisation

Air India’s legacy A320s are configured with 12 Business and 150 economy class seats, a total of 162 seats. With the new configuration, the airline will have 164 seats, two more but in a split which involves an additional cabin. Presuming that the airline was not able to meet its expenses in the past, this change in configuration gives it a better shot at breaking even and making money.

Sample this, for over a month ahead in future – the Premium Economy fares on Delhi – Bengaluru – Delhi are 1.5 times the economy class fares, while between Mumbai and Delhi they are 1.3 times. On other sectors like Delhi – Hyderabad and Delhi – Kolkata, the premium economy fares are anywhere between 1.3 to 1.7 times the economy class fares of a full service carrier. Essentially, with two more seats – the possibility of increasing revenue goes up significantly at a marginal increase in cost. The lure of additional frequent flyer points and better legroom have been drivers of shifting to premium economy for a larger number of passengers. CXOs of Lufthansa and Air France have often mentioned Premium Economy to be the largest per unit revenue addition in their planes pre-COVID.

What happens if the airline is not able to fill up these seats? With the focus on loyalty programs, Air India can well bump up passengers from economy to premium economy based on loyalty status. It is very common across American carriers to have a priority higher class seat being made available for higher tiered loyalty members. This helps maintain loyalty and let passengers sample the new cabin.

With 53 A320neo of Vistara set to merge into Air India’s fleet and 43 of those being configured in three classes, the merger and route selection will be easier as it races against a tight nine month deadline.

Tail note

The key to a seamless deployment is going to be an efficient execution of the plan. Air India launched a five year transformation plan Vihaan.AI, where it claims to have completed the Taxi and Take-Off phase and is now in the climb phase. Yet, it repeatedly makes it to the news for the wrong reasons.

A full fleet refresh is a long time away, but like the widebody routes see good reviews on routes which see the former Delta and former Etihad aircraft, the perception about the airline will start changing with this refreshed offering.

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