Air NZ adding more 'premium economy' seating

Demand for Air New Zealand's premium economy seats has been so strong the airline is expanding the category just a year after introducing it.

The airline is adding eight new premium economy seats to each of its Boeing 747s taking the total number to 31 per plane.The move will mean the removal of 15 regular economy seats and reduce the total capacity of Air NZ 747s from 392 to 385.

The higher margins the seats command made the swap well worthwhile, said international airline group general manager Ed Sims.

The seats - which offer passengers more leg room as well as perks such as the use of premium check-in facilities - cost about 30 per cent more than regular economy. So far the airline had been able to price the seats expecting 100 per cent capacity, he said. In other words: they are always full.

Airlines around the world are shifting the battle for customers from the cheap seats to the front of the plane as high fuel prices squeeze margins. Aviation industry analysts say the battle for budget travellers is over.

"I'm not sure whether we're riding that wave or leading it," said Sims.

"Clearly that has been where the big investment has been for us."

The additional revenue the seats were generating was something of a vindication of that investment decision, he said.

There were plenty of other airlines in the US and Europe offering premium economy but, in Australasia, Air New Zealand was "effectively test marketing" the idea.