Should Star Alliance roll out premium economy reward bookings?

Business Class is often the common goal when spending frequent flyer points. Failing that, there’s always Economy. But frequently, there’s a cabin in between: Premium Economy. It’s one that many points aficionados often forget about, as it can be rather tricky to book – especially on Star Alliance.

That’s because, unlike Economy and Business Class, there’s no alliance-wide standard for making those reward seats available to partners. There’s nothing stopping airlines from striking bespoke deals, of course. But without consistency, it’s a path few carriers have dared to trod. For instance, Singapore Airlines KrisFlyer, one of the more popular Star Alliance programs, doesn’t even have a Premium Economy redemption rate for Star Alliance partner flights.

But should that change? With Premium Economy now offered on a broader number of carriers, there’s a lot of potential for using points to book those seats. And if a few airlines in a global alliance are going to get on board, it makes sense to set a global standard for all to follow.

For the latest on the alliance front, I catch up with Star Alliance CEO Theo Panagiotoulias on the sidelines of the invitation-only IATA AGM in Delhi. I’m also curious to hear Theo’s view on the broader rollout of dynamic reward rates on partner airlines, as advocated for by Air Canada’s Aeroplan.

Premium Economy on Star Alliance

Here’s the current situation. There are plenty of physical Premium Economy seats flying around on Star Alliance carriers. But with a few exceptions, these are mostly bookable only via the frequent flyer program attached to that same airline.

There are lots of reward seats to the USA in United Premium Plus (premium economy), for instance. But you’ll generally need United MileagePlus miles to find and book these flights. You won’t see them available through other Star Alliance programs. As for Singapore Airlines Premium Econom, it’s the same thing. Bookable via KrisFlyer, but not through Aeroplan, for instance. Any opportunities that do exist – such as booking Singapore Airlines Premium Economy via Virgin Australia Velocity – are unlocked through direct partnerships only. (And Virgin Australia isn’t in Star Alliance, in any case).

I ask the Star Alliance boss whether it’s time for this to become an alliance-wide standard, for the group’s own members. “I can’t say to you that’s coming anytime soon,” Panagiotoulias admits. (Drat!)

“In terms of, ‘can I use my points for Premium Economy’, for example. They are commercial decisions for the various carriers. Some carriers have got Premium Economy, some don’t. They’re commercial decisions that we don’t really get involved in. We look for consensus across the member carriers, see what we can do, and then come up with initiatives.” Star’s goal is to “make people’s life a lot easier, as opposed to (focusing on) the specific product offering itself.”

On the mileage front, Panagiotoulias hints that Star is currently workshopping “how we make point redemption more instantaneous. We’ve got instant accrual right now, but let’s take it one step further.” Redeeming miles for an onward flight as you board the first flight in your trip? Maybe – watch this space.

Is it time for another Star Alliance-branded credit card in Australia?

For a couple of years now, Australia has been Star Alliance’s test market for an own-brand credit card and rewards program. That’s the HSBC Star Alliance Credit Card, with customers earning flexible points in Star Alliance Rewards. It’s always been seen as something of a trial. Dipping toes into the water with a mid-tier type of card, with the potential to expand with a more premium offering.

Has the time come for Star to branch out with a Platinum or Black version of the Star Alliance Credit Card? “It’s been a couple of years … (and) we’re still watching Australia closely, actually,” Panagiotoulias says of the credit card market in general. To Star’s current credit card offering, “it’s been pretty cool. It continues to grow steadily, and actually and most importantly, the average spend is quite high for the card there.”

“We’re still trying to better understand the demographics and what value it’ll have in the future. But it’s encouraging. We want to take a bit more time before we determine (if) we go and expand it further.”

How about alliance-wide dynamic reward seat pricing?

One aspect that really drives engagement with frequent flyer programs is the extent of the outsized value derived from learning the tricks of the game. But there’s always an inherent challenge – both in Star Alliance, and elsewhere. Reward seats, especially at the front of the plane, are limited. Yet airlines keep printing miles, and they’re becoming more mainstream.

The concept of a reward seat started as a way for airlines to monetise empty seats. They’d sell what they could to passengers paying with money. Any seats they believed wouldn’t be bought would then be released to would-be travellers using frequent flyer points. In turn, those points are sold to partners like credit card companies. In effect, creating indirect revenue that all came from empty seats that’d otherwise earn nothing.

But these days, flights are often full. Premium demand is high. And people have clued-up on how to book the best seats on the plane for less. Many frequent flyer programs have adopted by shifting to ‘dynamic pricing’ on their own flights. That is, where the number of points needed to travel could change from day to day for an equivalent flight, broadly in line with the usual fluctuations of airfare pricing.

Some programs want to take that further. In a previous Point Hacks exclusive interview, then-President of Aeroplan, Mark Nasr, shared his desire for dynamic pricing on partner airline flights as well. Not just in an arbitrary way set by Aeroplan, but in consultation with the partner. The goal? To get even more seats bookable using points.

“That’s a great example, and I know Mark really well,” the Star Alliance boss says of Nasr’s ambitions. “We have governance in Star Alliance that says if there is consensus around specific initiatives, we will do that. But there are 25 different airlines. They’ve (all) got different business models, different priorities, different focus points. And so what we (say) is, none of them are right or wrong. They’re just different.”

Also read: Have airline alliances reached their expiry date?

Featured image courtesy of Air Canada

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