Cathay Pacific to offer premium economy class in 2012

HONG KONG: Cathay Pacific Airways Ltd plans to launch a premium economy class in 2012, promising a "real upgrade over economy" to attract increasingly price-sensitive travelers in the face of economic headwinds.

The new class would be introduced on routes to Australia, Europe, the Middle East, North America and other destinations from the second quarter of next year, Cathay said in a statement on Monday.

"The seat will be more like a regional business class seat. We'll have great recline and plenty of leg space," Chief Executive John Slosar said in the statement.

Recent rounds of job cuts by global financial institutions point to a slowdown in premium travel, and June data from industry body the International Air Transport Association (IATA) showed a slight decline in premium travel growth from May.

Cathay's premium yields were expected to come under pressure as the global economy slows, analysts said.

Cathay shares rose 1.6 percent on Tuesday morning, largely in line with a 1.9 percent gain by the blue chip Hang Seng Index . Rising fuel costs and a weak global economy have pushed the stock down by more than a quarter this year against a 12 percent fall in the broader market.

"We think the new product protects its downside against any slowdown at the front-end," UBS said in a research note on Monday.

Other airlines that offer premium economy product in between economy and business classes, included All Nippon Airways Co Ltd , Qantas Airways Ltd and British Airways.

Copyright Reuters, 2011