Virgin Blue yesterday unveiled its new product offering, showing off their new red leather Premium Economy seats ready to be fitted into the entire Australian domestic fleet.

In a new move for the carrier, Virgin Blue is gearing up to tackle the Premium Economy market, offering a new product which sees a seat pitch of at least 34" and all seats on Boeing aircraft offering either a window or aisle.

"Over the past two years, the airline has evolved into a highly desirable business travel option with the introduction of, our Loyalty program "Velocity", The Lounge at major airports, flexible fares and other business friendly initiatives," said Brett Godfrey, Virgin Blue CEO.

"We expect our latest product enhancement to appeal to amongst others, the corporate and Government sectors as it will offer superior value for money and additional benefits for those who choose to book economy and prefer a premium product."

Both the Boeing and Embraer aircraft will be fitted with the new product, and extras include priority check-in, increased checked-in baggage allowance of 32k, full complimentary access to the Live2air entertainment option, and access to The Lounge in Adelaide, Brisbane, Canberra, Melbourne and Sydney.

The new Boeing cabin layout will see the first three rows transformed into Premium Economy seats, with 2x2 seating replacing the current 3x3 seating configurations, where the old middle seat will be transformed into a cocktail table.

"From an operations point of view, it's a smart solution, a convertible cabin which allows us to easily adapt seating to demand," adds Mr Godfrey.

The fully refundable and flexible Premium Economy fares are expected to compete with other airline's fully flexible economy class tickets.

"Launching a premium offering is another example of Virgin Blue's evolution to suit their needs and we are confident the introduction of Premium Economy will meet the changing needs of Australian business travellers," said Mr Godfrey.