Virgin Atlantic Airways Ltd. will split its coach class into three different ticket grades in an effort to head off the challenge presented by an emerging low-cost, long-haul sector led by Norwegian Air Shuttle ASA.

The U.K. carrier plans to introduce an “economy light” fare for passengers prepared to take hand-baggage only and happy to have their seats allocated at check-in, it said in a statement Wednesday.

The new category is aimed at “millennials and customers jetting off on city breaks,” it said.

At the same time, Virgin will offer an “economy delight” product with a 34-inch seat pitch — three inches more than standard — priority boarding, checked luggage and seat selection at any time. A third “economy classic” grade offers the same perks, bar priority boarding, but with the smaller berth.

The changes, which include fitting up to 36 of the bigger seats on each plane, are part of a 300 million-pound ($417 million) investment program that represents the biggest change to Virgin Atlantic’s economy-class cabins in more than a decade, Chief Executive Officer Craig Kreeger said in the release.

Virgin Atlantic, a long-time rival to British Airways on long-haul flights from London, is facing a new breed of competitor, as Norwegian Air builds the U.K. capital’s Gatwick airport into a major base. BA and other network operators are responding with lower-cost operations of their own that could begin to threaten Virgin on some of its leisure-oriented routes.

Founded by Richard Branson, Crawley, England-based Virgin is 49 percent owned by Atlanta-based Delta Air Lines Inc. Europe’s biggest carrier Air France-KLM Group, a Delta ally, has also agreed to buy a 31 percent stake in a move that will see the billionaire’s holding reduced to 20 percent.

Virgin will retain its “premium economy” class following the changes to coach, while renaming it simply “premium.” Together with the top-end “upper class” that will mean passengers have a choice of five different service levels.

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Photo Credit: Virgin Atlantic will split its coach class into three ticket grades in an effort to head off the challenge presented by an emerging low-cost, long-haul sector led by Norwegian Air Shuttle. Unfortunately, the three classes will not be called cheap, cheaper, and cheapest. Simon Dawson / Bloomberg