Pricing seats in airplanes

This article from the WSJ reports how airlines price different classes of seats. It is a great example of indirect price discrimination through versioning.

If the link does not work, do a Google search on the title of the article.

TOPICS: Pricing a Product Line

SUMMARY: For fliers, the ideal seat is usually in first or business class. For airlines, the sweet spot is, increasingly, farther back in the plane, in premium economy.

CLASSROOM APPLICATION: Instructors can present the selection issue associated with offering premium economy. "Airlines want economy fliers to buy pricier seats, rather than business travelers opting for cheaper ones." One way to reduce the selection problem of business travelers selecting down is to improve the quality of business class. "Only after Lufthansa in 2012 began upgrading its business class to horizontal beds from slanted ones was it confident of not cannibalizing its own premium traffic."

QUESTIONS: 
1. (Introductory) Why are airlines introducing premium economy class?

2. (Advanced) In the consideration of whether to introduce premium economy class, what issue concerns airlines about the demand for business class concern airlines?

3. (Introductory) What redesign of Luftansa planes reduced the problem of business travelers choosing premium economy class?

4. (Advanced) The article notes "down-sell risk" and "up-sell potential" for introducing premium economy class. Interpret these two terms.