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The following chapter deals with the conceptualization of the research issue of the dissertation. This chapter outlines the aims, objectives, scope and limitations of the research. The researcher, through this dissertation aims to get a better understanding of the business trend shift in domestic airline catering operations in India and its future feasibility.
The recent change in aviation industry also influenced a change in airline catering with change in consumer needs. The dominance of big caterers (TajSats, Sky Chef) have been taken away from small emerging caterers (café coffee day)Finger foods have taken over gourmet menu in many domestic airlines, due to which there is an increase in small size in-flight caterers. The shift from gourmet food to finger foods has helped the airlines not only in making more profit but also giving profit sharing deals by the small size catering firms on the sale of their food in air. With the resent slow down of the economy and bad financial year for most of the airline companies showing their balance sheet in loss. Airline companies are trying to cut down expenses from all corners, the new alternative of selling meals on board might help them get some profits. With the new caterers establishing their name in the airline catering industry, the big airline caterers like TajSats, Sky Chef, are facing a problem by only serving to a small part of the domestic sector.
India could only start developing their transportation after the British left India. Although Air transportation was limited to the Britishers or for air defence, the development started in early 50's when hotels could start catering to flight. Hotels such as:
- The Ambassador Hotel
- Western Hotel
- Cambatta Hotel
These hotels catered to flights as a part of their regular operation. In those days the skies were mostly dominated by Dc-8's, Boeing 707 and Tristar's 9small capacity aircraft's). Hence the catering requirements were also in small scale. The first flight in India was operated by Ambassador Group which later opened the Ambassador Sky Chef in 1960- 61 which unbelievably was a film studio. Mostly early flight caterers were not hygienic conscious. No chilling was done and no holding activities took place. Fresh meals used to be set and dispensed to the flights. But this scenario changed in the late 70's with the inception of large bodied aircraft's like Boeing-747 and Dc -10 and subsequent rise in the passenger traffic. These wide bodied aircrafts were equipped with more space in the galley as compared to the Tristar, Dc -8 and Boeing-707.
With the growing demand of the airline industry, food now became the cutting edge. With the menu itself now becoming more and more complex, the maintenance of certain demanding hygiene conditions became a necessity. A new era of extreme hygiene consciousness was ushered in. The basic hygiene concepts which were being maintained subsequently rose to higher levels as the up liftment ratio per flight increased due to the increase in the number of customers traveling through flights.
TajSATS Air Catering Ltd., the market leader in airline catering, is a joint venture of Taj Hotels Resorts and Palaces, and SATS (Singapore Airport Terminal Services). Taj Hotels Resorts & Palaces is part of the Tata Group, India's largest business conglomerate & SATS, a subsidiary of Singapore Airlines, is a pioneer of airline catering and ground handling services in Asia. 1B(www.tajsats.com)
In flight catering which was till now dominated by five stars players, has been thrown open to fast food chains and FMCG players, Cafe Coffee Day which has a tie-up with Kingfsiher Red (formerly known as Air Deccan) and GoAir, is looking at 25% growth per annum for its in-flight catering business. It is also in talks with various other low cost carriers (LCC) to provide products on-board. According to industry estimates, 65% of passengers buy snacks or beverages onboard in LCC. Low-cost carriers are also raking in the moolah by providing in-flight food and beverages. Air Deccan's turnover pertaining to in-flight catering was only Rs 37 lakh in December 2005 as compared to Rs 1.2 crore in December 2006. About 55% of the people on board Kingfisher Red's flights buy food and beverage items. It has a revenue-sharing arrangement with Cafe Coffee Day. Indigo, a low-cost no-frill airline, provides Pepsi and some other products like juices and cookies on-board. It's conversion rate is around 60-70%.In flight Sales manager is optimistic and hopes for a 100% growth In-flight catering by this year end. 1C(www.economictimes.indiatimes.com/.../In-flight_catering_gets_taste_of_fast-food)
Chapter onedeals with the introduction to the research issue, aims, objectives, scope and limitations to the research. The reader can get an overview of the entire research through this chapter.
Chapter twowould review the literature related to the research and the conceptual issue along with views of various authors who have conducted a research in the same area. The literature review would highlight various business trend shift in airline catering, and the diversification of air caterers.
Chapter threewould elaborate on the methodologies that the researcher would employ to conduct the research. In order to pursue this study, the researcher has adopted the qualitative research analysis with an empirical study.
Chapter fourwould deal with the analysis and interpretation of the empirical as well as the qualitative research work.
Chapter fivewould be the last part of the dissertation in which, the researcher would conclude with appropriate recommendations, suggestions and scope for further research. This study would provide a framework for airline caterers and different dimension of catering in which they could enhance their catering style in order to achieve a competitive advantage.
1.4Statement of Aims and Objectives
Aim:The research is to identify the change in airline catering and the future of airline catering, as an entrepreneurial research.
The business trend shift in airline catering operations. New role of small size caterers has been impacting the business for big and old players in the in-flight catering industry, which the author would like to research on. The aim of this chapter is to provide its readers with an overview into the topic of the research. The first section of this chapter would deal with the introduction to the in-flight catering industry. The second section would deal with and the business trend shift in the operations. The final section would deal with the impact on the large size caterers and the different dimension the air caterers have ventured into.
2.2 Catering industry
The catering industry as we know today has evolved when the earliest history was recorded instance of food served to travellers. The monks in their monasteries provided travellers with food and shelter. The Inns developed in Taverns, coffee shops, tea houses and etc; these catering establishments played an important part in the social, governmental, theatrical life of the country. It is due the Advent of railway and automobile the travelling has became easier and quicker, there for they helped the catering industry to emerge. Catering industry has developed into five major branches:
- Commercial catering
- Industrial catering
- Institutional catering
- Airline (Transport) catering
2.3 Flight catering
In 1933 the Marriott group contract caterers saw a gap in the market decided to serve food from one of their 'Hot Shoppes' to passengers queued up for flight out of an adjacent airport. After a year 1934 Dobbs International Service Inc, was founded in Memphis, USA as one of American's largest in-flight caterers.
1930s' the routes began to extend and by 1934 Qantas and Imperial Airways had collaborated their operation to fly passengers across continents in 'hops' from Croydon near London to Brisbane some 12,7000 miles in about twelve and a half day, costing 195 pounds. They served hot meals from insulated containers (hayboxes) to keep food hot. Same year Pan Am introduced the S-42 on its route from Miami to Buenos Aires. The airline set a precedent installing facilities for heating food in-flight on long over water journeys. Stewards would take orders from passengers and radio ahead for meal, which were served to passengers in a special dining area of the airplane. As aircraft designs improved so did the food served on board improve. In 1936 the DC3 were design with a gallery to enable hot meals to be served to passengers thus replacing sandwiches and tea or coffee. Imperial Airways with its 'c' or 'Empire' class flying boats built up a good reputation for its in-flight service for 24 passengers. Although no heating or refrigeration facilities were available the aircraft had a fully fitted gallery that enabled the flight attendants to serve meals comparable to first class restaurants or hotels. The passenger would order their meal one day in advance in the places where he or she would stay. The food was packed in bags and boxes, vacuum and thermos flasks delivered on hand-pushed carts and loaded by hand into the aircraft. The steward prepared drinks in small galley and bar.
In 1938 Imperial Airways were the first to setup what today might be called a 'catering centre'. Same year Boeing 307 Stratoliner became the first aircraft with a pressurized cabin able to fly above the weather. In 1946 Dobbs constructed the first independent airline kitchen which was built to serve Delta in Atlanta. As years passed everything improved from the quality of food to distance and the passenger capacity an aircraft could carry. 2A (www.hubpages.com/hub/airlinefood
Basic principles of the design of in flight food production
The basic principle of design of in flight food production are similar to the various food production catering centers as discussed in the starting of the chapter.
- The size and extent of the operations in terms of the maximum numbers of flight meals to be produced.
- Amount of capital expenditure costs.
- Policy on the use of prepared products.
- The use of latest technology
- Hygiene, food safety legislation.
The flow process
Each kitchen should have a flow process chart detailing the materials (food) and labour, the chart will show the main parts of the process, demonstrating the flow of materials and labour, the transportation of products, storage and chilling. The chart will also clearly identify when the operator should temperature test and for how long.
1. The flow process chart
Good production planning involves 'producing the necessary unit, in the necessary quantities, at the necessary time'. This concept is widely used by large scale caterers for sometime the problem is the refer it to as the good business practice and not JIT (just in time production techniques). The principles of JIT are:
- Stock level kept down to the level as and when required, order in as and when needed.
- Elimination of waste.
- Enforced problems solving.
- Continuous flow manufacturing
There has to be continuous improvement rather than accepting the status.
Balancing resources and passenger needs in a production plan
To achieve the tight balance between passenger needs and resources, the following need to be considered:
- From the airline
- For stock
- Broken down into details.
- Sequenced into date, time aircraft is due to take off
- Special meal requirements identified
- Evenly balanced work load where appropriate
- If overload, work can be subcontracted if necessary.
- Balance of high/ low margin orders
- Down time costs from excessive change over
- Cost of subcontracting.
In-flight catering is an essential component of an airline's marketing strategy, especially in view of the bottleneck competition between airlines.
The tradition of in-flight catering started way back in the early 1930's, when commercial aviation was just in its infancy and passengers were not used to flying and thus would panic. As a sort of distraction, young stewardesses were employed by airline operators to serve food to passengers on board the flight.
In the recent past, there have been many developments in the designing of galleys as well in the improvising of in-flight services by airlines, with choices ranging from gourmet cuisine, in-flight entertainment and sales of bar items to cosmetics and various other articles. Besides, airlines are constantly coming up with new and innovative ideas to pamper their passengers.
Food hygiene is one of the most critical aspects of airline catering. An aircraft is like a restaurant in the air, with people from all over the world coming together from different backgrounds. Though people from Asian countries have developed a good deal of resistance, most others are used to hygienic conditions. With the result that on a seven to eight hours flight, an attack of food poisoning could be fatal with no ready medical help available at 30,000 ft in the air. Which is why airlines insist on menus that follow specific safety standards and local availability of ingredients, as well as caterers complying with HACCP/International Hygiene codes.
The United States has thus banned return catering uplift due to reasons of hygiene. The same trend can also be observed in Europe, where return catering is mainly done to maintain cost effectiveness. However, at times due satisfactory facilities that meet required standards are not available at airports. The weight saved eliminating return catering can be used to carry extra passenger luggage and belly freight and space saved can be used to install an extra row of seats.
Today the concept of in-flight catering has undergone a change with the so-called 'no frills/low cost airlines successfully enhancing their air traveller base with affordable air fare and light meals; however on longer flights, a more elaborate in-flight catering service is preferred by most frequent fliers, especially business class passengers who look forward to a satisfying meal on board. 2C(www.expresshospitality.com/20080330/management04.shtml)
The trouble-torn catering firm Gate Gourmet is eyeing the $50-million Indian in-flight meal market. The company, which is the world's second-biggest airline caterer after Lufthansa's Sky Chef, plans to enter India through a joint venture by the year-end.
"The US and UK markets are saturated. Asia is a growing market and within that, China and India are fast growing with the increase in flight travel and modernization of airports, India's aviation industry is one of the booming industry in the world.
India, particularly, is significant since airlines are now giving increased importance to food on aircraft," Gate Gourmet vice-president business development division Asia/Pacific Peter Andrist told FE on the sidelines of the CAPA low-cost carrier symposium. Lufthansa's catering division Sky Chef is already offering its services in India with a full-fledged in-flight kitchen unit based in Bangalore, Mumbai, Delhi. It recently announced plans to set up another unit in Hyderabad.
Gate Gourmet, which serves as many as 200 airlines worldwide including British Airways, was recently in the news because of an industrial dispute involving its Asian workers.
The name of the Indian company it plans to start operations with is still not disclosed. While in most global markets Gate Gourmet follows an outsourcing model, in India it plans to set up multiple catering facilities targeting metros as well as secondary ports. The firm, which was originally owned by British Airways and was later sold to American venture capitalists, hopes to take about 50% of the Indian $50 million in-flight catering market over the next 2-3years. 2D(www.financialexpress.com/.../gate-gourmet-eyes-indian-inflight-meal-market /150354/)
No more chiiled complimentary drinks to welcome you on board. Caviar and prawns to nibble on while you settle in first class this all would be a figment of our minds. A Patiala peg of Blue Label to wash away those recession blues. Would be asking for even more with the tougher times lie ahead. These are tough times, even if you have the dough to travel better than cattle class. As airlines cut corners to shed flab, food and beverage is the first casualty. Even in business and first class. Air India in a desperate attempt to skim the fat off its in-flight menu, it has removed champagne and pricier brands like Johnnie Walker Blue Label from its wine list on international flights. Even the quantity of food and water to be served onboard has been reduced to save costs. For example, the dessert serving has been reduced by around 20 grams. And some gourmet items such as king prawns and caviar have also been withdrawn from business and first class menus.
"Air India has decided to discontinue serving expensive liquor like Blue Label in its premium class. Food items such as lobster and caviar will also not feature on its menu," said an Air India source.
Officially though, the stand is 'business as usual'. An airline spokesperson maintained that any change in the wine list can only happen after the recommendation of the consultant concerned. There is no change in wines was said by the airline official. The current wines will continue till stocks last and then be replaced by wines recommended by the consultant. Wines have a certain life span and stock level and later new stock would be introduced was all that an Air-Indian official had to say to shy from the low quality of in flight food served in the nearly bankrupt airline company. Cost cutting at which is on its number one priority list. Taking out gourmet dishes and including sandwiches and offers like buy on board meal.
Menu changes are effected with every summer/winter schedule is another alternative for the company to bring in the change .Air India can be forgiven for trying to scrimp on its in-flight expenses. Nearly all carriers are trying to bring down on-board food and beverage costs. Besides reducing the grams of dessert and quantity of hot meals, carriers are also shifting to low-cost food items. "Airlines have reduced the dessert gram mage from 80 gm to 60 gm. They have also replaced dal makhani with yellow dal to cut cost. Yellow dal is cheaper than dal makhani. The number of in-flight meals going down day by day was shown in TajSATS air catering financial sheet.
Air India has already withdrawn toffees from all its domestic flights. It has also stopped serving expensive chocolates and bakery items in certain classes on international flights. The public sector airline lost over Rs 2,500 crore in 2007-08 and is expected to see bigger losses in the current financial year.
Air India's losses are attributed to high fuel price, competition and underutilisation of resources. While fuel contributes over 40% of the operating cost of an airline, other major components are manpower and aircraft maintenance. In a move to cut fuel cost, the airline recently got a fuel gap analysis done by International Air Transport Association (IATA). It is currently implementing IATA's suggestions in a phased manner.
As business aviation has boomed over the past two decades, so has the quality of in-flight catering and the desire of the catering companies to satisfy passengers' food cravings at 36,000 feet. Without question, the dining experience on a private jet has become a key aspect of every trip whatever the trip's length.
However, when it comes to the in-flight dining experience, taste isn't the only issue that determines the quality of a meal aloft. Today's private jet operator seeks to ensure that in-flight catering meets high standards in terms of service, food handling, safety, security and costs. Consequently, the private jet in-flight catering business - now a $100-million industry - has evolved from simple box lunches to virtually anything that rivals the finest offerings of the best New York or Paris restaurants.
In-flight catering has grown over the past several years as a result of the increase in fractional aircraft ownership along with the boom in the sale of private jet cards that offer flight-time by the hour. Both have made private jets available to a wider clientele. Indeed, business aviation in-flight catering is expected to grow even more in the coming years - for this year alone more than 800 new private jets are projected to be delivered, according to Honeywell Aerospace.
Over the past 20 years facilities in airline catering have grown from a 2,000 square foot kitchen to a 17,000 square foot state-of-the-art facility to reflect that expansion. On an average a well established airline caterers provides meals for an average of 400 flights a day out of New York and Washington DC area airports - a number that can triple on peak days. More than 120 employees work at the Teterboro facility, which, incidentally, will be expanded with the addition of a 9,900-square-foot warehouse this year.
Today's new clients come with many new challenges. For example, many corporate aviation clients are traveling with young children, creating a different demand. Additionally, many business flyers have really grown to be more health-conscious, while there is also a noticeable increase in the request for organic fruits and vegetables. Conversely, a prior spike in high-protein requests such as those called for by the 'Atkins Diet' has declined recently. Moderation and healthy choice seem to be the norm right now, with whole-grain and whole-wheat-based products being popular.
"Organic food requests were running at 30 percent last year, and expected that figure to be closer to 70 percent this year, The person flying in the back of a corporate jet is someone who is often a successful business person or celebrity. They are truly educated about nutrition."Another passenger demographic shift in cosmopolitan areas has come in the form of more. 2F(www.demandbase.com/.../rudys_inflight_catering_inc-business-contacts)
To meet growing demands of India's booming aviation sector. The world's largest airline catering and in-flight solutions provider LSG Sky Chefs has decided to make India its major hub and is planning to open four new facilities in the country next year.
LSG Sky Chefs is the sole independent international airline caterer in India and has a presence at the old airports of Hyderabad and Bangalore. It is building facilities at Hyderabad and Bangalore to replace the existing ones.
India is been seen as a major market where there is a h3 demand for top-quality in-flight catering services. The market size is around $100 million and growing, India has a large middle class but the number of air travelers is comparatively small, the boom in Indian aviation industry is here to stay and the number of air travelers is increasing at a rapid pace. 2G(www.livemint.com/2007/.../India-to-be-hub-for-global-air.html)
? No meals especially in-flight annoys anyone because the airlines have been adding fuel surcharges anyway with little public backlash, however, it seems that no airline has attempted to raise ticket prices in an attempt to bring service items back to flights. A Rs1200 surcharge per passenger be enough to provide a decent meal. Would it really be so bad to pay a little more to get a clean plane and a hot meal. Some of the more expensive boxed "meals" cost about Rs 130 out of pocket (probably substantially less to airlines that buy bulk). If Rs 1200 is the difference between staying home and flying, then maybe those are the customers airlines shouldn't attempt to retain. Better idea is the possibility that passengers have the option to see the menu and pay for their meal during their booking. That way we don't have to fumble around for change or wonder when we are going to get our next meal once we arrive at the airport. Some of us might not have enough time between flights during the busy hours to pick up something at an airport restaurants, but the risk of having to deal with a 5 plus hour flight with nothing but tetra packed juice, coffee, boxed snacks seems a little too much to bear for many passengers.
In-flight meal that is served while you are on a commercial airline is prepared by an airline caterers. Typically these meals are decided upon and made by the caterer with the customer in mind. Most often chicken or vegetables is served with a salad and a dinner roll, followed by a dessert. Most caterers do understand that these meals will not always accommodate all customers so they usually prepare others with special considerations or alternative choices. The vegetarian and those who only eat kosher sometimes have to order their meals in advance. Other special menus and factors that the caterer will consider are cultural diets, meals for babies and infants, medical diets, religious diets, and fun foods that small children would enjoy. Caterers know and understand that a small child would much rather eat a hotdog and some French fries than grilled halibut and a salad. ?
Airline caterers also prepare for the morning flights by offering either a continental breakfast or some may serve a hot breakfast consisting of cereal, fruit, and perhaps a muffin or a bagel. No longer is it the case that airline catering is thought of as substandard dining. The quality of the food that you will receive on your next commercial flight all depends on which caterer your airline employs. Some caterers offer five star ratings for their food service, especially on longer flights. Because of an ever changing economy, many airlines are no longer serving complimentary meals or drinks on board but instead have opted to charging for meals or just offering complimentary snacks. Obviously the food cannot be prepared in flight by a caterer but rather has to be prepared in advance, frozen and then heated on the ground before the flight departs. Airline catering are aware that high altitudes can alter the way that food tastes because it alters the taste buds. The biggest concern for the catering industry is food safety. Not only are caterers very cautious in avoiding any cases of food poisoning but the last thing they would want to encounter are an extremely ill pilot. This is why meals that are catered to the flight crew are very restricted. Some foods are completely banned from the crew including eggs and dairy. Many flights also require that no member of the technical crew can consume any of the same food just as a precautionary measure. 2I(www.caterersguide.com)
2.4 In-Flight catering for the elite
Putting together those beautifully prepared and eminently eatable dishes in a kitchen the size of an apartment closet, with just enough counter space to open a can of soup. Or take a shot at whipping up a soufflé at 8,000 feet, or building an intricately stacked entrée at the same time you're creating a sauce, grinding coffee beans and serving drinks to a dozen demanding passengers. And do it all with no sous-chef and no assistants, a microwave oven that looks as if it belongs in the local convenience store and a convection oven barely large enough to accommodate a couple of plucked birds. The galley of a typical large business jet, where food preparation and any form of cooking is always a challenge. Despite the limitations of the galley, more and more passengers are "foodies" who expect the same quality and service at dinner in their $30 million business jet.?Today's business aviation catering specialists are better than ever, putting together intricate meals for virtually any ethnic or religious or dietary group and adapting menus to meet new trends, from organic to vegan. But even so, a growing number of customers-flight attendants, schedulers and dispatchers, pilots and passengers-are asking for raw ingredients that can be prepared and/or cooked on board the aircraft, or that can be sliced and sectioned, par-boiled or seared and easily finished in flight. They don't want a menu, said one flight attendant. "They want what they want."??Donna Casacchia, president of The Corporate School of Etiquette, is well aware of the phenomenon. One aircraft owner, said Casacchia, made it clear in sending his flight attendant through a course that the motivation was "no more catered meals." Another owner asked Casacchia if she could recommend a flight attendant capable of "slicing and dicing and putting meals together in flight."??Bombardier chief flight attendant Debbie Franz is also acquainted with this growing demand for in-flight meal preparation. Franz manages the flight attendant staff of five for Bombardier's demonstrator aircraft fleet in Hartford.?In-flight cooking has Its limitations.?While culinary education and experience is valuable, food preparation on the business jet has its limitations, determined for the most part by the galley.??On even the smaller bizliners, such as Embraer's Lineage 1000 or the Airbus A318, galley space is rarely an issue and there is typically room for such "luxuries" as a refrigerator, a trash compactor and a full-size oven and warming drawers. But smaller business jets, even those the size of a Global 5000 or Gulfstream G550, are rarely so well equipped.While there are certainly limitations to the in-flight preparation and cooking of meals, it appears culinary training for flight attendants is becoming more common.?Business aviation caterers are becoming a typical source of such training. According to Paula Kraft, owner of Tastefully Yours catering in Atlanta, "the bar has been raised in terms of the culinary expectations of business jet passengers". 2J(www.avbuyer.com/Articles/detail.asp?Id=1267)
2.5 Shift in trends
A menu is more than just a list of available foods from a guest's point of view. A menu also reflects the operating image and contributes to the overall dining experience by building interest and excitement in the guest towards the restaurant and hotel. For managers, the menu is the main in house marketing and sale tool.
Flight caterers are high volume operations. In January 2006 the Cathay Pacific flight kitchen in Hong Kong recorded its highest-ever daily production output--in excess of 74,000 meal trays. Globally there are around 630 flight kitchens with an annual output of more than 1 million meals each. A single flight by a long-haul Boeing 747 may require over 40,000 separate items loaded onto it. Therefore, it is very clear that flight caterers handle a considerable volume of products on a daily basis (Jones, 2004; McCool, 1995). Although referred to as 'flight kitchens', food production is only one stage in the operation. There are a number of subsequent assembly and delivery stages--dish assembly (assembling hot entrees and other dishes from their components such as meat, fish, rice and assorted vegetables), tray assembly, bar cart assembly, trolley loading and delivery to the aircraft. Flight caterers also have to cope with a high variety of outputs. Most operators contract to supply more than just one airline, as there are few airports where a single airline has enough flights to justify the exclusive use of a kitchen, except for the 'hub' airports of major carriers. So within the flight catering business, there is a considerable variety of outputs, deriving from number of airlines, types of airline--scheduled, charter, low-cost, executive duration of flight--short haul, long haul seat class--first and business, economy, and chatter flight, day-part'--breakfast, mid-morning, lunch, mid afternoon, dinner demand for special meals--26 different types, such as kosher, halal, low-fat, low-salt and vegetarian 2K(www.cathaypacific.com/cpa/en_INTL/search?keyword)
Traveling by air is no longer a dream in India, flight air tickets have become far cheaper than what it use to cost a decade ago with the introduction of new low cost budget airline companies like go-air, kingfisher red (formerly known as Deccan airways) established it mark in the aviation industry which adversely had an affect on the airline catering industry. These airlines charged cheaper than the normal airlines as they discovered a method of cost cutting by giving no food in flight which at that time a airline company use to pay sixteen hundred rupees to the airline catering company per passenger with this out of the way tickets were cheaper and common man could easily fly. This meant more planes and less passenger food for the airline company. This didn't bother the big airline caterers as other airline companies providing food on board had to lower price to stay competitive, this helped the airline companies to grow not only in metropolitan cities but also small towns. (Author conceptualization)
Flight catering was usually dominated by big players mentioned earlier in the chapter had to face a huge competition from small and inexperienced flight caterers as low cost airline looked to attract and build brand loyalty plus providing value for money.
Café coffee day one of the medium sized food and beverage retail company with no experience in airline catering entered the market with a tie-up with kingfisher red airline (formerly know as Deccan airlines). In-flight catering which was dominated by five-star players has been thrown open to fast-food chains and FMCG players. Cafe Coffee Day, which has a tie-up with Air Deccan (formerly known) and GoAir, was looking at 25% growth per annum for its in-flight catering business. It is also in talks with various other low cost carriers (LCC) to provide products on-board. According to industry estimates, 65% of passengers buy snacks or beverages onboard in LCC. Low-cost carriers are also making in the money by providing in-flight food and beverages. Air Deccan's turnover pertaining to in-flight catering was only Rs 37 lakh in December 2005 as compared to Rs 1.2 crore in December 2006. They are looking at 100% growth. In-flight catering is an added source of revenue for LCCs," Air Deccan's head, in-flight sales, Manikantan. On an average about 55% of the people on board Air Deccan's flights buy F&B (food and beverage) items. It has a revenue-sharing arrangement with Cafe Coffee Day. Indigo, a low-cost no-frill airlines, provides Pepsi and some other products like juices and cookies on-board. It's conversion rate is around 60-70%.With increased competition even full service carriers might have to revisit their in-flight catering model as things in aviation sector needs some change. About 4% of Indigo's revenue comes from in-flight catering. Fast food chains are making best use of the opportunity to expand operations in the air. As airlines expand their operations and add new aircraft to their fleet, our in-flight sales also increase. They are looking at volumes and want more and more passengers to buy food on-board. In fact, airlines also order special food products for their crew members, adding to our business. The products are sold at a marginally higher price on-board, as compared to the price offered at its retail outlets, owing to the incentives given to the airline and logistics cost. The chain has a separate in-flight catering division. However, some low-cost airlines would still like to stick to water and cookies. "In-flight catering does not fit into low-cost model as loading food products could add to the costs," said a SpiceJet official. 2L(www.highbeam.com/doc/1P1-72561437.htm)
The growth of the aviation industry has opened up new skies for the business of airline catering.The Indian aviation industry is going through a boom and its infrastructure is fighting hard to expand its contours to provide this growth with the new required space.
According to the Airports Authority of India, passenger traffic saw a jump of 25-30 per cent last year as compared to 2006, increasing the aircraft movements to an unprecedented level. What's more, the airline business in India is growing at a rate of 50 per cent in the domestic sector alone, with LCCs (low-cost carriers) spearheading this growth.
Since the industry's fulcrum, the passenger traffic is supporting this growth; the chances of this being a steady development are very h3. Besides this, all the allied services to the aviation sector are growing with it. Since in-flight catering is an area directly related to the growth of the aviation sector, its own growth is also directly proportional.
The business of in-flight catering is not only about providing meals to airlines. Today most airline catering companies are performing the role of in-flight solution providers, providing the airlines with all that goes inside an aircraft, like newspapers and magazines, cabin cleaning, laundry, and so on.
But as far as beverages are concerned, the role of catering units differ from one to the other. While some limit their role to just providing storage and chilling facilities to the airlines, the rest not only store them but also buy them for their clients. Alcoholic drinks, however, are arranged by the airlines themselves.
Apart from all these principal activities most of these companies are also involved in other non-flight services, like managing airport lounges and restaurants. Though these services are not their chief operations, most of the big players are operating in them. These make for moderate business, not like the hotels".
The big players in the airline catering business of India are TajSats, a joint venture between the Taj Group of Hotels and Singapore Airport Terminal Services, The Oberoi Group, Ambassador's SkyChef, Sky Gourmet and LSG Sky Chefs. These cater mostly to full-service and international airlines.
According to experts, air traffic is expected to grow at the rate of at least 25% for the next 5-10 years, making aviation one of the fastest growing industries of the country. The number of airports presently operating in India is only 80, out of which only a few account for a major share of the total airline traffic. The government has plans to rejuvenate most of the non-operational airports by 2010 so as to evenly spread the existing load and also to make provisions for the increasing passenger traffic.
Driving this growth is the domestic sector of the country. According to industry experts, apart from full service airlines, low-cost carriers (LCCs), also known as no-frills airlines, are the major contributors to the growth that is being witnessed.
Low-priced airlines like Air Deccan, SpiceJet, Go Air, and Indigo Airlines, are not just offering low-priced tickets, but have also redefined the market for the full-service airlines. Not so long ago traveling by air was considered a privilege of the rich. But the advent of LCCs brought air travel down to the level of middle-class families and those residing in small cities.
A number of foreign airlines have also increased their operations at Indian airports to take advantage of the limited Open Sky policy of the Indian government. The proposal allows foreign carriers, already operating in India, to add to their passenger-carrying capacity during a specified period, by either introducing a larger aircraft or increasing the frequency of aircraft movement.
Projected size of airline catering market
- Number of Air Travelers (year 2007) 5.53 crore
- Projected growth annually 25% (in percentage)
- Number of Air Travelers (by 2010) 10.80 crore
- Per meal cost (approximately) Rs 45
- Total size of opportunity (by 2010) Rs 486.26 crore
With bottleneck competition between airlines heating things up, winning the passenger's loyalty has gained utmost importance. It comes as no surprise that the flying passenger ranks in-flight food among the most important governing factors, when choosing which carrier to fly with. Earlier on an average airline meal comprised of one portion of vegetarian or non-vegetarian course, a salad and dessert. However, in-flight meal providers have taken airline catering to a different level altogether. Today, in-flight kitchens not only cater to the bulk food requirements of the economy services, but also take care of specialty meals for business and first class passengers. If this is not enough, services providers today have diversified into various other airlines services such as aircraft cleaning and laundry, management of airport restaurants and lounges, storage facilities and refrigerated hi-loaders. For example, TajSATS is responsible for the management of the premium Maharaja Lounges at the Mumbai and Chennai airports, for Air India. The competition grows stiff in the business of flight catering, with the entry of international players like LSG Skychefs and Gate Gourmet.
Flight kitchens have to deal with the limitations of preparing and serving food at high altitudes. Meals are blast frozen or heated before take off. Due to space constraints within the aircraft, on the spot preparation becomes difficult. Some airlines use preparations that can be served as cold meals to save much needed effort in terms of presentation. "The presentation of food cannot be as good as a hotel or fine dining restaurant, as space provided for food is very limited. However, for every meal served on board, there is many mechanism to ensure food safety and take measures to avoid harmful bacteria in the food.
Quality and food safety on board are premier concerns for all airlines and in-flight services providers. Flight kitchens in turn, respond by improving quality and ensuring that the services offered comply with catering trends. They also constantly change menu options. The service of superior food to passengers is gaining importance amongst airlines, as even isolated cases of food poisoning can have devastating effects on the airline's overall credibility. Passengers remember the quality of food served to them and airlines must use this as a differentiator.
The difference in air pressure has a marked effect on the experience of eating, as taste buds are less sensitive at these altitudes and everything tastes bland. It is estimated that at high altitudes, there is a loss of as much as 30 per cent in our tasting capacity. To overcome these problems, the standards followed are the same as in the preparation of food at high altitude resorts and hotels. Some airlines keep the food bland for passenger comfort, as some people might not appreciate very spicy meals and secondly, they want to ensure food's safety.
When one eats at a high altitude, the amount of oxygen in the body drops and therefore, metabolic activity slows down. Since carbohydrates are easily digested and provide the body with instant energy, the airline meal provides a small amount of carbohydrates to keep the body active. Small meals ensure that the passenger's meal time is not altered, as it helps to overcome jet-lag quickly.
"In-flight dishes are now lighter, more colorful, and lower in fat and calories. Presentation is important. As compared to earlier, when food in flight comprised big portions, today's portions are smaller and more attractive. The passenger is able to eat all his food and this helps reduce the amount of food wastage.
?When it comes to specialty meals, the list is long, and the choices varied. From seafood to exotic desserts, airlines want to be the leading innovators. Catering service providers have found the answer by collaborating with celebrity Chefs from around the world.
Special meals are designed to cater to the culinary taste, and requirements of the passenger. Apart from special meals for diabetics, and the strictly vegetarian and non-vegetarian difference, the 'special meals' category presents several options. For the calorie conscious traveller, a low calorie meal is available. For those who are on a restricted diet, a range of options like 'high carb', 'high protein', or even 'high fibre' meals are offered. Strictly high fibre meals are not very popular on board, since fibrous vegetables lead to flatulence. Other categories include meals such as low salt meals, gluten free meals, and for people with common allergies to fish, milk, or eggs: low purine (no beans, nuts, fish and animal organs), and lacto-ovo vegetarian meals (no milk and eggs).
?Due to the entry of low frill airlines, even full service airlines have been forced to revise their catering model. The catering model encompasses health drinks, soups, appetisers, main course and desserts. Low cost carriers (LCC) usually provide the customer with a complimentary meal, which consists of a small disposable box along with water, a sandwich or roll and a tetra pack of juice. Some LCCs also offer to sell food on board, but this does not limit the options that are available.
LCCs are now looking at tie-ups with fast food chains and FMCG players. To cite an example, Air Deccan and GoAir have a revenue sharing arrangement with Café Coffee Day, which supplies F&B to the passengers.
In-flight meal service is a key factor in determining how a passenger will rate his journey with an airline. The outsourcing of in-flight services offers an independent, cost effective and efficient solution to airlines, and ensures that the customer remains loyal and flies with them, frequently. 2N(www.hospitalitybizindia.com)