Catering solutions

After absorbing some dramatic blows in late 2001, and fearing the worse for 2002, this year has turned out better than expected for the catering business, says Alfred Rigler, global senior vice-president total in-flight service at LSG Sky Chefs.

The world's largest in-flight caterer has seen a strong market in Asia, with Europe recovering despite the challenge of low-cost carriers to the traditional model of meal service on short-haul services. The major black spot for caterers remains the domestic US market, where only a limited amount of catering removed after 11 September has returned to the cabin, and where traffic remains weak.

What all markets have in common is the constant search by airlines for savings on their in-flight product. "For six or seven years we have seen the average spend per meal drop by 5% per year," says Kevin Abbott, chief executive of Alpha Flight Services, the UK's largest in-flight caterer with operations also in Australia and Jordan. During the first half of 2002, Alpha was down 14% compared to the first half of 2001 in meal delivery terms.

The result of such a tough market has meant intensive discussions with customers to discover new ways of delivering quality food service at lower cost, says Rigler. "Airlines are not only asking for tenders for catering only, they are looking for a solution provider - they want solutions for equipment management, information technology and sell on-board," he says.

It is the short-haul catering product that is causing full-service carriers most angst. Rigler sees many carriers questioning whether they should provide a free food and beverage service on such routes at all. There is a good opportunity for carriers to adopt the sell on-board approach, he believes, and LSG Sky Chefs is preparing a food product trial for a US carrier in early 2003.

The sell on-board products Alpha has developed for European low-cost carriers such as easyJet, bmibaby and Virgin Express have been the only growth part of its business this year, says Abbott. He believes this approach will spread to the USA, but that in Europe mainline carriers will not remove their free meal service. "Despite all the commercial pressures, all our research confirms that European passengers expect a meal service on board," he adds.

While this is a very live issue, Abbott believes another major opportunity is the ability of passengers to gain a wider choice of food by pre-ordering their meals via the Internet when they book their tickets. Alpha is preparing a trial of such a system with a low-cost carrier in the early part of 2003.

The past year has seen LSG Sky Chefs on the acquisition trail, taking over the assets of Sabena Catering in April, and signing a deal to take a stake in MAS Catering in Kuala Lumpur in July, although this has yet to be finalised. Further deals are possible in Asia this year.

The world's number two caterer, Switzerland's GateGourmet, has been hampered in its efforts to gain more scale by a long-drawn out sale process to US investors Texas Pacific Group. First announced in March 2002, the sale from the administrators of bankrupt SAirGroup to TPG has been complicated by negotiations with Swiss over its catering contract with GateGourmet, but is expected to be closed soon.

Source: Airline Business