In-flight catering gets taste of fast-food
In-flight catering till now dominated by five-star players has been thrown open to fast-food chains and FMCG players.
By Vishakha Talreja, TNN |
NEW DELHI: In-flight catering till now 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 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. “We are looking at 100% growth. In-flight catering is an added source of revenue for LCCs,” Air Deccan’s head, in-flight sales, Manikantan told ET.
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 airline, 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,” says Indigo’s COO Steve Harfst. 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.
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“As airlines expand their operations and add new aircraft to their fleet, our in-flight sales also increase. We 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,” says Cafe Coffee Day CEO Naresh Malhotra. 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.
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