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Meal deals

Recently, it is the prevalence of ancillary revenue that has made the biggest impact on airlines. Keith Mwanalushi speaks to Alan Hayes at Alpha LSG about recent buy onboard trends
 

When British Airways switched to Buy on Board (BoB) on short-haul flights in January 2017, it became even more evident that low cost carrier (LCCs) strategies were encroaching on full-service carriers, again copying LCCs in almost every regard.

 

Recently though, some industry reports have indicated that airline passengers are scaling back on onboard purchases as competition from airport retailers intensifies. Alan Hayes, Alpha LSG’s In-flight Retail and Managed Services Director says that is not necessarily the case: “At Alpha LSG, we’re not necessarily seeing passengers scaling back on their BoB purchases. On some of the leisure carriers we operate retail programmes for, we see nearly two consumption items sold per travelling passenger – that drink and snack is still seen very much part of the leisure or holiday experience,” he says.

 

The airport experience is getting smoother and smoother with huge investment in new look, fast-track check-in and security. As Hayes indicates, this means passengers get airside much quicker from point of arrival at the airport and have more dwell time available before their departure – which lends itself to shopping and dining. Conversely, savvy customers are seeing this as an opportunity to get to airports much closer to their time of departure, eating less into their own personal time, which leads to lesser shopping time and more opportunities for onboard purchasing.

 

“In terms for fresh food, this is much tougher – with airlines grappling the challenge of sales optimisation versus cost and customer satisfaction.”

Hayes feels this is not a service to dapple with. It needs genuine expertise to get this right – from product development and brand partnerships to getting the right selection of products at the right quality, through to insight and knowledge to determine the correct loading levels to satisfy demand and avoid high wastage costs. “Airlines can seem reluctant to invest in the technology to do this correctly, but it is pivotal to unlock the lucrative revenue from this service and steer customers away from the airport dining environment.”

 

However, Hayes observes that boutique goods over the past couple of years have struggled in terms of sales levels – not just with the intensity of the competition from the airport retail environment, but also from the convenience of online shopping from smartphones. “This has also been compounded by a number of big boutique brands turning their back on the in-flight retail element of the travel retail business, favouring brand protection merchandising in Duty Free shops or High Street doors. It’s a lucrative revenue stream and it is surprising that so many big brands feel they can turn their back on. We’ve worked hard to revive this category, by turning to new and niche brands to give customers some interesting choices to drive impulse purchasing, supported by the development of unique promotional strategies,” Hayes explains.

 

Back in 2017, Alpha LSG won a five year extension to its contract to provide catering and logistics services to Jet2.com until 2021. Alpha LSG is responsible for procurement, warehousing and packing of Jet2.com’s retail products into bar sets and onboard service products which are packaged into kits for passengers. Hot meals are supplied to the airline’s customers from Alpha LSG’s frozen food production facility along with full logistical support for on and off-loading aircraft, equipment cleaning and storage.

 

More than ever, airlines today are embracing digital channels to boost their ancillary revenue. A report by Inmarsat Aviation indicates that expanding retail options will require airlines to make strategic choices. While many will no doubt focus on an in-house offering, acting as gateway to a newly enhanced shopping opportunity makes new retail partnerships possible.

 

Another issue is the quality of onboard food purchases which is often a set back and Hayes agrees that food innovation needs to improve the quality of food items: “This innovation is critical in developing something different that customers will actually want to buy onboard and would enjoy eating.”

Frankly, air passengers are tired of the “long-life horror” items. “We’ve all done it,” Hayes admits “to cut down the waste – we look at long-life food, dehydrated, sterilised, thermogenic sealed… it all sounds like it tastes, and customers don’t react well to it.”

 

 BoB food can also be too predictable. There is an unprecedented amount of cheese and ham and cheese and tomato toasties taking to the skies every day. An equally unprecedented amount landing back into catering units across the country unsold and wasted. “Customers have come to expect a predictable and dull BoB offering, and this is where innovation has to plays its part.”

 

Hayes reckons effective brand partnerships, with leading recognisable High Street brands, give BoB options that customers are familiar with, something they would trust. “Not only that, it provides you with up-to-date and up-to-the minute menus; with products customers are seeing on the High Street at that time – on-trend.”

 

Of course, it doesn’t have to be all about partnerships. Hayes mentions that in-house development can also bring innovation under a well-developed brand umbrella with menus based on quality specifications and aligned to general taste trends in the domestic marketplace. He says customers want to see the trends they see on the High Street. They want plant-based protein, vegan choices, gluten free choices, low-calorie choices and so on. “This can be delivered through effective investment in the right chef skills and culinary technology, combined with robust consumer research, using innovative techniques to bring restaurant and on-the-go eating establishment quality food to the skies.”

 

Other onboard retail specialists such as Retail inMotion (RiM) are constantly watching food trends across the globe to understand how consumer tastes are changing. RiM is working closely with its customers to advise them on the best and newest trends for their onboard retail programmes. One major trend that they see developing in the market and becoming very popular is healthy, “free-from” meals and snacks – whether that’s free from preservatives, meat free or gluten free.

 

RiM is believed to have launched a vegan meal option for Ryanair.

 

Hayes also observes that travellers are now making more choices than ever before based on sustainability. “They now expect to see eco-friendly food packaging on their BoB options and clear strategies on recycling. All of these aspects can hugely improve the quality of the BoB proposition for any airline, enrich customer satisfaction and drive a lucrative revenue stream.”

 

Several airlines have implemented or are considering the pre-purchase of retail/food at the time of booking to avoid the dead weight on unsold items.

Hayes says Alpha LSG has achieved significant success in working with its clients on their pre-order retail and food programmes. “Food in particular is an emotional subject matter for customers – they react well to being able to pre-order their food to have the assurance that they will get their choice of meal rather than the possible lottery of buy onboard food sell-outs.”

 

He further explains that effective pre-departure marketing is key to making this a success. “It isn’t a case of sell it and they will come.” He says social media can be used to reach out to prospective customers in the build up to their flight – showcasing any innovation, brand partnerships and food retail quality. “All of these subtle messages give customers an insight into what your proposition is and builds that trust in readiness for when they want to order.”

 

Hayes warns not to encourage the order too aggressively, too far away from the point of departure. “Our research tells us that customers start to properly think about their inflight and airport experience just three days before they are due to fly. This is the optimum window to grab the customers’ attention through the correct targeted marketing.”

 

Once the customer has been drawn in by the marketing campaign, passengers like to see what they are going to get – so over-staged photography can be a turn-off. Nonetheless, the visual needs to be appealing. Bundled promotions also work well – Hayes suggests assigned seating, additional baggage allowance and meals/food packages drive good volume uptake.

 

“Boutique pre-order retail is still in its infancy in the UK. We work with customers who offer this service and whilst the sales are steady, they don’t reflect the success in other well-established territories such as Scandinavia.”

 

Hayes says there is a danger of falling into the temptation of putting out daunting pre-order programmes, with almost too much choice which can push customers away. He adds that ranges need to be well-tailored to the customer profile with the right fit of brands to these demographics – with new and niche brands and a good promotional strategy to encourage people to want to buy.

 

“Again, the success of this lives and dies by the marketing. Reaching out tactically via digital channels, with tailored and bespoke campaigns is key to engaging the interest.”

 

The internet has changed consumer habits on the ground, and it has the potential to transform the retail spend in the air as well – and that goes for food too.

 

Air to ground connectivity opens huge possibilities, Hayes asserts, from partnerships with large High Street stores with collaborative promotions, to sales of destination-led experiences to onboard order for either home or inbound fulfilment: “Creating a reason for the inflight Wi-Fi’s existence is key – and ultimately it’s about offering meaningful products and services that are best served in the connected world, but also drive an element of convenience.”

 

In addition, Hayes says this brings about the more agile product range and pricing strategy. “Many onboard ranges are static, due to the long production timescales of the old-fashioned menu cards and catalogues. Onboard Wi-Fi opens up the possibility of e-catalogues accessed from the customer’s own smart-device, with regularly updated dynamic product ranges altered monthly for different promotional or seasonal sales strategies as well as flexible pricing – to target sales or promotional activity at key periods.”

 

Destination-specific content and commercial offerings could become a reality as airlines realise the retail potential of inflight Wi-Fi.


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