Fast Food companies eye In-flight catering boom

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's. 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 said. 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. “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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