Catering: New concepts post-pandemic

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Retail rallies the recovery

Onboard hospitality models are shifting post-pandemic, with the role of retail revenue pushed way up the agenda. Julie Baxter explores how ancillary sales are making their mark on the F&B offer

operational barriers are tumbling, collaboration is growing and ancillary revenues are the future of inflight catering, whatever type of airline model you work with.

That is the conclusion of leading players in onboard catering as they build back postpandemic and work to drive both airline profitability and passenger satisfaction.

While acknowledging that COVID-19 has been the worst crisis to hit the aviation sector since WWII in terms of depth and length, those on the catering frontline see some notable positives emerging from the pandemic pain, with significant changes in airline thinking, industry infrastructure, priorities and capabilities evolving across global markets.

Robin Padgett, chairman of the Airline Catering Association and svp catering and retail at dnata, says: “Nothing we see post-pandemic is new but the trends and the pace of change are greatly accelerated. It is the speed of things, that is really the most extraordinary thing.”

He highlights the issues of cash handling and preordering as the first to show real change. “Cash handling onboard used to be a key issue – now that is dead, that conversation is over, the need is gone. Things have changed very quickly, even markets we thought would take 10 years to change have in fact changed in less than 10 months. And it’s across all demographics. Digital payments are now just the norm.

“There is also an explosion in pre-order but we have to watch this to see whether that is just because people know they currently have to plan a journey much more than normal. It will be interesting to see if this uplift is sustained. Preorder is certainly critical but is it everything? The next 6-12 months will tell.”

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But he insists one change is certain and driving everything else: “The future is ancillary. For both traditional, full-service airlines and low-cost carriers as well as hybrid models, the highest priority postpandemic will be finding new revenues. Key to that is remembering you cannot underinvest in the consumer, if you want to drive change it requires thoughtful, consistent and detailed attention.

José Lirio Silva, head of onboard retail Europe at Retail inMotion, agrees: “The pace of change is faster than ever, especially the use of technology for touchless payments and ordering through a watch or smart-phone. Customers want what they want, when they want it. They expect this now, they get that on the ground, and it is important to recognise that this is not an extra cost because it generates extra revenues.”

Most recently his team has launched a digital magazine for onboard retail. The passenger clicks on a coke or a chocolate and gets all the back-story and product information they could need, instantly – hopefully supporting their decision to purchase. “That technology can give you new sources of revenue. It can also support optimised loading to cut waste. Waste of 50% may sound good but we have to consider the margins on lost product, and the environmental costs of the loss too now,” adds Lirio Silva.

“Suppliers also have to really understand their customers, it is not just about our B2B relationships but the B2B2C business collaboration – that is the future, we have to work together to optimise customer satisfaction while also optimising the revenues for airlines.”

a spur to change

Michelle Green, director business development, strategy & innovation at Tourvest Retail Services, is excited that a whole new future is opening up in retail and believes the pandemic has been awful but acted as a useful spur to change, shaking up the onboard catering offer. She says: “In today’s consumer-centric world where experiences, personal fulfilment, and transformative moments are seen as the ultimate currency, we need to deliver more than just a retail experience. We need to deliver an integrated and seamless customer experience throughout the decision-making journey, putting customers in control, allowing them to have what they want when they want it.

“We all want choice, and have it in most areas of our lives now, why can’t we have it onboard too? Well we can. What airlines offer doesn’t just

Above: Digital interactions now touch all elements of the journey from Mobipax info apps to British Airways retail shopping

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have to be delivered on a trolley coming once through the aisles. The dynamics have changed. Cash has all but gone. QR codes and ordering digitally are the norm in many places, and I think food retail has changed for good, and changed for the better.”

She identifies two types of retail opportunities now developing in tandem. ‘Considered’ purchases made by those who like to plan ahead and preorder to ensure certainty and full choice; and ‘impulse’ purchases made onboard while travelling, on the spur of the moment.

Barriers are falling

She says: “There is a balance of complexities which has to be managed, but that management becomes easier if there is not just one point of sale. You can take out some of the cost and complexity that way, while continuing to offer choice. Airlines are starting to think differently. With pre-order you can offer choice without worrying about onboard weight and space restrictions, without worrying about waste, it can all be managed in a much better way, from the ground. We have seen a big shift already but we need collaboration to work smartly end-to-end, we have to blur lines to get the ultimate experience.”

She adds: “Out of the pandemic airlines are way more open to this, we all know we have to focus on the customers. The barriers of the past – older systems – made acceleration tricky, but now we can use forecasting tools and information to predict and react, and we can share data so we know far more about what the customer actually wants. The retail offers need to be cost effective and sustainable and the only way is to work together. Digital connections with the passenger allow us to market the right product to them at the right time, through the right device, and when you do that right it is very powerful and brings added value to all. Airlines do seem more open to this now.” Antony McNeil, director, food & beverage – inflight service delivery at Singapore Airlines, accepts that even legacy airlines are looking for incremental revenues within their cabin spaces, such as Economy class travellers upgrading their meal to a Business class menu for $20-$30, or adding a bottle of champagne.

“These opportunities are available through pre-order, and the additional platforms used for duty free sales are already there to support an expansion, for inflight consumption. The pandemic has allowed us to evolve, given us time to work with insight teams and listen to our passengers.”

He believes the booking process for pre-order/ dining choices must be very simple and an integral part of the booking process. “By pre-ordering, passengers get access to a wider choice and that can be attractive to them. As we increase the passenger’s digital footprint, it saves weight and paper, with QR codes at check-in and onboard for example, and it triggers engagement too, so we can see what people are looking at and buying, or changing their minds about, and when.”

Transitioning to new offers, he says, will require collaboration. “We have to work with catering partners to meet local catering needs but also to ensure we can match supply chain availability because the global supply chain disruption has

When nothing is sure, everything is possible

Above: Digital engagement on Singapore Airlines already helps passengers personalise their journey through touchscreens and personal devices Below: AirFi Scoothub enabling inflight retail

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already impacted our pre-order availability at some stations overseas. We need to see the opportunities at station and leverage those.”

Lirio Silva believes these upgrade opportunities are very important in creating a customised offer for those willing to pay for it. “People are familiar with these kind of opportunities – they are offered a house wine, but know they can upgrade if they wish to pay – and this seems a natural, easy development of service".

new business models

Green agrees: “I don’t think buy-on-board will take over completely in the back of the aircraft (for long-haul) but a hybrid offer will emerge where there will be an included service element, as expected for long- haul, for example, but with opportunities to add to it and tailor the timings of delivery. Increasingly passengers will ask: 'Why do I have to eat when the airline says I have to eat?' We need to give them the chance to personalise their journey by giving them the tools and the opportunities to adapt the standard service.

Both note changes in crew attitudes have been accelerated too – reduced-touch service was introduced for safety and security through necessity and now the crew see that this works. Lirio Silva adds: “We have had proof of concept now and shown these changes can benefit both the crew and the passengers.”

The pandemic has clearly impacted every aspect of business but not everyone has been impacted equally. Some regions have seen strong domestic markets – the U.S. and China for example, and even Australia for a while – which enabled some early recovery. In Europe the bounce back is beginning impressively, consumers clearly want to get back in the air, but those on the frontline detect a threat to recovery in that there is always a lull post-crisis, and the risk that the bounce back catches the industry off-guard and it is unable to gear up fast enough.

McNeil warns: “The planning going on by airlines now will help the reopening. Airlines have to engage caterers and ground handlers well in advance, we need to know how long they need to ramp up services, how long they need to recruit, get re-certificated, reopen fully, so we have a realistic understanding in terms of timescales and lead times. Airlines have to work at the caterers’ pace, we cannot get ahead of them. Working with partners is key if you want to be quick to come back in the recovery.”

He also hints at new ways of doing business, commenting on customer feedback on catering which had shown some demand for an option to deselect a meal option onboard altogether. He says: “The demand for that was quite a surprise but made us think about the lounge options – people might prefer to eat there and then not onboard, which could support waste efficiencies.”

Green concludes optimistically: “I have wanted the industry to change for some time and I think, as bad as the pandemic has been, we now have the platform to do that. When nothing is sure, everything is possible.” •

The pandemic has given us time to evolve and really listen to our passengers

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