Those bland sandwiches sold by airlines to economy-class passengers? They’re on the way out.
Even as the last major airline — Continental Airlines — is ending free economy-class meals on domestic flights this fall, carriers are changing their whole approach to food.
Air Canada has introduced healthy food options, like vegetarian sandwiches and yogurt parfaits, and Alaska Airlines has a new healthy snack pack. American Airlines is working with Boston Market. JetBlue is about to start selling food on select long-haul flights. Some carriers are expected to offer combination meals and other promotions similar to those available at fast-food restaurants.
And United Airlines is testing the sale of some food items sold on domestic flights, and a variety of sandwiches, in its Red Carpet lounges at Chicago O’Hare International Airport and Los Angeles International Airport. It will also let passengers preorder in-flight food by the end of the year.
The new offerings are in large part the result of the new economics of in-flight food. Kevin Jackson, managing director of consumer marketing for US Airways, said that when airlines gave away food, “the motivation was to minimize cost.” Now that most airlines are selling food, they have an incentive, he said, to “provide better choice and quality for passengers.”
In addition, the airlines are competing with new restaurants and take-out food businesses in the airports. Executives of HMSHost and OTG Management, which operate airport food businesses, said sales were thriving, and to-go options — Wolfgang Puck Gourmet Express, California Pizza Kitchen’s stand-alone airport kiosks and Cibo Express, among them — were proliferating, particularly since the demise of free food on most domestic flights.
With many more options on the ground, most hungry travelers seem to be bringing food on board. A survey conducted by Forrester Research in the fourth quarter of 2009 found that 19 percent of leisure travelers and 21 percent of business travelers bought a meal or snack on a plane in the previous year. If a free in-flight meal was not offered, only 6 percent of travelers polled in Zagat Survey’s 2009 airlines poll said they typically purchased food on-board, but 56 percent said they bought it in the airport.
Indeed, in-flight food sales are not huge money-makers for the airlines. Tom Douramakos, chief executive of GuestLogix, a company based in Toronto that makes the hand-held devices and software used by most North American carriers for in-flight sales, said carriers generated a net profit of only 5 or 10 cents on a $10 sale of in-flight food. But, he said, gross profit on sales of in-flight liquor generally can go as high as 50 to 80 percent on a $10 drink.
That may explain the growing offerings of elaborate specialty drinks on flights. These include Virgin America’s absinthe and Sprite cocktail, United Airlines’ Trader Vic’s mai tai cocktails on Hawaiian flights and a pomegranate martini served by Delta Air Lines and US Airways. Carriers continue to serve free nonalcoholic drinks on most flights.
For the most part, American airlines stopped serving free meals in economy class on domestic flights after the Sept. 11 terrorist attacks cut deeply into their profits. As airlines sought new ways to generate revenue and cut costs, food was one of the first places they looked.
Jim Compton, Continental’s executive vice president of marketing, said in an e-mail message that the airline expected that introducing in-flight food sales this fall would “add about $35 million per year to our bottom line.” According to Henry H. Harteveldt, travel analyst for Forrester Research, most of this profit will come from eliminating the cost of serving free food.
The airlines’ adoption of GuestLogix’s equipment, used by flight attendants for what are usually credit card sales of food and drinks, and to keep track of inventory, makes the sales process easier for both carriers and passengers: Airlines can monitor the popularity of items and use the information to provision flights, while travelers do not have to fumble for change and can get expense receipts for purchases.
Mr. Douramakos predicted that GuestLogix’s technology would allow airlines to offer more combination meals, including a drink, snack and sandwich or salad, an option now available on Air Canada. He said he expected carriers to distribute coupons with food or drinks bought in-flight, good for discounts on future purchases, and also to deeply discount items that remained unsold as a flight progressed. The technology, he added, will allow airlines to operate more like restaurateurs.
The question is whether all the changes in on-board food will actually influence travelers’ behavior. Richard Wong, a transportation lawyer in Washington, said he refused to buy food in-flight “because there’s nothing attractive about it” and prefers to dine on hamburgers and French fries sold by Five Guys at Ronald Reagan Washington National Airport.
On the other hand, Rob Volpe, a market researcher in San Francisco who is an elite-level participant in United Airlines’ frequent-flier program, said he was a devotee of United’s on-board food items, like a yogurt parfait and snack boxes with small portions of a variety of items. And he has purchased the parfait and a mozzarella and tomato sandwich at Red Carpet lounges.
“I’ve been buying snack boxes since they were first rolled out, and I’m always delighted to be offered something healthy,” he said. “It’s kind of a picnic in the air. It’s one less thing I have to carry on board when I have bags, and it’s something I don’t have to think about while I’m trying to get to my flight.”
However in-flight food sales change in the future, one thing will probably remain constant: Snacks like Pringles and candy will undoubtedly remain best sellers.
When there are “healthy and less healthy options,” the less healthy are always more popular, said Paul Platamone, who supplies food to airlines for LSG Sky Chefs, an in-flight catering company.
“It has to do with the travel mentality,” he said. “When you’re on the road, you become a bit more indulgent.”
By JANE L. LEVERE Published: April 12, 2010
NEW YORK (Reuters) - What's the value of a pint of beer? Let the market decide, says a new restaurant in Manhattan, where prices for food and beverages will fluctuate like stock prices in increments according to demand.
The Exchange Bar & Grill, set amid the bustling shops and pubs of the Grammercy Park neighborhood, is replete with a ticker tape flashing menu prices in red lettering as demand forces them to fluctuate.
Customers can move prices for all beverages and bar snacks such as hot wings ($7 for 6 pieces) or fried calamari ($9). The prices will fluctuate in $.25 cent increments, but will most likely plateau at a $2 change in either direction.
A glass of Guinness starts at $6 but could be pushed to a high of $8 or a low of $4, depending on popularity.
So if one drink is in heavy demand, its price will rise, causing the cost of other equivalent drinks to drop. A rush on a particular beer would increase its price, and cause other beers to drop.
Owners Levent Cakar and Damon Bae admit the stock exchange theme is a gimmick but hope a good deal on drinks and their hamburger's tastiness will win over customers.
"Its definitely something a little bit different," said Bae. "There is a little bit of a twist."
Bae, 35, who has an MBA from Georgetown University and Cakar, a veteran restaurant hand, combined forces to open the airy lounge, which serves up to 60 people.
The Exchange Bar & Grill has a long bar facing the ticker tape -- and flat screen televisions -- as well as a few tables in the back where patrons can eat in greater comfort.
Restaurants in New York and across America have had a tough year because consumers have slashed discretionary spending in a tough economic climate. New York has about 23,000 restaurants, with about 4,400 opening each year according to the city's Department of Health, which tracks establishment licenses.
The number of sit-down restaurants in New York dropped 9 percent from the fall of 2008 to 2009, according to market research firm NPD Group.
Good prices and a good location should be enough to make their project work, Bae said. And, Cakar added, put in a dash of speculation and you've got a winning recipe.
"Why couldn't we play with the prices like a stock market?" said Cakar, who explained that when he mentioned the bar's concept to his liquor distributors, they laughed at him.
"One day you are all going to come to me to put your drinks on my ticker tape," he told them.
The restaurant opens April 1.
ATLANTA—PKF Hospitality Research announced that U.S. hotels should enjoy double-digit revenue growth by 2012, according to the March 2010 edition of Hotel Horizons.
The company is forecasting hotel rooms revenue to grow 10.5 percent on a per-available-room basis in 2012. Until 2012, however, market conditions will remain relatively soft. For 2010, PKF-HR is forecasting a 1.1 percent decline in RevPAR, the third consecutive year of falling RevPAR for the U.S. lodging industry.
However, while PKF-HR is forecasting a 1.1 percent annual decline in 2010 RevPAR, lodging market conditions will turn and improve throughout the year. In fact, the demand for hotel rooms has been greater during the first quarter of 2010 than it was during the same period the prior year. This growth in demand is expected to persist throughout the year and result in an annual increase in rooms occupied of 1.5 percent.
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