British Airways has made the announcement with regards to its short haul catering being paid for in economy and being sourced from Marks and Spencer.
You can read the news announcement here
And the pricing here
And the use of avios here
Making the announcement, CEO Alex Cruz said that the move was “Two great British brands coming together” and was in response to customers asking for more choice and better quality in the short haul catering.
“We have reached this point as a consequence of an increasing number of requests from our customers, “ Cruz said. “We have customer saying to us “Do not force me to eat just what you have -there is very little choice”. And there are always questions about the quality. Today’s product launch is in reaction to customer response around choice and quality.”
The following is an edit of CEO Alex Cruz’s comments for those interested in more detail beyond the news pieces above. To make sense of the comments I have summarised the questions asked at the announcement.
Is this being done just to reduce costs?
“We haven’t reached this decision because we were going to take a huge amount of cost out of the business. The decision has been taken because of choice and quality. We have been receiving feedback on both of these and we had to respond. We could have spent more money and increased the amount of food on board, but the logistics behind it and the cost behind it would have become prohibitive and completely uncompetitive and we would never have gone against the trends on this particular topic. So for us it was the right decision to move to the buy on board model but to make sure we did it in a special way. We are convinced this is a special way with Marks and Spencer and also the payment method. We will be going through, figuring out how we fine tune, but now we have the range of products on board.”
What about people who say this is turning you into low-cost airline?
“We’ve already been reading the comments that people have been made about this. But when I read those same comments the balance of the comments show that there are people who understand the choice and quality arguments. We are providing a link with a fantastic brand in Marks and Spencer and to be honest we are really really really far away from becoming a low cost airline. The fact that you can pay with avios shows we have may other gadgets and services that make us an airline that has substantially more product offering than a LCC.”
What will happen to short-haul business class (Club Europe) food and drink?
“We are considering how else we can strengthen the Club propositions. We will be leaning on the expertise of the expertise of M&S in terms of the materials and what is popular. At the moment there are no changes in the Club product but if anything we will be looking at how we can strengthen it.”
Will prices of economy tickets drop because of the removal of free food and drink?
“The price of economy tickets has been falling tremendously across the summer period, not just with BA but with our competitors. The price of the tickets isn’t determined by the service but by supply and demand. We are able to offer very cheap tickets in the short haul market.”
Does the new catering require any changes to the aircraft?
“There is no adaptation for the plane for the moment. We have four ovens, two in the back and two in the front. Potentially we might remove two of these, but at the moment there are no changes. Also some of those aircraft may end flying longer sectors on which we do are providing food, and on which we are having to heat up the food for Club food.”
How many people do you think will be buying this food?
“We have some idea because we have three partner airlines – Aer Lingus, Iberia and Vueling who do buy on board food and we have statistics and it varies tremendously from route to route, not just the length of the route but if it is a leisure route or a business route, so we have some information. We are going to have to build our own but for like to like routes we have some information. If you look at sun and beach holiday flights from Gatwick there will be a larger amount of consumption, a 0630 flight to Amsterdam it will be a little bit less. Many of those Executive Club members will have been in the lounge so they may want to catch some sleep. I think we will end up with our own patterns which will be different from the other airlines.”
And it’s outbound and inbound?
“Yes. It requires fantastic forecasting abilities and also some procedures internally to make sure you have sufficient inventory on the way back. Sometime you get some very hungry people on the way back from Malaga for instance so you have to administer it carefully.”
“We also have a different flight design from the low cost carriers. If you look at Heathrow we have more than 50 percent passengers who are point to point but we also have a lot of connecting passengers We can speculate if they will be hungry or not, but it makes the design and operation of our flights different and gives us bigger windows to load and replenish the catering on board. You are likely to see the catering trucks approaching us more than you would for an Easyjet flight which would be maybe four short haul flights. So definitely from Heathrow we will have more opportunities to make sure we have sufficient stock.”
The food is more expensive than on the ground.
“There has to be some way to get the sandwiches from the different distribution points of M&S to the airport and the logistics mean that there are multiple places the food has to pass through – the airport area, the airport terminal, the airport distribution area and the plane, and each one sometimes has sometimes multiple players who are licensed by the authorities to take things to the plane, and that means each one of them has to be paid.”
“By the time this sandwich gets to the place it is very well wrapped up, thank goodness, because it’s been through a lot of different procedures. To load a sandwich onto a train is peanuts compared to loading it onto a plane. The difference is security. The sandwiches along with everything else that goes onto the plane gets canned and has to be approved and driven by people who have been certified and vetted to go to the aircraft so that adds up to the cost and that makes up the difference mostly.”
“This is not going to be a huge revenue maker given the complexity nor is it a huge revenue for the airlines unless you take the price very high. Our starting point is offering more choice and more quality. We will refine this. And it will be the passengers who will do this by choosing a particular sandwich and buying it or not buying it, the same as ticket prices that we have been responding to since forever.”
“The price of the ticket is not determined by the level of service offered. We are pressured on price and we price accordingly, and if we get it wrong you won’t fly with us, so lots of pressure.”
Will menus differ depending on route?
“Initially we discussed this. Who knows in the future. But short haul there appears to be sufficient there aren’t too many reason to customise it, and we do it on long haul of course. But that doesn’t take away that we are going to be looking if there is any merit behind having seasonal items in which case we would change the menu.”
The menu will change seasonally, but will there be other changes?
[As a result of the new offering] “We will find we have two new tools. From January we will begin to have fantastic statistics in terms of what people like, which flights, at what time of the day and the days of the week. Enable us to refine the products. Secondly we have a well-articulated and presented distribution platform that will allow us to try something new. So if M&S has an interest to test on a particular market we would be able to do that. Both of these new platforms that we have not had in the last.”
How will you decide if it’s a success?
“I think take up rates. We have some basic take up rate objectives per route. So that will be the first sign of success. Those take up rates by a flight by flight or destination have been based on others. We will have to develop our own. How much our frequent flyers use it, the different payment methods, how the logistics work, how much flex we can build in to do some of the other things. We are just keen to get it started, and then absolutely we will think about children’s menus and other things. I remember when I introduced this at my previous airline it took us two years to bring in healthy items. You want to get sufficient, tangible feedback from passengers.”
Won’t it make service slow?
“From a service design perspective we are spending a lot of time to think about how the food is delivered. It might be from two different positions, front and back to the middle or starting from the middle and moving to the back. There are multiple models. We are interested in finding the model that will be from a serving perspective the optimum one. We have some very short flights where we may not go through the cabin the flight time is 25 minutes where we make it an on demand service, show the menu.”
“If there’s one innovation that will quicken it, it will be payment. The ability to pay from your mobile using avios points. The scanner will be able to read straight from your app to allow payment and it will make the ability to not manage cash a lot quicker – and the rest will be cashless using debit and credit card.”
“We’ve been testing it with some of the logistics and crew for the design. We are a very conservative company. We have all those emails and letters as feedback – you ran out at the end, or you don’t have the choice, or as we have redesigned the offering and it has become smaller and people want more choice, or hotter, or healthier, and this allows us to give that.”
How did you decide on the Avios redemption rate?
“We looked at which passengers with bronze status above were consistently flying economy on short haul flights to try and determine the threshold of points to buy the different items in a way that it wouldn’t become prohibitive and would just be an extension of the overall experience. There are some that fly in business, some in economy, some fly with other airlines on other occasions, so that data we used to try and determine the points levels. For someone flying with us a couple of times a month, this should be a nice extension if they want to use it for private use. If they want to expense the food, then we will give them a receipt and they can expense it. Just being able to use the points we think is innovative and we think that people will welcome it.”
How much short haul food is currently thrown away?
“More than I would ever feel comfortable about. I set out in my previous airline a programme to pass on the unconsumed food to several food kitchens in Barcelona and Rome, and it’s a subject that makes me uncomfortable because it is our responsibility as citizens to match the demand to the supply as much as possible. This model will allow us to do this in a more exact way. One single box of food being thrown away is way too much. We do have a large operation, and we do end up having to dispose of it. We do currently have programmes to dispose of some of the non-perishable ones to some organisations. I didn’t want to mention it because it would seem opportunistic, but since you asked the question, that’s the position.”