With more than three billion passengers flying a year, the scale of global catering operations is mind-boggling. A single long-haul Boeing 747 has over 40,000 items loaded onto it before it flies and large international airlines make more than 1,000 take-offs and landings every day. Given these figures, it’s understandable that the president of KLM Catering has said: “Flight catering is 70% logistics and 30% cooking.”
Peter Jones, a former professor of airline catering and the author of a standard textbook on the industry, said: “Because of the high volumes, the margins are tight and the food offer is one of the few things an airline can adjust. They can’t do much about fuel and their operating costs are fairly fixed. So when they’re suffering financially, catering is where they’re likely to make cuts.”
Jones illustrates his point about the importance of small margins when operations are on a grand scale with a lovely story about a charter airline running package holidays to Mediterranean destinations. The company used to offer free chocolates to passengers at a cost of 1p per item. Since they flew six million passengers a year, the total cost was £60,000. When it came to a cost-cutting exercise the chocolates had to go. “So in the first year, they spent £60,000, then in the second year nothing at all on chocolate. Then in the third year they were taken over by a new company that upgraded the catering offer. So they started offering 2p chocolate which then cost them £120,000 a year just for one little piece of chocolate.”
A good example of the importance of logistics came when the global logistics company DHL entered the flight catering market. In 2008, they teamed up with Northern Foods to win a slice of British Airways’ in-flight meals business. DHL replaced Gate Gourmet to supply meals and sandwiches for short-haul flights from Heathrow Airport. Since then, DHL’s catering operations have grown. Last year, they opened the 52,000ft2 DHL International Flight Centre catering hub at Heathrow. The £7 million centre services United Airlines, as well as offering procurement, product sourcing, beverage replenishment and food assembly services.
Getting ahead of the game
BA’s recent extension to its pre-order meal service is another example of finding logistical solutions to large-scale catering operations. The pre-order service, which allows those travelling in First, Club World and World Traveller Plus, to select their meals before travel to guarantee their first choice of main course, was extended from six routes to 21 this year after an initial trial period proved successful. Passengers select their food via the ‘manage my booking’ tool on ba.com between 30 days and 24 hours ahead of their flights. By the end of 2015, the service will be available on all long-haul outbound flights from Heathrow, with Gatwick to follow.
Peter Jones says that when the pre-order system was introduced a few years ago, it was slow to catch on. “It was first trialled by a big holiday company flying people to the Mediterranean, but there was too much confusion about what had been ordered, and allocating meals to the wrong seats, so the idea was abandoned because it was too much hassle,” he said.
BA’s trials, however, revealed the many logistical advantages for airlines and their customers. “It eliminates the risk that what’s on the plane isn’t what you want and it means you don’t need to stock spare meal items. Because you only have the stock from the inventory there’s less food waste. Also, if you get the system right, you can potentially extend the size of the menu to five or six choices, instead of two or three. Knowing exactly what you need makes it much easier to make plans.”
The major challenge in the pre-order system was always tying the meal to the right passenger. But the meals can be pre-ordered online at the same moment the passenger chooses a seat.
The low-cost model
For low-cost airlines, logistics play
an equally important role. With low ticketing prices, profit margins per journey are tight. Most of the low-cost carriers will use one of the two major catering providers, LSG Sky Chefs or Gate Gourmet. But they will use them in a different way to legacy carriers.
Low-cost airlines make their money when the planes are in the air, so they need faster turnarounds than international carriers. One of the ways to achieve that is to stock the aeroplanes just once a day. This would normally be done at the hub airport. “By definition low-cost airlines offer short-haul flights so they can normally do the catering uplift for several flights at the beginning of the day and avoid restocking later on. A plane might be filled up before it leaves Heathrow for Geneva. It will then make the return journey and then another return journey with the same set of provisions. There’s a danger, of course, it might run out of some items on the final leg back to London,” said Jones.
The world’s largest low-cost carrier, Southwest Airlines, has a different model to most airlines. Instead of calling on a global caterer such as Gate Gourmet, it uses Southwest employees to provision the planes with products stocked at 20 warehouses strategically located all over the US.
Frank Porter, Southwest’s senior manager cabin services strategic planning and projects said: “It’s a lean production model so orders are placed weekly at our various airport locations to one of the 20 warehouses. We make orders on a Monday and provisions are delivered on a Tuesday to fulfil the requirements for the following week. We keep seven days of inventory in our warehouses. Operating week by week creates rotation of product and we don’t get out-of-date stuff, it’s very cost-effective and eliminates a lot of waste.”
For distribution, Southwest uses Bunzl, one of the world’s largest logistics companies, with operations in 23 countries. Though originating in Hungary, and now based in London, almost half of Bunzl’s business is in the US so it has extensive supply networks. The efficiency of the Southwest model is most evident when it is compared to the company’s previous model, which was in operation until about 15 years ago. “In the days before we teamed up with Bunzl, Dallas Airport, for example, would have to order directly from the supplier a lot of product to cover for lengthy periods of time. So, if Dallas needed orange juice, they would order a truckload. It wasn’t efficient from a cost perspective or a product-rotation perspective,” Porter said.
Southwest’s service to customers has evolved over the years. All fliers on the longest flights used to receive a Snack Pack, a box that included three salty and sweet snacks. But in 2008, the company transitioned to Select-a-Snack trays, which gave customers the option to choose as many snacks as they like free of charge. As a result, there have been cost savings and there is less rubbish to collect.
Southwest’s main provisioning agreement is with Mondelez International, an American multinational confectionery, food and beverage conglomerate, employing around 107,000 people worldwide. It comprises the global snack and food brands of the former Kraft Foods. Mondelez International manages well-known snack brands, including branded cookies, chocolate bars, pretzels and peanuts.
The practice of using branded products is common for low-cost airlines even when they provide cooked meals. “It’s partly because food manufacturers can almost certainly make them at a lower cost than a flight caterer can. But it’s also because on their menus, they want products that people can identify with,” said Jones. “The practice of buying products directly from manufacturers is quite common in the US. Some airlines will even use restaurant brands. TGI Fridays’ food is served by one airline to establish in the customers’ minds that it is as good as, if not the same as, the food offered in TGI Friday restaurants.”
Options
The Southwest model of provisioning in-house, with the assistance of a logistics company, is unusual. The majority of major airlines use either LSG Sky Chefs, or Gate Gourmet. LSG Sky Chefs, a subsidiary of Lufthansa, services more than 300 airlines worldwide across 213 airports. It operates well over 200 customer service centres in 54 countries, producing around 532 million meals a year. LSG Sky Chefs estimates that it has 30% of the world’s airline catering market. Meanwhile, the Swiss group Gate Gourmet is the largest independent airline catering company in the world. It has 120 flight kitchens in 30 countries preparing 530,000 meals a day.
Martin Riecken, Lufthansa’s director of corporate communications Europe, says the airline – in conjunction with its subsidiary LSG Sky Chefs – has changed its catering operations significantly over the past decade. “With airlines under cost pressures, many different categories have developed. We now offer traditional catering, low-cost catering solutions for medium- and short-haul flights. We also offer buy-on-board solutions as well as innovative and high-quality culinary solutions for premium classes.”
The logistics involved in producing so many different types of meals are highly complex. But it is to Luft-hansa’s advantage that it is closely aligned with the world’s largest flight caterer. “Most Lufthansa meals are prepared at the airport, or nearby. LSG has about 200 units at airports around the globe. There’s one exception to this rule. Our deep-frozen meals are produced at LSG Sky Food in Alzey, about 100km from Frankfurt Airport,” he said.
Reducing environmental impact
Riecken said greater efficiencies were an ongoing task of the catering industry, which is under immense cost pressures. But he said that LSG Sky Chefs had been making a profit for many years despite the difficult and competitive market structure. A further pressure on LSG Sky Chefs operations comes from environmental legislation, which demands a structured approach to saving energy and reducing emissions. The group’s Environmental Management System, which was introduced in 2008, has had a big impact.
The policy divides the LSG group into six global regions, each of which is responsible for its own environmental programme. The regions work independently but best practices are shared through an intranet site and the same stringent key performance indicators (KPIs) apply to each one.
The first set of KPIs set goals for the first three years. By the end of this programme, all targets were exceeded. Water consumption decreased by more than 20% (m3) and energy consumption decreased by about 10% (MWh). This was in spite of a 9% rise in total meals served. Based on these results, the environmental KPIs for the regions were increased from two to four for the next three-year cycle, with targets set through to the end of 2015. The focus areas will remain energy, water and waste.
Walter Vreden, director of environment and work safety at LSG Sky Chefs, said the regional approach had paid dividends. “Environmental guidelines and laws differ by countries and regions. So it’s a real advantage to have several regional environmental programmes under the umbrella of a worldwide programme. They all have the necessary know-how for their individual region. The structure maintains a steady focus on the environment. Thinking and acting ‘green’ has become more and more part of our daily routine.”
He added: “We always encourage our staff to suggest new ideas, as the local employees know best where improvements can be achieved. LSG Sky Chefs also has a network of some 200 catering facilities, so if one location has implemented a new project, it will still be a new project at some 199 other locations.”
Vreden said the environmental efficiencies had not necessarily saved money in the short term. “We’ve observed no causal relationship with cost savings. But in the medium and long term, it is increasingly apparent that sustainable alternatives augment the reputation and value of the brand.”
Right across the supply team, LSG Sky Chefs is changing its methods to become greener. For example, in Frankfurt, the company installed a combined heat and power unit (CHP) to produce both electrical and thermal energy using natural gas, which is cheaper and more eco-friendly than other fossil fuels.
The thermal energy produced as a by-product in the generation of electrical power is recovered and used to heat the building, as well as for heating water to wash dishes. Since the energy is not transported but consumed where it is produced, energy usage is highly efficient. As a result, it is calculated that an overall reduction in carbon dioxide emissions of 3,000 tons per year is achieved.
Vreden said this method could become a model for the rest of the LSG Sky Chefs network. The company is evaluating the implementation of this new technology in other units both in Germany and overseas.
Another technical solution trialled in Germany is the electric drive system for catering highloader trucks. As a part of the Lufthansa ‘E-Port on’ project at Frankfurt airport, an LSG Sky Chefs team has been working on the trucks alongside Doll Fahrzeugbau, the Technical University of Berlin and Euro Engineering.
The eLift truck will not only have an electric e-drive system, but it will also have integrated components such as an e-lifting mechanism for the cargo area. The trucks will reduce fuel consumption as well as CO2 and noise emissions significantly. The eLift has become an essential component of the ‘green dispatch’ electro-mobility concept introduced at Frankfurt airport, which earned ‘lighthouse’ recognition from the state government for its innovation.
Meanwhile, in 2013, LSG’s 41 US locations began a Zero-to-Landfill project to divert 100% of recyclable waste from designated landfills through 2015. LSG Sky chefs evaluated the initiative in its first year and found a reduction in greenhouse gases of nearly 21,000 metric tons and annual energy savings equal to 3,813 passenger cars not being driven for a year. The results were achieved, in part, through the use of new equipment that separates, cleans and compacts metal, plastic, cardboard, paper and selected food waste in preparation for recycling.
LSG Sky Chefs also encourages its suppliers to use products made of materials that do not turn to waste. Locations in Boston, Denver, Detroit, Las Vegas, Minneapolis-St Paul, Portland, San Francisco, Seattle and Washington Dulles have implemented 100% waste management and recycling processes and others will follow suit.
Computer systems also play a part in reducing energy along the catering supply chain. LSG Sky Chefs has created a custom-designed Simba software tool to measure a dishwasher’s energy, water, chemical use and temperature. The software captures data at 16 different points throughout the dishwashing cycle and sends the information in real-time to an intranet.
If target values are exceeded, the system alerts the operator, who reacts immediately to correct the problem. After the tool was first used, there were immediate reductions in energy and water use. As a result, Simba software is now being used at 65 LSG Sky Chefs facilities
