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The days of bland economy-class food are numbered, with Europe’s full-service carriers dishing up gourmet menus reminiscent of the golden age of air travel as they look for ways to squeeze more revenue out of passengers.

Air France is tempting economy-class customers with paid- for meal upgrades featuring foie gras terrine, and Austrian Airlines has Wiener schnitzel and sushi among its 15-euro ($19.60) in-flight nourishments. They’re part of a growing trend of carriers charging for auxiliary services, including lounge access or individual aircraft seat choice.

The move comes two decades after Ryanair Holdings Plc started a cultural revolution in Europe by making passengers pay for snacks and drinks. So-called ancillary sales ranging from food to overhead-bin space have jumped more than tenfold to $36 billion since 2007, amounting to 5 percent of the total $680 billion earned by airlines last year, International Air Transport Association Chief Executive Officer Tony Tyler said.

“The low-cost carriers have taken ancillary revenue from a normal way of doing business and turned it almost into an art form,” said John Dabkowski, managing director for airline technology company Navitaire Inc. “They’ve set the customer’s expectation, so people now are not offended by it.”

Untapped Niches

Ancillary sales will rise to $50 billion in the next five years, John Thomas, a senior managing director at L.E.K. Consulting LLC said this week in Cape Town, where IATA held its annual meeting to discuss industry trends. Revenue streams that remain untapped — in-flight entertainment, wireless access and shopping — could be worth about $5 billion, he said.

“When people get on board an aircraft, they’re actually in a great retail mindset,” Thomas said. “About an hour into the flight, they start to relax and their mind opens.”

Opening their wallets, too, has become a major ambition of airlines. Air Canada has seen ancillary revenues for services ranging from baggage fees to lounge access climb 30 percent annually since 2009, CEO Calin Rovinescu said.

“In terms of competing with new entrants, with folks who have a significantly lower cost than we do, the best way of competing was to give the exact same price on the base fare and then start incrementally adding to that,” Rovinescu said.

Air France sold more than 26,000 menu upgrades priced at 12 euros and 28 euros to economy- and premium-economy fliers in the nine months to March 31. The Paris-based carrier’s duck confit with mushrooms and sauteed potatoes, followed by Opera cake for dessert, costs 18 euros. EasyJet Plc, Europe’s No. 2 discount carrier, charges 8 euros for its “meal deal” featuring a sandwich, tea or coffee and a Twix chocolate bar.

New Model

“We’re moving away from historic all-in pricing,” said Donal O’Neill, an analyst at Goodbody Stockbrokers in Dublin. “For airlines like Air France, where the margins are so razor thin at the moment, every cost saving can be material.”

Pre-booking is key to boosting quality while trimming waste, helping to make the paid-for-food model cost effective, said Caroline Hanly, head of catering at Dublin-based Aer Lingus Group Plc, which began offering three-course upgrades to economy-class passengers on trans-Atlantic trips in February.

“We’re going to know exactly how many people on board are going to want certain meals,” Hanly said in an interview. By selecting traditional Irish fare such as soda bread and black pudding, it’s also an opportunity for Aer Lingus to highlight its status as an indigenous Irish brand, she said.

Design Challenges

Regardless of the quality of food, catering also poses a design challenge to manufacturers Airbus SAS and Boeing, who must build galleys sufficiently large to cater for three meals on long-distance flights lasting more than 12 hours, said Tim Clark, president of Emirates, the world’s largest airline known for its lavish premium product including in-flight showers.

EasyJet sold almost one million bacon sandwiches in 2012 from its “Cafe in the Sky” range, plus 14 million drinks including Starbucks Corp. coffee, helping boost in-flight sales 10 percent.

“They’re commoditizing the seat and filling out the rest of the experience with retail offering of some description,” said Goodbody’s O’Neill. “The more they split those out and manage the cost base of each item, the more profitable they’ll be.”

Full-service carriers are taking note and following suit. British Airways in February started sales of cheaper hand- luggage-only tickets, a move consumer groups say amounts to charging for checked bags. As well as establishing checked luggage as a generator of revenue, the move has the advantage of reducing take-off weight, allowing for lower fuel consumption and faster turnaround times.

Passengers on European routes are prepared to pay as much as 40 euros for add-on items and, and airlines will ultimately demand cash for all aspects of flying beyond the basic journey, especially once they’ve exhausted options for paring expenses, said Bjoern Maul of Roland Berger Strategy Consultants GmbH.

“We’re just scratching the surface,” said Jim Davidson, CEO of aviation adviser Farelogix Inc. “You can actually democratize the back of the cabin and that’s pretty exciting, so someone who only flies two or three times a year, if they want to be treated like a frequent flier they have the capability to do that.”

–With assistance from Christopher Jasper in London and Richard Weiss in Frankfurt. Editors: Benedikt Kammel, Heather Harris

To contact the reporters on this story: Kari Lundgren in London at klundgren2@bloomberg.net; Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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The four firms that took part in a design challenge sponsored by The Municipal Art Society all said the only way to improve Penn Station would be to move Madison Square Garden from its current home atop the train station.

John Fantillas of H3 Hardy Collaboration Architecture said the arena crowds the station “like three fat men in a rowboat.”

Roger Duffy of Skidmore, Owings & Merrill called Penn Station “a disaster” and said his firm has imagined “a magnificent future” for the area with Madison Square Garden moved just to the southwest of its current location.

Madison Square Garden called the plans “pie-in-the-sky drawings.”

“It’s curious to see that there are so many ideas on how to tear down a privately owned building that is a thriving New York icon, supports thousands of jobs and is currently completing a $1 billion transformation,” the company said in a statement.

The design challenge was prompted by an upcoming vote by New York’s City Council on renewing Madison Square Garden’s permit to operate on top of Penn Station.

Madison Square Garden wants the permit renewed in perpetuity, while the city Planning Commission is recommending a 15-year limit. The Municipal Art Society and some other civic groups want the permit renewed for 10 years.

In addition to H3 Hardy and Skidmore, Owings & Merriill, architects of the under-construction 1 World Trade Center, the firms that presented new Penn Station designs were Diller Scofidio + Renfro, which has worked on the High Line and renovating Lincoln Center, and SHoP Architects, one of the firms that designed the Barclays Center arena in Brooklyn.

They offered plans for an airy, light-filled Penn Station with shops, rooftop gardens and other amenities.

Elizabeth Diller of Diller Scofidio + Renfro called her firm’s “city within a city” design “a large sponge-like mass aerated in many directions.”

Some plans envisioned paying for the upgrades by replacing existing buildings in the Penn Station complex with new mixed-use skyscrapers.

Madison Square Garden, home to the Knicks, the Rangers and the WNBA’s Liberty as well as a venue for concerts and other events, would be moved due west to a pier on the Hudson River under the H3 Hardy plan. The SHoP plan would place it a few blocks to the south and west in the Morgan mail processing facility.

“Penn Station cannot move and the Garden can,” SHoP’s Vishaan Chakrabarti said in a phone interview. “Right now everything’s piled on top of everything.”

Diller Scofidio + Renfro’s plan puts the Garden in the back part of the Farley building directly west of Penn Station.

Madison Square Garden said an earlier plan to move the arena to that spot “collapsed for a number of reasons that did not involve MSG, but did involve many of the same people now pressuring MSG to move, including The Municipal Art Society, which created enormous obstacles to achieving the relocation.”

Its statement concluded, “The fact that this exercise does not include anyone who actually has detailed knowledge of this issue or understands the realities of this complex project exposes this exercise for exactly what it is.”

The architects said they would hope to work with the owners of the arena to the benefit of all parties.

“Madison Square Garden should not take this study as an affront,” Charles Renfro of Diller Scofidio + Renfro said in interview. “They should be heartened by the fact that no one wanted to get rid of Madison Square Garden entirely or move it very far from its current home.”

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“It’s not as bad now as it was even two years ago, but you still have legacy airlines trying to compete on who’s got the nicest prison cell,” Mr. St. George said. “We’re in a different class than that and I think the whole industry is going to be better off if we all up our game a little bit.”

Plenty of downdrafts remain, of course. “How many times have Wall Street guys come in and said ‘You know, if you charge five bucks for TV, you’d make a lot of money’?” Mr. St. George said in the interview, with Joel Idelson, senior VP and creator of opportunities at Allen & Gerritsen. “You know what, you’re right, but then we wouldn’t be JetBlue.”

“It’s actually kind of liberating,” he added, “compared to other places where you’re continually in this fight of ‘What’s the next thing I can take away from my customers?’”

This story originally appeared on AdAge, a Skift content partner.

Additional links from AdAge:

• A Peek Into Starwood Hotels’ Marketer Immersion Program
• Qantas to Flyers: Ditch Your Kindles, Read Our Custom Books
• Loyalty Programs Need to Put Customers’ Needs First

The post JetBlue exec: Airlines shouldn’t compete over “nicest prison cell” appeared first on Skift.

Aussie airline Qantas is asking consumers to ditch their Kindles and curl up with a good book — one that’s been specially penned by the airline so that fliers they’ll manage to finish just as their plane touches down. Droga5 Sydney, which won the client’s business last year, teamed with publishing house Hachette to create a push geared toward Qantas’ most traveled flyers. It’s called “Stories for Every Journey,” and is a collection of bespoke books, each of which promises to last only for the duration of one of the airline’s routes.

Stephanie Tully, CMO Qantas Loyalty, said the tactile experience and custom-created books are meant to reflect the sophistication of the brand. It’s a trait that’s Qantas is focusing on more than ever thanks to its recent partnership with luxury airline Emirates, which makes Dubai a key travel hub and opens the airline up to 65 destinations. The effort is aimed at the brand’s high-frequency travelers but is “just one of many conversations we’re developing with our members, from Bronze to Platinum One,” she said.

“It occurred to us that, in this world of Kindles and iPads, the last bastion of the humble, paperback novel is actually at 40,000 feet,” said Droga5 Sydney Creative Chairman David Nobay. “Just take a look at the bulging shelves at any airport bookstore. But, for all its relative clumsiness, there’s an unmistakably reassuring charm about thumbing through a good book as you recline amongst the clouds.”

Each book’s cover was designed by award-winning art director/designer Paul Belford, who was behind memorable campaigns for The Economist, Sony Playstation and Waterstones. What’s more, every book has a customized with a special foreward from Qantas and is packaged with a personal note from the CEO Alan Joyce.

The agency worked with Hachette to choose themes especially suited to Qantas Platinum Flyers, who skew male. Based on research, that means non-fiction, thrillers and crime-based short stories are the most popular choices.

So how did Droga5 managed to time the actual books to match the length of the flights?

“According to our literary friends at Hachette, the average reader consumes between 200 and 300 words per minute, which equates to about a page per minute,” said Mr. Nobay. That idea was applied more specifically to the shorter novels and flights, but “for the longer flights, we accommodated some napping time and meals,” Mr. Nobay said. “After a few hours with a fine Qantas in-flight meal with Australian Shiraz, most people need a break from reading.”

This story originally appeared on AdAge, a Skift content partner.

Additional links from AdAge:

• How Fenway Became About Much More Than Baseball
• Newsweek.com Redesign Aims to Be ‘Snow Fall’ on a Weekly Basis
• TBS and TNT to Stream All Their Programming Live

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Alaska Airlines tops the traditional carrier segment in the J.D. Power report. InSapphoWeTrust / Flickr

North American airlines earned their highest rating for passenger satisfaction since 2006, before the advent of baggage fees, in a survey showing the value of smiling employees, onboard Wi-Fi and mobile applications.

Customers reported better experiences with both segments of the industry, the traditional full-service carriers such as Delta Air Lines Inc. and low-cost competitors including JetBlue Airways Corp., market researcher J.D. Power & Associates said today in its 2013 North America Airline Satisfaction Study.

Travelers who checked in with a mobile app, surfed the Web in flight and consistently received warm service helped buoy airlines’ rankings, according to Westlake Village, California- based J.D. Power. The study found fewer objections than in the past to luggage charges and booking-change payments, which totaled a record $6.1 billion in 2012.

Traditional carrier segment

Based on a 1,000 point scale

Low-Cost carrier segment

Based on a 1,000 point scale

Source: J.D. Power & Associates 2013 North American Airline Satisfaction Study

“With each year, passengers are increasingly more accepting of carriers unbundling baggage and other fees,” Ramez Faza, senior manager of J.D. Power’s travel practice, said in a statement.

On a 1,000-point scale, customer satisfaction across the industry was 695, 14 points higher than in the 2012 survey, J.D. Power said. The score for full-service airlines rose 16 points to 663, and low-cost carriers gained one point to 755.

‘Negative impact’

While “charging for bags still has a pronounced negative impact on passenger satisfaction,” according to Faza, the study found that 37 percent of travelers who checked luggage said the fees are reasonable, up from 28 percent a year earlier. Airlines in the U.S. began adopting baggage fees in 2008.

The annual study was based on responses from 11,800 business and leisure fliers on “major” North American airlines and measures passenger satisfaction in seven categories: cost and fees; in-flight services; boarding, deplaning and baggage; flight crew; aircraft; check-in and reservations.

The largest year-over-year improvements involved boarding, deplaning and baggage, followed by check-in and aircraft.

Alaska Air Group Inc.’s Alaska Airlines ranked highest among carriers with at least two cabin classes, followed by Delta and Air Canada. The low-cost segment was led by JetBlue, Southwest Airlines Co. and Canada’s WestJet Airlines Ltd.

“Traditional carriers have improved significantly across all seven factors, and it is a positive sign to see them turn a corner and starting to rise again,” said Jessica McGregor, senior manager of J.D. Power’s global travel and hospitality practice.

Flight crew

Satisfaction with flight crews climbed to the highest since 2005. Travelers smiled at by employees at least occasionally had an average satisfaction score 105 points higher than those who never received one. The rating was 211 points higher for those who consistently got a smile, the study found.

In other ways, technology improved travelers’ experience by letting them bypass personal interaction with airline staff.

The survey showed 36 percent of passengers check in for flights online, while 15 percent use a mobile device, more than double the 6 percent share two years ago. Satisfaction was highest for users of mobile apps, at 866, followed by use of a mobile device, 853. Check-ins at a kiosk had an average score of 805, trailed by an 801 for queuing up at the main ticket counter.

J.D. Power & Associates is a unit of McGraw Hill Financial Inc.

Editors: Ed Dufner, John Lear. To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net. To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net. 

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Chris / Flickr.com

Correction: Cathay spokesperson says the SCMP story is not accurate. ”Unfortunately, the story in the South China Morning Post is not accurate.  Our representative simply confirmed our interest in the concept of a self-boarding device, not that any plans were underway.  Any infrastructure changes would be an initiative of the airport authority.”

Original curated post: Cathay Pacific is considering installing “self-boarding” gates at Hong Kong airport…to allow passengers to board without a manual document check by ground staff. Face-detection cameras at the checkpoints will recognise the passenger using biometric technology, freeing up airline staff.

In an experiment by Lufthansa at Frankfurt Airport, the airline found that using four self-boarding devices and two ground staff enabled it to halve the embarkation time for about 450 passengers to 20 minutes.

Air China is putting on trial two self-boarding devices at Beijing Capital International Airport. Kaba is helping set up similar self-boarding programmes in Singapore and Australia.

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John Torode and Gregg Wallace appointed official taste buds of Heathrow. / Heathrow

Two of UK’s best-known foodies have been appointed as the official taste buds of Heathrow. BBC’s Masterchef show star chefs John Torode and Gregg Wallace were tasked with eating their way around the UK’s only hub airport in 80 plates and to set Heathrow a six-month challenge to improve the airport dining experience. The duo were given access to all areas of the airport to sip, sample and savour dishes from Heathrow’s 73 restaurants and bars to better understand and improve the airport offering.

John and Gregg have tasked Heathrow’s food and beverage team with introducing healthier food choices across the terminals and asking them to champion British culinary talent. John and Gregg’s experiences are also being used to launch heathrow’s first food guide, “Food on the Fly”, which will provide passengers with an overview of the various dining options available in the airport.

Every year 26 million orders are placed at Heathrow’s restaurants and bars, which include options such as Caviar House and Prunier, Gordon Ramsay’s Plane Food, Oriel and rhubarb, as well as high street shops such as YO! Sushi, Strada and Carluccio’s.

10,000 copies of “Food on the Fly” will be published and handed out to passengers, with a digital version available to download from Heathrow.com from July.

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The stylish, Finnish designed sleeping pods…feature a partial or fully enclosed sliding shade that isolates the customer from noise, light and crowds.  After an initial launch phase, the chairs will be upgraded to include Internet access, will include secure storage for luggage and other valuables, and will allow customers to charge their laptops, mobile telephones, and other electronic devices.  Passengers will be able to use the chairs at a rate of AED 45/hour (about $12) using a credit card.

The post Abu Dhabi airport’s cool new sleeping pods launch, with internet access built in appeared first on Skift.

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At the Park Hyatt Beaver Creek in Colorado, the hotel recently brought on a Sleep Ambassador to train employees on the art of a restful night’s sleep. The hotel offers a Sound Sleep TV Channel…oxygen canisters to adjust to the altitude and slumber massages…In Berlin, the Swisshotel uses light therapy, aroma therapy, nutritional supplements and a sound pillow.

Even airlines are getting in on the trend. Starting this summer, Delta Airlines will provide Westin Hotels’ famous Heavenly Bedding in BusinessElite cabins.

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The pool at the Delano Hotel in Miami. Dan McQuade / Flickr

Kim Walker was the sixth employee at Morgans Hotel Group.

Straight out of Boston University, with a degree in finance and a minor in hotel management, she was hired nearly 22 years ago by none other than Ian Schrager. The famed American real-estate developer — credited with creating the “boutique hotel” segment and known for his days as owner of legendary New York club Studio 54 — gave her a job as a front-desk agent.

For Ms. Walker, joining Morgan’s was an intentional choice. She eschewed bigger hotel chains like Hyatt, Hilton and Marriott in favor of a more hands-on experience. And, boy, did she get it. She worked in virtually every department, including stints as a concierge, room-service manager, housekeeping staff and in sales. But there was a common thread in the things she enjoyed most, whether it was sending mailings for events to Mr. Schrager’s “movers and shakers” list or helping design uniforms. It all came back to the brand.

Today Ms. Walker is senior VP-marketing and creative director for the chain, which owns boutique brands like the Hudson, Delano and Royalton. She’s responsible for overseeing Morgan’s public relations, marketing, partnerships, online and digital presence, special events, uniforms and guest-room amenities. During the next two years, she’ll be instrumental in the brand’s expansion, which includes new hotels in the Bahamas; Istanbul; Moscow; Las Vegas; and Doha, Qatar. Ad Age recently caught up with her.

Ad Age: How do you convey the value of a luxury, boutique hotel in what’s largely a price-driven travel market?

Kim Walker: Our guests choose to stay at our hotels not just to sleep and have a bed. They want to experience our entire culture. Whether it’s our public spaces, nightlife or restaurants, you get the feeling that it’s more than just a place to sleep. We have created a very loyal customer base that knows what to expect when they come. Our guest experience is different than other hotel brands. For example, we aren’t formal — we are more interactive with our guests and make them feel like they are at a home-away-from-home and welcomed, but all while still providing great service. And by continuing to push the envelope with design, we are always trying to create lifestyle and restaurant venues that not just guests but also locals want to go to — which is really important — to hang out on the weekend. We give guests the essence of the city in which they are staying.

Ad Age: Are you working on modernizing the Morgan’s culture through new digital and mobile initiatives, like others in the hospitality industry?

Ms. Walker: Yes. Right now it’s all over the place. What our site looks like on mobile and on a tablet, it’s not consistent. Flash has prohibited us from doing the things we want to do. We’re also trying to bring [digital capabilities] more into the hotel so that you can experience them in the hotel and after you leave — pulling it through your entire stay. Over the past year and half we have been trying to figure out the plan for 2013, and we really felt that since consumers are relying heavily on mobile access it was going to be our key focus for this year. Also our last website was designed five years ago, so it’s time for that. [The goal is to have a new one live this summer]. We met with about eight different agencies from Seattle, New York, Los Angeles and Brooklyn and hired Firstborn. Firstborn did a fabulous job and showed us some interesting things and really stood out amongst all the companies. It’s probably two months since we’ve been into the project and we’re very in sync.

Ad Age: Each of your hotels are designed differently and have a unique aesthetic, unlike other hotel brands where customers know what to expect wherever they are in the world. What are the opportunities and drawbacks of having a brand that actually prides itself on inconsistency?

Ms. Walker: We absolutely don’t want to be a chain and be cookie-cutter where you expect the same thing every city you’re in. The design should reflect the city, and it’s very purposeful that way. We think it makes it more interesting for the guests. Relying on one design to carry us through for the next 15 or 20 years isn’t what we want to do; we’re always looking for up-and-coming designers. Our audience is very sophisticated and they don’t want the same all the time. The one drawback is that we’re starting from scratch each time we do that. Right now we’re opening eight hotels in the next two and half years. We would have a very easy life [if they all looked the same] but because each is different it makes it more challenging. But also more gratifying.

Ad Age: What do you think a loyalty program needs to be? And what has Morgan’s done to enhance its own?

Ms. Walker: Our loyalty program is called the Global Card and made up of our guests who have 25 stays or 50 nights over the course of the year, as well as tastemakers in design, art and fashion that we want coming to hang out at our hotels. We don’t give points away. We may offer discounts at our spas and restaurants and shops, but it’s more about having exclusive access to events or giving them a dedicated guest-services manager to help curate their stay — making them feel like it’s their own private concierge while they are staying with us, rather than a point program to cash in for free nights.

This story originally appeared on AdAge, a Skift content partner.

Additional links from AdAge:

• How P&G, Ford and Wendy’s Are Redefining Value
• The Manhunt for Media Screw-Ups
• Is the World Ready to Buy a Car Made in China?

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