Skift Take

Are you upset some airlines charge $3 for a soda? There's a reason prices are higher than at a convenience store. It's not easy or cheap to get provisions onto an aircraft.

The Skift Airline Innovation Report is our weekly newsletter focused on the business of airline innovation. We will look closely at the technological, financial, and design trends at airlines and airports that are driving the next-gen aviation industry.

We provide insights on need-to-know developments in passenger experience, ancillary services, revenue management, loyalty, technology, marketing, airport innovation, the competitive landscape, startups, and changing passenger behavior. The newsletter, sent on Wednesdays, is written and curated by me. We will look closely at the technological, financial, and design trends at airlines and airports that are driving the next-generation aviation industry. You can find previous issues of the newsletter here.

United Airlines has been around for 90 years, and yet it’s still not sure of the most efficient number of Coca-Cola cans to board for each flight.

I tweeted this recently, after someone at United forwarded me catering news. “To help reduce unnecessary soda overstock, beginning Dec.1, we will reduce the amount of soda provisioned on all single-segment domestic flights,” United told employees, while promising it still seeks to “provide the right balance of beverages to meet customer demand.”

I bring this up because this week we published an interview with Anne De Hauw, vice president of innovation for Gate Group, the world’s largest caterer and airline retail company. Part of her job includes bringing true innovation to airline catering and retail, but much of it has another purpose — to help carriers reduce costs. On each meal served to a passenger, she said, “every penny [airlines] can reduce is significant.” That includes drinks.

We spoke about how some U.S. airlines have resumed free food service on longer domestic flights. But mostly, she said, the trend is going in the other direction, with airlines charging for meals. Her research tells her passengers in their 20s and 30s — the next-generation of important executives — don’t mind. “Millennials want to have great food,” she said. “It can be simple, but it needs to be good. They would rather pay for good than get free food which isn’t good.”

We also discussed sodas. It’s a topic I’ve found fascinating since I interviewed then-Frontier Airlines President Barry Biffle a couple of years ago in Denver. He and I spoke about how passengers dislike paying for sodas, since most assume a Coke costs an airline 20 cents or less. But because of the supply chain expenses, he said, a Coke costs Frontier a lot more than passengers pay at Costco.

How much? This is an answer I tried to learn from De Hauw. She declined to give exact numbers, but defended Gate Group’s pricing.

“The cans need to be sorted in the catering unit at the airport,” she said. “They need to be sorted into trolleys. It is all planned in advance how much Coke goes into each trolley. The catering then needs to be driven by the high-loaders of the caterer at the airport and loaded on the airplane. That area is a highly secure area. And the price of a high-loader is around $200,000 — of one high-loader.”

For more catering tidbits, including her thoughts on the recent Listeria scare in at Gate Group’s Los Angeles facility, read the interview.

Brian Sumers, Airline Business Reporter

News and Notes

Allegiant to Mexico: For roughly five years, executives at discount U.S. carrier Allegiant Air have said, on and off, that they want to fly to the Caribbean and Mexico. But it still hasn’t happened.

In occasional statements, they’ve suggested they have enough worthy U.S. markets, and don’t need to rush international expansion. But recently I spoke with Kristen Schilling-Gonzales, Allegiant’s director of planning, for my Airline Insiders interview series, and she told me part of the issue is airline’s technological system. It’s not ready to support international flights.

“Our website is also part of our booking engine and it’s all internally created,” she said. “The same thing goes with international. We’re looking to build our own departure control system, making sure that we’re sending all the right data to government agencies, all that stuff. We’re still working on that.”

She said she doesn’t know when the airline will be ready. But the airline’s planning team knows what routes it will suggest when, or if, the time comes.

“I’ve got a roughly five-year plan of several hundred routes that we could be running once international is up and going,” she said. “The routes aren’t the issue, it’s the infrastructure and updating our systems to handle it.”

Look for the entire interview after Thanksgiving.

Want to be the next interviewee for the series? Email me.

Stories of the Week

Airline Food Conundrum — Paid Meals Winning Out Over Freebies: Airline food isn’t always tasty, but passengers probably shouldn’t compare it to what they find in a restaurant. Delivering food to an aircraft is a logistical challenge, and it’s amazing the system works as well as it does.

Delta Puts a Better Business Class on Routes Where Travelers Will Buy It: When deciding which planes to send where, U.S. airlines usually keep it simple. Domestic routes, with few exceptions, get narrowbody jets with first class recliner seats. International routes get flatbeds, regardless of whether there’s a premium market. But this week, Delta said it will try something different in 2018. It’ll deploy flatbeds on more U.S. routes, while some flights to Iceland, Portugal and Ireland will lose them. It’s smart business since more passengers may buy first class on New York-San Diego, than from New York to Ponta Delgada, Portugal. (Did you know Delta flew to Ponta Delgada?)

United Is Making Tech Changes to Boost Wi-Fi Speeds on Many Planes: I heard for months United was having modem trouble on its Panasonic-equipped Boeing 777s, 767s, 757s, and Airbus A319s and A320s. But while I once received a $175 travel certificate after flying with broken Wi-Fi, I never learned the exact problem. Last week, though, United admitted it had an issue. “We are working with Panasonic to improve the quality of the wireless access points on all of our Panasonic aircraft,” United said, promising more travelers soon will be able to “….tap into a strong, steady connection at the same time.” The upgrade should be done by May.

Alaska Airlines Blames Trump Administration for Decision to Pull Out of Cuba: Our chutzpah award goes to Alaska Airlines, which blamed “changes in Cuba travel policies,” for why it canceled its Los Angeles-Havana flight. The Trump Administration’s recent regulatory changes may not have helped, but this was almost certainly a marginal route from the beginning. Remember, no other airline wanted to fly from the West Coast to Havana. In its release, Alaska said it would deploy the 737 to “markets with higher demand.” Blogger Brett Snyder tweeted, “not sure why they bothered saying ‘higher’ there, could have just said ‘Aircraft and crew will be re-deployed to markets with demand.'”

Airlines Personalize the Passenger Experience With New Apps and Devices: At almost every conference I attend, someone asks about the line between creepy and cool, when it comes to customer service. Do passengers want a flight attendant to wish them happy birthday? Do they want someone to bring them their favorite drink before they ask? Or might they want the airline to suggest where they should fly next, as Netflix recommends movies to subscribers? In many cases, airlines have the data they need. But they’re often not sure how, or when, to use it. Bloomberg’s Justin Bachman has details.

Why Airbus Lost Its Super Jumbo Deal With Emirates: Bloomberg’s Benedikt Kammel and Benjamin Katz report Airbus and Emirates recently shook on a deal that was to send 36 more A380s to the Dubai-based carrier. But it hasn’t happened. Why? “At the heart of the turnabout was concern at Emirates about the commitment of Airbus to carry on developing the A380, with the carrier loath to place on order only to see the program terminated a few years later,” the two reporters write.

‘Pay Least, Board Last’ — British Airways Unveils Its Newest Policy: Is any mainstream global airline brand mocked more than British Airways? The airline said it will require passengers buying its cheapest tickets to board last. It’s a similar strategy to what American, United and Delta use with basic economy. Many British newspapers, including The Telegraph, criticized the move, using colorful language to describe it. But this is a common business practice, right? People who pay less get less.

Airport to Pay Nearly $1.5 Million for Qatar Airways Flights to Pittsburgh: Over a one-year period, Pittsburgh International Airport could give Qatar Airways almost $1.5 million in exchange for twice-weekly cargo flights to Doha that began in October, according to the Pittsburgh Post-Gazette. The airport may avoid some payments if the airline reaches its financial goals next year. But no matter what, the newspaper said, Pittsburgh’s airport will pay the airline about $15,500 per flight — or $744,000 total — to subsidize service for the first six months. Is that money well-spent?

Correction: Last week, I poked fun at Ed Wegel, founder of the reboot of Eastern Airlines in 2015. He has a new project, World Airways. In last week’s post, I suggested that the new Eastern is still flying, albeit under different management. Technically, that’s not true. There might be some planes in Eastern’s livery still operating, but the carrier no longer has an operating certificate. “Earlier this year, Swift Air acquired two Boeing 737-800s that Eastern Airlines Group was leasing,” an FAA spokesman told me. “Eastern Airlines surrendered its Part 121 certificate on Nov. 13, 2017.”


The Skift Airline Innovation Report is curated by Skift Airline Business Reporter Brian Sumers [[email protected]]. The newsletter is emailed every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send me an email or tweet me.

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Tags: airline catering, airline innovation, airline innovation report, allegiant air

Photo credit: A catering truck — called a high-loader in industry lingo — might cost $200,000, according to an executive with Gate Group. That's part of the reason airline food is so expensive. Gate Group

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