Feature: Ancillary Revenue


BoB revenue was estimated at €1.1billion, with a forecast to increase by 12% by 2012. Today the market separates into established markets such as Europe, North America and the Pacific region, where passengers on both legacy and LCCs have accepted the change as the BoB offering has improved. Emerging markets such as Africa, Asia, the Middle East and South America have yet to introduce BoB on a large scale. The whitepaper suggests that caterers can become revenue drivers by understanding the specific requirements of different types of passengers, and offering the right mix of BoB


products. Louis Carvalho of Air Canada says: “BoB is here to stay, and the airlines that figure out how to do it best will be most successful.” Alaska Airlines has managed to reduce waste


and improve customer service since it moved to a BoB model. According to the airline’s marketing managing director, Greg Latimer, “We were throwing out so much food back in the days when we gave everyone a free sandwich. It wasn’t a quality product, to be frank, so we invested in a good Buy-on-Board programme.” In September 2008, however, United scrapped


its plan to switch to BoB on transatlantic flights because of passenger resistance. The Australian LCC Jetstar, on the other hand, has successfully introduced BoB on its flights to Asia and Hawaii. Susan Young of Jetstar says: “…in Economy, passengers can pre-book meals as an added extra when purchasing their fare, or purchase meals and beverages onboard. Both the meal options in Economy work well.” Caterers now have a greater responsibility to work with airlines to predict passenger habits and behaviour. Fitz George, vice president


of sales and services at LSG Sky Chefs North America, says: “Finding a happy medium between


passenger satisfaction and waste management is one of the toughest challenges we


face in BoB today.” Pre-booking options help airlines to estimate how many passengers will want


28 www.onboardhospitality.com


Crisps, canned drinks, make-up and stuffed toys all make popular choices when buying on board


meals. LCC Air Berlin offers standard or gourmet options on their website with ticket purchase, and also the BoB option. Air Berlin’s Thomas Ney says:’ “We earn, not burn, money. It’s not so much about AR. It’s about costs you don’t have anymore.” There are three ways for airlines to work with caterers. The supplier model leaves all the risk with the airline, which orders specific meals from the caterer, which loads them on the plane. LCCs such as Ryanair, which specialises in maximising AR and manages all these operations in-house, follows this model. The profit-share model, as followed by Air Canada, splits the risk between caterer and airline, allowing them to work together to ensure customer satisfaction. The commission model is a low-risk way for airlines to introduce BoB. US Airways introduced this after 9/11, and Steven Kingsley says: “…this model allowed us to assess our BoB operations without taking on any further risk…. The downside is that the caterer doesn’t want to incur losses either, which can have an affect on the final product.”


WESSCO International recently won “Best onboard product created for revenue generation” in Montreal at the Mega Event. The product was a kit for an American airline, with a Bed, Bath and Beyond special retail coupon offer included in the kit. WESSCO is focusing on onboard and buying onboard for shipment home for passengers using onboard interactive and Wi-Fi.


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