Special Report
Flight catering in the future
A small group of experts got together to discuss what flight catering might look like in 2020. If the futuristic kitchen designs are anything to go by, we are in for exciting times!
In the 1990s following the first world oil crisis, Shell developed a strategic planning tool which became known as scenario planning. The
basic idea is to identify best and worst case scenarios and then use them to think about alternative policies should any of these arise. I recently completed such an exercise that considered what the flight catering industry might be like in the year 2020.
Scenario A In Scenario A any increase in fuel prices has been more or less offset by airlines acquiring new aircraft with more fuel efficient engines. The recovery from the global economic recession of 2009 was relatively swift and there has been steady economic growth throughout the decade. Linked to this, passenger demand has grown at a rate of 4% or more p.a., with especially strong demand for long haul travel. By controlling costs and having strong demand airlines are financially strong, so there have been limited bankruptcies with some industry consolidation. Flag carriers have continued to offer full complimentary meal service, whilst LCCs have increased their retail-sales onboard offer. This is good news for flight caterers, but the sector is now dominated by two or three global catering firms. There has been little or no market entry
by other stakeholders (food manufacturers, brokers, or logistics firms), unless in partnership with caterers. As a result the financial performance of global flight caterers is strong.
Scenario B The key features of Scenario B are that significant increases in the price of fuel have not been offset by airlines. Moreover the recovery from the global economic recession was sluggish and there has been weak economic growth up to 2020. Therefore
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passenger demand has only grown at a rate of 2% or more p.a., with weak demand for long haul travel. Airlines are financially weak, with consolidation and bankruptcies taking place almost yearly. All airlines have reduced their onboard meal offer. Whilst the flight sector is dominated by two or three global catering firms, their financial performance is not strong.
Scenario C Scenario C has the demand conditions of Scenario A but different supply conditions. Instead of global flight catering companies, these have been broken up. This scenario assumes there will be eight or nine catering firms, each of which is competing in regional markets, with significant market entry by other stakeholders. Due to this intense competition, even though demand is strong, the financial performance of flight caterers is weak.
Scenario D Finally Scenario D has the demand conditions of Scenario B, along with the supply conditions of Scenario C. For flight caterers this is the
Electrolux designs a kitchen of the future
worse case scenario. The point about developing such scenarios is
not that any of them will happen (because they are deliberately ‘best’ and ‘worst’ cases) but they encourage out-of-the box thinking – what if things do not turn out as forecast? In addition, using an expert panel of industry experts, it is possible to assign probabilities to each scenario to see which is the most and least likely to occur. So we put together a small expert panel of eight people to see what they thought.
Conclusion Scenario A emerged as the most likely, followed by Scenario B. In other words, almost all agreed that on the supply side there would be more globalisation and consolidation. But there was less agreement that demand would be strong. No one thought Scenario C was likely. Which scenario do you think is most likely? What do you and your firm plan to do if it does not turn out this way? Send your comments to Peter on: email
p.jones@
surrey.ac.uk
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