Airlines hungry to please passengers with food sales

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Airlines hungry to please passengers with food sales

CHICAGO (Reuters) =97 Susan Kraut might be willing to buy another $10=
 chicken=20
sandwich on her next flight =97 but only if she can't find her favorite $7=
=20
salad in the airport terminal before she boards the plane. "In a bind, I=20
would do it," said Kraut, a software analyst from Washington, D.C., who=20
flies Midwest Airlines to Kansas City every six weeks and has bought=20
sandwiches onboard twice recently. "(But) I wouldn't fly based on the=20
food," she said. "I buy a ticket based on the best price. I fly for=20
convenience." Charging passengers for in-flight meals may sound like a way=
=20
for cash-strapped U.S. airlines to restructure costs. But analysts say the=
=20
strategy is not likely to sell airline tickets and could bring on a case of=
=20
indigestion for airlines at a time when they can least afford it.

With the industry facing its worst financial crisis ever, most U.S.=20
carriers eliminated standard meal service for coach passengers on domestic=
=20
flights months ago. Some airlines still offer snacks, but only on their=20
longest coast-to-coast flights. The experiments on certain routes allow=20
passengers to buy breakfast, lunch, dinner or a snack for $3 to $10 =97 not=
=20
much more than local delicatessen prices. Airlines have tested menu items=20
from TGI Friday's Inc., Einstein Bros. and other sandwich shops =97 with=20
choices such as roast beef with caramelized onions and horseradish spread,=
=20
or turkey breast with fontina on focaccia bread. While carriers say=20
passengers generally have praised the food trials, many airlines are facing=
=20
logistical problems that would have to be resolved before in-flight food=20
sales could become permanent. Managing inventory to meet demand and keeping=
=20
track of cash collected on board are sticking points =97 and some=
 consultants=20
say airlines will have a difficult time overcoming them. "Unless an airline=
=20
wants to do it on a complementary basis, it's not going to work," aviation=
=20
consultant Michael Boyd of The Boyd Group said. "You're opening yourself up=
=20
to huge consumer problems."

KEEPING CUSTOMERS CONTENT

America West Airlines, which began experimenting with charging for meals in=
=20
January, said it is still trying to find the right balance between supply=20
and demand. "One of the complications we found on the test is that there is=
=20
a lot of variability around demand," Chief Executive Douglas Parker said in=
=20
a recent conference call. "Same flight, same day of week, same load factors=
=20
may have twice as much demand one week as the next." Having more perishable=
=20
food on hand than passengers want to buy is costly for carriers. But the=20
risk of not having enough meals for sale could make passengers unhappy =97=
=20
exactly what airlines want to avoid. Balancing those risks =97 and deciding=
=20
whether airlines or in-flight catering partners should bear the cost =97 is=
=20
under review, several airlines said.

But J.P. Morgan analyst Jamie Baker said affordable fares and convenient=20
flight scheduling factor into airline ticket sales more than onboard food.=
=20
"We are confident that the way to a business traveler's wallet is not=20
through his stomach," Baker said. "All else being equal, we expect leg room=
=20
to consistently trump food, and TV to consistently trump leg room. Food=20
doesn't enter the equation, nor do we expect it to." Continental Airlines=20
Inc. is one of the few major carriers that still doesn't charge for meals=20
on most flights and says it does not intend to test food sales onboard.=20
Delta Air Lines offers meals for sale on its new low-cost subsidiary, Song,=
=20
but has not yet decided if it will do so on its mainline flights,=20
spokeswoman Peggy Estes said.

A new online service, Carry-On Cuisine, is trying to fill the void by=20
allowing passengers to place Internet orders with airport restaurants that=
=20
are ready for pick up when passengers arrive at the airport. For her part,=
=20
Susan Kraut said she is crossing her fingers that her favorite $7 chicken=20
and mozzarella salad with sun-dried tomatoes is available in the airport=20
terminal before her next trip. "Ten dollars is a bit much," she said,=20
referring to the price of some onboard sandwiches. "It was a shame that=20
they cut out their (free) meals. Midwest used to have such wonderful meals=
=20
on the airline."


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