Attracting the Chinese traveler is rapidly becoming the holy grail of international airlines. According to market research firm PhoCusWright, the total value of China’s travel market will reach US$65.3 billion by 2011, up from US$61.1 billion in 2008. There are more than 400 million Chinese air travelers but that number is likely to grow exponentially to over one billion in the next few years.
Civil Aviation Administration of China (CAAC) data indicates that domestic air traffic was up 16.4% in the first half of 2009. Over 200 million people made trips within China, and airports of Beijing and Shanghai each served over 50 million passengers during the same period. A report from HSBC predicts that air travel will increase by a further 17% in 2010.
There is plenty of competition for these customers, and airlines seeking differentiation strategies are beginning to focus on the meals they serve as a way to stand out from the crowd.
While price, safety and punctuality are important considerations for Chinese travelers, food quality follows right behind, said Lisa Lai, frequent traveler and CEO of Chinese online media group Xiaoxishu.com.
Chinese passengers, be they traveling for business or pleasure, are known for their clannish attitude toward food. At home, abroad, or in transit between the two, the average Chinese citizen prefers to eat Chinese food, in particular on the way home, said Gilbert Lee, senior director for marketing and business development at TNS Research International China.
"Chinese food is almost a must," said Leo Tsoi, a vice president at PepsiCo China Beverages, who also travels frequently. He agrees with Lai that quality is important, "particularly for the business travelers."
Alas, as on Western airlines, Chinese airline food is not famed for being high-quality – much the opposite. "I actually take mostly Chinese airlines when I travel, so of course it’s always Chinese food, but unfortunately, it doesn’t taste very good," said Lai. Tsoi of PepsiCo complains that Chinese meals tend to be too oily and too loaded with MSG.
This may be no more than one would expect from an airline food catering company. The technical hurdles to providing better than mediocre in-flight dining are significant. For example, preserving freshness is an unavoidable challenge; meals are often prepared as much as eight hours prior to the time they are served.
The overall crunch in the market does not help. In general, airlines are spending less on catering than ever before. Spending on in-flight meals by US airlines fell by 30% between 1999 and 2006, and continues to decline due to the ongoing economic lull ? and increasingly strict security environment.
Today, while Chinese airlines are obviously not suffering as much as their Western counterparts, concerns about quality have reared their head here as well. Food scares in China prompted the domestic industry to discuss establishing a regulatory body specifically for Chinese airline caterers in 2008.
Remove the middleman
Given their desire to build loyalty in the upcoming generation of Chinese travelers, a few airlines have recently established partnerships with well-known Chinese restaurants. One standout example is the South Beauty Group, a premium Chinese food chain that is working directly with Air France/KLM to handle in-flight catering for all passenger classes.
While the restaurant chain’s original claim to fame is for Sichuanese cuisine, the company is not unfamiliar with the airline catering market. It began consulting with frozen airline meal maker Marfo in 2007 to deliver 15 million in-flight meals each year to Air France/KLM. Under the agreement, South Beauty advised Marfo on recipes, and the South Beauty logo was displayed on the cover of the meal boxes and on menus, information pages, as well as in the in-flight magazine.
Eventually, Air France/KLM decided to cut out Marfo and work with South Beauty directly. According An Yong, chief operating officer of South Beauty Group, South Beauty chefs will now be directly responsible for selecting dishes, providing recipes and designing production processes. They will also inspect ingredients and work closely with the airlines directly to ensure the quality is consistent. Furthermore, the company is sending chefs to Paris and Amsterdam for additional training.
Still, South Beauty is taking a risk: It has more to lose than the pure in-flight caterers because expectations are higher. A catering company that sells only to airlines doesn’t have a brand on the ground to damage – it serves a captive dining room that has no place else to go. South Beauty, on the other hand, is trying to use airline food to drive restaurant sales.
Company management does not seem overly concerned. "We believe if we can offer tasty, appealing and healthy food in the form of an airline meal, when [passengers] decide to dine at our restaurants they will be duly impressed," said An.
For South Beauty, the partnership also has relevance to its wider expansion strategy. The group plans to open 10 restaurants outside China this year. In addition, South Beauty is in discussions with another international airline, but it declined to divulge further details.
"The value of the advertising realized with this partnership is to the tune of US$400,000 and the positive brand alignment for us has been priceless," said An.
However, South Beauty’s strategy to associate its logo with airline food in order to increase restaurant traffic in China or abroad seems dubious. No matter how talented the company’s chefs are, the freshness problem will remain, as will the simple fact that an in-flight caterers must cater to the common denominator, which encourages blandness.
Other carriers are putting increasing emphasis on the quality of their Chinese food, and not just for the Chinese passengers. A survey conducted recently by Scandinavian Airlines revealed that many Western travelers would also prefer to eat Chinese dishes; the airline promptly turned to improving its Chinese cuisine.
Lufthansa is also trying to improve its Chinese food, but like Air France/KLM, it is going for branded cuisine, contracting with star chef Max Yan of Shangri-La’s China World Hotel in Beijing to design meals for first- and business-class passengers. Economy passengers, alas, will still be served standard fare. If they are lucky, though, the chefs may go lighter on the oil and MSG.