March 26, 2010 Flying High

Volume 6 | Issue 1

Viewing the state of the airline industry, it’s amazing that a company that specializes in supplying in-flight meals can survive, let alone

These aren’t easy times for the global airline industry. The worldwide economic crisis, fluctuating currencies, health and security issues – specifically, the spread of swine flu and the fear of terrorist attacks – have put a definite damper on airline travel, causing all players in the aviation business to scramble to find ways of cutting back without compromising safety and security, not to mention turning a profit. As many passengers are sadly aware, cost cuts are necessary, and one of the first things to suffer is usually in-flight food service.

In recent times, complimentary airline meals have become, in many passengers’ opinions, functional at best – at worst, increasingly they are no longer complimentary. Airline catering companies find themselves challenged not only with how to adapt to new conditions, but to turn a profit. A German-based subsidiary group of Deutsche Lufthansa, LSG Sky Chefs has succeeded on both fronts. With over 30,000 employees working in over 200 customer service centers in 49 countries around the world, LSG Sky Chefs’ average market share is 30 percent. However, in Latin America, and more specifically in Brazil, where the company’s regional headquarters have been located since it set up shop at São Paulo’s Guarulhos International Airport in 1994, LSG Sky Chefs has grown into the region’s undisputed market leader.

COVERING THE TERRITORY

No sooner had LSG Sky Chefs established its presence at Guarulhos than it began to expand in earnest throughout Brazil’s vast territory. In 1995, the company acquired units at Rio’s main Tom Jobim (Galeão) and Santos Dumont airports, and in 1998, it expanded to the two most important cities of the Northeast: Salvador and Recife. A testament to its success is the fact that in January of 2009, in the midst of one of the worst crises ever to hit the aviation industry, LSG Sky Chefs scored a coup by expanding its Brazil coverage to embrace the airports of a trio of coastal cities: Natal, Fortaleza, and Belém, all three major tourist hubs.

“Our increased presence throughout Brazil is a big advantage,” admits Andréa Arakaki, LSG Sky Chef’s vice president of sales and program management for Latin America. “As a result, we have more volume and greater management facility, as well as more synergy and improved logistics between all the different airports where we operate. Ultimately, this allows us to offer our clients a service model that is more efficient and less expensive.”

Arakaki works at Guarulhos. The largest domestic and international air traffic hub in the country, the airport on the northern outskirts of South America’s largest city is where the greatest amount of business takes place. LSG Sky Chef’s clients include major airlines from all over the world, among them Air France, British Airways, Lufthansa, KLM, and TAP (Europe); Air China, Japan Airlines (Asia); Air Canada, Continental, United, Mexicana, and Copa (the Americas); as well as Brazil’s major airlines Gol, Varig, and TAM, and private jets and charters.

“We have an enormous mix here in Guarulhos,” says Arakaki, stressing that on an average day, the company prepares 25,000 meals (35,000 during high travel season). “Between all the different meals served on different flights and in different classes, we prepare more than 500 different items here,” she says, referring to the 112,000-square-foot facility, 22,300 feet of which is devoted to food preparation, and which, like all other units throughout Brazil, stays open 24 hours a day, 365 days.

TAKING SPECIFICS INTO ACCOUNT

A major difference between LSG Sky Chef’s Brazilian production facilities and those in other parts of the world is the degree to which the former are labor intensive. “Due to the low costs of labor, we rely a lot on people and very few machines for food preparation,” explains Arakaki. “Moreover, unlike Asia, Germany, and the U.S., where LSG Sky Chefs has invested in large plants for the production of frozen food that is then distributed to bases throughout each region, in Latin America, food is still prepared using fresh ingredients. While in North America and Europe customer demand for frozen food is on the rise, the majority of airlines in Latin America still request fresh food. Consequently, at Guarulhos, for example, we have our own butcher, bakery, pastry area, etc. – it’s at these individual work areas that all our food is made.”

Guarulhos is also where menus for all of LSG Sky Chefs’ Latin America bases are developed by an executive chef, in consultation with the different airlines.

Together they design menus, carry out taste tests, and create concepts that take into consideration the time and duration of flights as well as passengers’ tastes, cultural habits, and health concerns. Specialty meals such as vegetarian, vegan, non-lactose, sodium-free, and gluten-free meals are all available as are baby meals. And when El Al began flights to São Paulo late last year, within months, LSG Sky Chefs had created an entirely separate work area devoted exclusively to the preparation of a kosher line of meals for the Israeli airline.

For all flights, however, there are many other restrictions other than dietary to take into consideration. “This isn’t like preparing restaurant food where you cook it and serve it right away. Many food products act differently on a plane when they’re 35,000 feet in the air,” explains Arakaki. “We have to take the space limits into account as well as notions of food safety.” Safety is of prime importance. LSG Sky Chefs has stringent quality and hygiene controls at every point: from the kitchens and warehouses to the delivery trucks and finally the food’s arrival on the plane. The two issues that are absolutely non-negotiable are food safety and ramp safety, which involves making sure that the delivery trucks (LSG Sky Chefs has a fleet of 37 high-loader trucks at Guarulhos) don’t bump into the plane when unloading the food prior to take-off.

The high standards that LSG Sky Chefs applies to its meals and its service have received ample recognition from the aviation industry. Aside from winning kudos such as best caterer of the year from the likes of Air France and British Airways, the Guarulhos unit recently received the 2008 Golden Award Americas awarded by the IATA Catering Quality Assurance Program (beating 220 other catering units around the world) as well as Caterer of the Year South America. That these awards take into consideration not only LSG Sky Chefs’ catering, but its entire range of services and logistics, is significant.

COMPLETE SOLUTIONS FOR A BUMPY FUTURE

With the aviation industry facing major challenges that demand cost cutting, LSG Sky Chefs has taken it upon itself to help the airlines stay afloat and in flight by offering innovative solutions that respond to logistical problems that go far beyond traditional catering. With this in mind, in 2009, the Guarulhos headquarters created a new Solutions Department that aims to offer clients complete solutions that embrace every product that enters an airplane. “An average flight may have 500 distinctive items, ranging from headsets, blankets and disposable cups to soap, towels, and napkins,” notes Arakaki. “If you imagine all the flights leaving from Brazil to points around the world, you can see how enormously complex the logistics can be. In supplying all these items, we can simplify things greatly for clients. Ultimately, our goal is to become their partners, really sitting down with them and brainstorming over innovative ways to increase opportunities and reduce costs. While this complete solution partnership is very recent in Latin America, we already view it as the future of our business.”

Another sign of changing times is the beginning of in-flight retail of food and other items; another novelty in the Latin American market. LSG Sky Chefs was the first to inaugurate this “Buy-on-Board” concept in Brazil, with Gol, a low-cost carrier that only offered cereal bars, peanuts, and juice to passengers. Now passengers receive menus with additional food and beverages they can purchase. This minimizes cost for the airlines while providing them with an extra source of revenue and gives passengers additional options in terms of what they want to eat and drink.

Arakaki acknowledges the challenge that this will pose to Brazilian flyers who still tend to view air travel – which a decade ago was a privilege reserved for only the well-heeled and is still out of reach to many Brazilians – as a slightly “glamorous” event associated with a certain level of service and hospitality that involves food. “Brazilians are very hospitable people. When you go to someone’s home, you’re always greeted with coffee and something to eat,” says Arakaki. “Well, when Brazilians get on a plane, they expect the same type of treatment. Already, North Americans no longer expect to receive free food, but in Brazil offering meals for a price is going to be a big challenge. Our goal is to try to find intelligent solutions that don’t necessarily entail cutting meals since paying for food isn’t really something Brazilians want – at least, not yet.”

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