1 Introduction

1.1 The Aviation Sector

Indian Aviation industry is one of the fastest growing aviation industries in the world.
With the liberalization of the Indian aviation sector, aviation industry in India has
undergone a rapid transformation. From being primarily a government-owned industry,
the Indian aviation industry is now dominated by privately owned FSCs and Low Cost
Carriers. Private airlines account for just about 75% share of the domestic aviation
market. Earlier air travel was a benefit only a few could afford, but today air travel has
become much cheaper and can be afforded by a large number of people due to
introduction of Low Cost Carriers in the Indian aviation sector. However, Indian aviation
is currently approximately 1.1% of the estimated global industry size (in operating
revenue terms) of US$ 500bn. The Indian aviation sector has been a laggard relative to its
potential in the past. Extreme regulation and high cost of air travel were the main reasons
for this sluggishness. However, all this is now changing and the sector has shown an
explosive growth over the last few years. Booming economy, growing proportion of
consuming class, deregulation and acceptance of the private carriers have been the main
drivers of this growth. Growth has accelerated with the entry of the Low Cost Carriers
(LCCs) who are giving price based competition to the incumbents. (Shah, 2008).

1.2 The flight catering market in India the major players.

There are three main flight kitchens operating in India:-

1. OBEROI FLIGHT SERVICES (1979)

British Airways, KLM Royal Dutch Airlines, Lufthansa, Northwest Airlines, Thai
International, Gulf Air, Qatar Airways and Aeroflot. Number of meals prepared per day:
New Delhi: 5,000
Mumbai: 4,600.

2. AMBASSADOR SKY CHEF (1942)

Indian Airlines, Air India, Lufthansa, Swiss, Saudi, Asian, Austrian Airlines and Air
Lanka. Number of meals prepared per day:
New Delhi: 4,500
Mumbai: 5,000.

3. TAJ AIR CATERERS (1955)

Air India, Indian Airlines, Air France, Air Mauritius, Jet Airways, Cathay Pacific, Sahara
Airlines, Kuwait Airways, Singapore Airlines, Virgin Atlantic and China Air. Number of
meals prepared per day:
New Delhi: 10,000
Mumbai: 15,000.

2
1.3 The LCC

A low-cost carrier or low-cost airline (also known as a no-frills, discount or budget

carrier or airline) is an airline that generally has lower fares. To make up for revenue lost
in decreased ticket sales, the airline may charge for extras like food, priority boarding,
seat allocating, and baggage etc. The term originated within the airline industry referring
to airlines with a lower operating cost structure than their competitors. While the term is
often applied to any carrier with low ticket prices and limited services, regardless of their
operating models, low-cost carriers should not be confused with regional airlines that
operate short flights without service, or with full-service airlines offering some reduced
fares. Low cost airlines in India INDIGO AIRLINES, GO AIR AIRLINES, SPICEJET
AIRLINES, PARAMOUNT AIRLINES, JETLITE AIRLINES, KINGFISHER
AIRLINES, and JET AIRWAYS. (Gross, 2007).

1.4 Cafe Coffee Day

Coffee day is the only chain shop which offers the products at the same price inside and
outside the airports in India. Normally, the prices of the goods vary when you buy from a
general retail store and a shop inside the premises of the airport. Its good that they are
maintaining their fixed standard where ever they set up their coffee chain. CCD, which
supplies in-flight snacks and beverages to two low-cost airlines, Air Deccan and Go Air,
is also in talks with to more low-cost carriers. Besides, the company is also in talks with
big retailers to set up cafes in hypermarkets across the country. The company closed last
year with a turnover of Rs 450 crore, up from Rs 350 crore in the earlier year. (Lechu,
2010).

2. Situation analysis:-

2.1 PEST

A PEST analysis is an analysis of the external macro-environment that affects all firms.
P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of
the external macro-environment. Such external factors usually are beyond the firm's
control and sometimes present themselves as threats. For this reason, some say that "pest"
is an appropriate term for these factors. Let us look at the PEST analysis of the Indian
aviation sector:

2.1.1 Political

It is very necessary for the selling the edible goods. They are inspected regularly by
health inspectors and they make sure the airlines are running a clean and a safe flight
kitchen.

3
Acquiring liquor licence is very essential for any airlines. It is very essential and
necessary to have liquor licence as it will allow the airlines to sell alcohol and for the one
who plans to introduce alcohol in their airlines which will be known as flight bars. The
type of alcohol you will serve in your flight will determine the type of licence you will
apply for. Licence for beer, licence for wine and licence for hard liquor are a must for
certain states. In an area only a certain number of licence allowance that the state
provides. If licences are not available one can purchase it from someone who is willingly
ready to sell his liquor licence. This licence can be renewed on a yearly basis until and
unless you have committed and illegal offence like selling a drink and you don’t have the
licence for it or selling the liquor to the minor due to this offence government will cancel
the licence. (Fred, 1998).

2.1.2 Economic

Airlines insist on menus that follow specific safety standards and local availability of
ingredients, as well as caterers complying with HACCP (Hazard Analysis and Critical
Control Points) /International Hygiene codes. There are three main meals - hot meal
(lunch or dinner), snacks and breakfast. A snack costs around Rs 125-Rs 130, a breakfast
Rs 170 to Rs 180 and a hot meal comes for about Rs 250. With the advent of low cost
carriers, in-flight catering which was earlier dominated by the 5 star hospitality players
was thrown open to fast food chains and FMCG players. In-flight catering does not fit
into low-cost model as loading food products could add to the costs. The products are
sold at a marginally higher price on-board, as compared to the price offered at its retail
outlets, owing to the incentives given to the airline and logistics cost. With increased
competition even full service carriers might revisit their in-flight catering model. Taj Air,
Sky Gourmet Catering Pvt. Ltd, Café Coffee Day is some of the in-flight caterers.
(Srivastav, 2008).

2.1.3 Social

Now a days maximum people have started travelling by air as the fares are dropping out.
Similarly the food choice depends upon the clientele the airlines cater to. For example the
food given to the business class passengers will be way different as they pay more,
similarly the type of people i.e. the foreigners will be having different food choices as
compared to Indians. Speaking about the Indian people pallet they like to have Indian
food more as compared to international food. This is mainly because their pallet is not
used to other food choices. (McCool, 1995).

2.1.4 Technological

4
In-flight catering software application In-flair is a multi-user, fully integrated database
system covering all areas of the in-flight catering business. 15 years of work experience it
is a fully developed application which is proven to work in the way the industry works.
We have constantly upgraded the system software with new features based on the
advancement happening in the industry and inputs from our significant client base. This
system manages the entire business form purchasing and billing to the clients. The main
attraction of this system is the rich configuration. The application is configurable and can
accommodate your needs regardless it has a large or a small kitchen. Simple or
complicated operations are handled with care and ease by the system In-Flair.

As many airlines offer no meal service on up to 1500 daily flights, some companies are
trying on arrangement of which the airlines offers the passengers a discount coupons
instead of a flight meal. For e.g. Sky chef began offering pizzas, Northwest airlines
merged with Pepsi Company, pizza hut and KFC on the flight (Romano, 1993). However
some airlines have diversified their feeding strategies to fulfil the passenger’s
expectations of value for money in other way. Japan airlines have introduced an in-flight
sushi bar. Air India reports that almost 50 percent of all travellers pre-order vegetarian
meals. (Dana, 1999).

2.2 Porters 5 forces analysis:

2.2.1 Existing Industry Rivalry

There are many rivals which are already their in the practice. Some of them who are well
known in the market are Oberoi flight service, Ambassador Flight Chef, and Taj SATS.
All the flight Catering services mentioned above cater to different airlines and among
them Ambassador is the oldest organisation dealing with flight catering.

2.2.2 Bargaining power of Suppliers

The bargaining power of the supplier is high as the flight catering organization caters to
the a large number of passengers the food item purchased will be of low cost but of good
quality as the food also has a brand name attached to it.

2.2.3 Bargaining power of buyers

The bargaining power of the buyers is always low as they cannot bargain the airlines for
food. As the travelling is more important than food. Similarly if a passenger doesn’t like
the food there is always a choice for him to change the airlines the next time he travels.

2.2.4 New Entrants

5
There are many flight catering organizations who are trying to enter the Indian market.
LSG Sky Chefs to make India its hub and open four new facilities in the country. (Mint
2007). A Muthoot Pappachan Group company is also making its mark in the flight
catering business.

2.2.5 Threat of Substitutes

There are many substitutes which an airline can go to if a flight catering organizations
doesn’t provide good quality and good food on time. In India there are companies such as
Taj SATS, Oberoi Flight Catering etc which can be used as substitutes.

2.3. SWOT Analysis

Essential for every industry in the world and the core requirement is to perform SWOT
analysis and it is the review which performs strength, weakness, opportunities and threats
on the industry. The airline industry is no exception to unstability. Now a day all the
individual airlines have started analyzing and making the decisions according and based
on their situation. Mainly all the airlines are trying to minimize their weakness and
threats and maximize their strengths and opportunities. (Fulton, 2009).

2.3.1 Strengths

A major strength of any airline is the product itself. Despite many problems air travel
continues to grow and not only due to population growth, but also due to an increased
tendency to fly. Safety record and the connected public acceptance of air travel is both a
fast and safe way to travel. The strength is being shared by both new low cost carriers and
brand recognised airlines. From pilots and flights attendants to mechanics and ground
staffs of the airlines are highly trained and are experienced. The ability of airlines are
now being segmented in the market even on the same route. Customers are provided a
completely are provided a completely different level of service which the airlines have
started establishing.

2.3.2 Weakness

There is a risk if miscalculation happens in the business plan such as new equipment,
breakdowns, and replacements of staffs and the main problem is when the cost increases
such as food, staff and utility bills. There is lack of expertise in the section of food
specification. Not enough knowledge while planning a menu. Food preparing areas,
hygiene and safety measures are not appropriate. There are no new food standards, staff
members are not ready to give their 100% commitment.

2.3.3 Opportunities

6
Airline market growth offers repeated growth opportunities for both leisure and business
destinations. Technological advancement can result in cost savings, from more fuel
efficient aircraft to more automated processes on the ground. Technology can also result
in increased revenue due to customer-friendly service enhancements like in-flight Internet
access and other value added products for which a customer will pay extra.

2.3.4 Threats

Leisure, optional travel and business travel are being negatively affected due to global
economic downturns. It is becoming a huge problem for all the airlines as the price of the
fuel is increasing day by day. The business model is being threatened by an upward
spike. The dangerous thing which now has a huge negative impact on passengers is the
terriost attack threats. Unexpected new competition and new costly rules may be
implemented if the government tries to get involved.

3. Implementation

From the above give situation analysis we come to know the strength, similarly the
existing rivalry and the political and economical factors which are creating hindrances
and which when rectified can produce a boom to the new product. As the new product
deals with the introduction of namkeens and sweet in the flight catering in Indian airline
industry. The new products can be a hit as these food items come under the liking of the
Indian people. Similarly in order to start food items will be prepared in the centralised
kitchen. Similarly the transporters will be chosen in a bidding process a tender will be
passed so that the company gets cheap but good transporters. Similarly the materials and
the supply will be given to that supplier who has cheap rates but also the quality will be
kept in mind. Or other thing can be done is starting the new product by selling it to any
operating flight catering service and make them sell your product.

4. Conclusion

In-flight catering is a service is a service which offers products which are simply
intangible and this intangibility creates neck to neck competition and how low cost
competition is not at all entertained in today’s time. The main aim of airlines is to earn
more and more profit. Each airline is expanding its network and size on a regular basis to
stay in competition. Advertising creates a personal attitude problem after the consumer
either has a positive or a negative experience is heavily influenced on their behaviour. To
assess consumer needs accurately and to provide innovative ideas marketers and
researchers have to work hard and have to be on their toes. Airlines are making progress

7
by entering into new markets, new segments and adding new and better services like i-
flight catering which they need to make a steady approach and educate consumer of new
wants.

5. Annexure

5.1. 5.1. PEST ANAYLISIS:-

Political:- Economical:-

1) The amount of fees is 1) The passengers mostly

charged according to the who travel in airlines
country. come under high or
average income group.
2) Food handler license is
required to start this kind
of business

Social: Technological :

1) The travelling has 1) Different software’s can

increased as the price of
tickets is dropping down
2) Food choices are
different of different
people and catering.
be used to take the
track of the food items
and inflow of food etc.
2) In-flare is one which is
being used.

8
5.2 Porters five forces analysis:-

9
5.1. SWOT:-
Strength:-
1) Major strength is its
product itself.
2) The growth is due to
population growth but
also tendency to fly.
3) Its fast and safe mode of
transport.
Opportunities:-
1) Technological
advancement can help
in fuel costs.
2) Introduction of new food
choice will also increase
the food demand.
Weakness:-
1) Break downs and
replacement of staff is
more .
2) Unsatisfied workers
3) Cost increases due to
food and utility bills
4) Food preparing areas
are not hygienic.
Threat:
1) Price of fuel is rising.
2) Upword spike can
treaten the business
model
3) Terrorist attack can
have a negative
impact on air travel.
10
5.4 Menu given in Airline Catering:-

MENU FOR PRE PACKED LUNCH

VEG Rs. 80/- NON VEG Rs. 90/-

ITEMS GMS. ITEMS GMS. ITEMS GMS. ITEMS GMS.

Chana Chicken Chicken Do

90 Veg Do Pyaaza 90 90 90
Masala Sagwala Pyaaza

Veg Pulao 140 Jeera Rice 140 Veg Pulao 140 Jeera Rice 140

Daal Daal Daal

90 90 Daal Makhani 90 90
Makhani Tadkawlaa Tadkawlaa

Chappati 3 nos. Chappati 3 nos. Chappati 3 nos. Chappati 3 nos.

Boondi
70 Veg Raita 70 Boondi Raita 70 Veg Raita 70
Raita

Doodhi Doodhi
70 Gajar Halwa 70 70 Gajar Halwa 70
Halwa Halwa

Methi Malai Chicken

Aloo Methi 90 90 90 Methi Chicken 90
Matar VinDaaloo

Plain Rice 140 Tomato Rice 140 Plain Rice 140 Tomato Rice 140

Moong Daal 90 Plain Daal 90 Moong Daal 90 Plain Daal 90

Chappati 3 nos. Chappati 3 nos. Chappati 3 nos. Chappati 3 nos.

Cucumber Mixed Veg Cucumber Mixed Veg

70 70 70 70
Salad Salad Salad Salad

Vermicille 70 Kaala Jamun 70 Vermicille 70 Kaala Jamun 70

11
Kheer Kheer

Veg Kofta Palak

90 Paneer Kadhai 90 90 Lal Murgh 90
Curry Chicken

Peas Pulao 140 Kashmiri Pulao 140 Peas Pulao 140 Kashmiri Pulao 140

Black Daal 90 Daal Makhani 90 Black Daal 90 Daal Makhani 90

Chappati 3 nos. Chappati 3 nos. Chappati 3 nos. Chappati 3 nos.

Green Salad 70 Kachumber 70 Green Salad 70 Kachumber 70

Black & White Black & White

Phirni 70 70 Phirni 70 70
Mousse Mousse

Chicken
Veg Biryani 90 Mutter Aloo 90 90 Chicken Afgani 90
Biryani

Chana
140 Mix Veg Pulao 140 Chana Masala 140 Mix Veg Pulao 140
Masala

Tur Daal 90 Black Daal 90 Tur Daal 90 Black Daal 90

Chappati 3 nos. Chappati 3 nos. Chappati 3 nos. Chappati 3 nos.

Boondi
70 Mint Raiata 70 Boondi Raita 70 Mint Raiata 70
Raita

Gulab
70 Orange Mousse 70 Gulab Jamun 70 Orange Mousse 70
Jamun

Veg Chicken Chicken

90 Veg Pasanda 90 90 90
Makhani Makhani Pasanda

Jeera Rice 140 Kashmiri Pulao 140 Jeera Rice 140 Kashmiri Pulao 140

Moong Daal 90 Yellow Daal 90 Moong Daal 90 Yellow Daal 90

Chappati 3 nos. Chappati 3 nos. Chappati 3 nos. Chappati 3 nos.

12
Veg Raita 70 Green Salad 70 Veg Raita 70 Green Salad 70

Fruit Salad 70 Fruit Trifle 70 Fruit Salad 70 Fruit Trifle 70

13