Airline feeders say '85 profits won't lift off with rider counts - in-flight caterers

Nation's Restaurant News, Dec 17, 1984 by Peter Romeo

In-flight caterers don't expect any significant improvements on their bottom lines in 1985 despite projections by industry analysts of a 6% rise in airline passenger counts next year.

The bigger contract feeders that cater airline meals say that fewer flights, cutbacks by carriers in the numbers and types of meals served and other factors will cut into sales and squeeze profit margins.

"The airlines are carrying more passengers, but airline catering is also driven by the number of flights the carriers offer," says Daniel J. Altobello, executive vice president of Marriott In-Flight Services.

"Right now," Altobello adds, "the airlines are getting a historically high utilization of their existing fleets," meaning that fewer flights are needed. The prospects for next year "all depend on whether that trend continues," he says.

Meanwhile the National Restaurant Association (NRA) in its annual forecast predicts that in-flight feeding revenues will grow by an inflation-adjusted food service sales will rise 3.2%, according to the NRA.

At the same time in-flight caterers and airline analysts agree that the boost in airline passenger counts is largely attributable to fare discounting, which leaves the carriers with less money to spend on meals.

The contract feeders point out that the 11 major domestic carriers are eliminating snacks on many off-hour flights and serving less elaborate meals for lunch and dinner thereby reducing the contract feeders' profit margin.

"You may be serving more meals," Altobello declares, "but you may be staying even. "The airline catering industry isn't going to be hleped if it can't make a decent profit."

All things considered, Altobello says, "The airline feeding industry may still do fairly well next year. But I don't think you're going to find any of the airline feeders, us included, ready at this point to expand their capacity."

The NRA expects airline catering sales to total $738.1 million in 1985, compared to $666.7 million in 1984.