01 January 2000

Airline catering used to be about preparing meals freshly for passengers. Now it is about the organisation necessary to get supplied food on to the right trays and on to the right aircraft.

At least, this is the view of LSG Lufthansa Service/SKY Chefs, the catering subsidiary of German national carrier Lufthansa, which claims that its 33% share of the airline catering market makes it the world's largest caterer.

Yet, at its German base in Frankfurt, SKY Chefs kitchens cater mainly for specialist meal requests, and for the fresh preparation of salads and fruits.

The general manager of the international unit in Frankfurt, Dieter Hemmer, shows off the Japanese kitchen which caters solely for the needs of Japan Air Lines, All-Nippon Airlines and Lufthansa's own requirements out of Frankfurt. Downstairs, there is a special halal kitchen to meet similar needs for Middle Eastern destinations.

The irony, however, is that these dedicated kitchens, which prepare fresh ingredients for airline meals, are here only because the quantities they need to produce are small. Fewer than 20% of SKY Chefs' clients ask that their passengers be served meals which are in quantities that are too small for it to be efficient or practical to use either deep-frozen dishes or freshly-prepared meals.

And so, in the 1995 annual report of LSG Lufthansa Services, the catering section's outlook states: "Today, since many products such as frozen meals can be purchased in large quantities… the caterer increasingly assumes responsibility for storage and transport. The consequence of this is that catering companies are tending to become logistics firms."

That airline catering is changing is fact. In the USA, low-cost airlines have eliminated catering in an effort to bring fares down and entice passengers from established carriers. "In the USA, they are moving towards selling the food in the airport, with people getting on board with their doggie bags," observes Hemmer.

Similar airlines in Europe, such as Ryanair, are following this trend but national carriers such as British Airways and Lufthansa have yet to follow. Indeed, worldwide, Lufthansa claims to have the largest catering operation of any airline.

The LSG Lufthansa Service/SKY Chefs group claims it has 33% of the catering market and consolidated sales of DM1.5b (£584m). Globally, 37,000 staff at 187 kitchens prepare 330 million meals annually, primarily for a client base which includes 250 international airlines.

But the company does not just cater to the airline market; 30% of its sales come from Lufthansa Party Service, which handles private parties and acts as a catering consultant worldwide.

SKY Chefs reported a profit before taxes in 1995 of DM67.8m, up by 60% on the previous year. The unit in Frankfurt is one of two which produces meals for 36 airlines flying in and out of Frankfurt.

Hemmer views the trend toward logistics as an evolving process that began when items arrived at the kitchens pre-peeled. Later, he says, they came pre-cut and now they arrive packaged as a variety of ready-made, deep-frozen meals.

For SKY Chefs, this is the way forward, allowing it to concentrate on the logistics of receiving, storing and delivering the correct food to the right aircraft on time. "If we talk about logistics, it now takes more than 50% of the business in terms of time and staff," says Hemmer. "We must control each and every part of the operation for the whole flight. It is time-critical problems, most of the time." As an example, if a flight runs late, the airline still wants that particular aircraft's next flight to leave on time, with the turnaround time cut to compensate. "Within a very short time frame, we must plan how to change the whole operation to solve all of the problems for the customer who came in late," says Hemmer.

Of course, there are still airlines which want to give their passengers freshly prepared food, and in Frankfurt Hemmer's 17 chefs are happy to oblige. But today's suppliers can meet exacting requirements, such as slicing cakes and sweets to predetermined measurements to fit on the trays of different airlines. This makes it easier, and invariably cheaper, to source the food from outside suppliers, says Hemmer. Indeed, despite the special kitchens, he says his strategy is to encourage clients to buy deep-frozen products. "We try to convince our customers to purchase from outside agents," he says.

At the Frankfurt operation, pastry and cakes come from local German suppliers while bread and rolls are bought from Lufthansa's domestic unit. All deep-frozen meals are bought in from subsidiary LSG-Sky Food GmbH in Alzey, Germany, but cold meals and salads are prepared in the Frankfurt kitchens.

Not everything comes pre-sliced. For example, cold meats, cheeses and fruits are sliced on site to maintain freshness.

Trays are packed, shelved into wheeled trolleys, stored in the cold holding room, and then moved on to vans an hour-and-a-quarter before flight departure time.

Production line belts are not used here, Hemmer preferring employees to be in workstations, with complete responsibility for a given flight. The opportunity for an employee to see a completed product is more gratifying than ensuring that there is a napkin set on every tray, Hemmer believes.

He is quite genuine in his belief that a well-managed employee base, with staff who are kept content, is more productive. "Quality is a matter of discipline. If you have this, then you also have better productivity," he says.

SKY Chefs provides chefs who will assist customers with menu planning, although some clients will use their own chef advisors. "If we suggest what is done, naturally there is a better cost efficiency," says Hemmer. "We know what food items are in season here and when we can get the best price."

Suppliers are not regularly changed, although Hemmer says he naturally watches the market prices to ensure he gets the best deals. "We have constant pressure on costs, of course," he says. "We look for quality, and if that makes us unique it is how to keep the customer satisfied." The profits are made by adding a handling charge to the cost of the food, but airline catering is a tightly contested market, as most airlines originally started with their own caterers.

Costing of meals is a sensitive issue and Hemmer will not be drawn on pricing structure. He stresses that the costs borne are related to more than simply food. "The caterers are not only producing food," he says. "If you say everything is produced outside, even then we are doing the organisational work."

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