NEW YORK (CNN/Money) -
Airline food is more than a much maligned product, it's a multibillion-dollar expense for an industry already hemorrhaging red ink.
Last year, with losses soaring in the wake of Sept. 11, the nation's 10 largest carriers cut the amount spent on meal service per passenger by about 10 percent to an average of $4.29. Many of the flights that used to offer meals now have only snacks available, and the discount carrier Southwest Airlines (LUV: Research, Estimates), which doesn't offer meals, has seen its market share and traffic continue to grow. Both trends pushed the average spent per passenger lower.
But those 10 airlines still spent about $2.1 billion on the meals last year, and the non-discount carriers that cater to business travelers still feel a pressure to offer meals to passengers on many of their longer flights, including some without free meal service. They've yet to settle on a solution, though.
AMR Corp.'s (AMR: Research, Estimates) American Airlines, the world's largest carrier, is in the process of selling meals at the gate that can be carried on board. A pilot program is under way at New York's Kennedy Airport and in San Juan, and the Dallas /Fort Worth Airport Tuesday started its own sell-at-the-gate program at an American gate there.
American executives say the sell-at-the-gate food isn't replacing free meal service on flights where it still is being offered. But slightly more than a third of flights of more than three hours don't offer meals in American's main cabin, and slightly more than two-thirds of flights between two and three hours also don't offer meals. This new buy-at-the-gate program is aimed at those flights.
American executives also say it has several advantages over efforts to have flight attendants sell the food once they get on board.
"It is far less cumbersome to sell it at the gate and you have essentially no waste -- it's in a refrigerator, so anything unsold can be sold on the next flight. All the food put on the plane that isn't sold is waste," said Dan Garton, American's executive vice president of marketing. "We also don't have any problems with running out of the meals passengers want -- we can just pull extra meals from the next gate."
Weighing the options
But No. 3 Delta Air Lines (DAL: Research, Estimates), which has been experimenting with both sell-onboard and sell-at-the-gate offerings, is leaning toward the sell-onboard option. Spokeswoman Catherine Stengel said the airline is preparing to announce an expansion of its sell-onboard program, along with some new partners, within the next week. She said the airline will continue its experiment with sell at the gate at its Cincinnati, Ohio, hub, but that it is not set to expand that offering at this time.
Delta did announce Wednesday that it's low-cost sister carrier Song will allow passengers to pick a menu item for purchase online up to 12 hours before the flight. Those who order in advance are guaranteed the meal they want will be there, while those who wait to order on the plane will have their choices limited by availability.
No. 2 United also is preparing to expand its option of selling more food onboard flights at the end of this month, but isn't looking at any sell-at-the-gate offerings.
"The rationale behind our concept is so people don't have to carry extra food or items on board," United spokesman Jason Schechter said.
United is moving to offer branded meals from restaurant chains such as Bennigan's, Hard Rock Cafe and TGI Friday's with its sell-onboard offering. American says it also will look at offering branded meals in the future with its sell-at-the-gate offering.
One thing that neither American nor most of the buy-onboard menus offer is hot meals on the go. Many planes used on shorter flights no longer have ovens to heat food, and American doesn't plan to offer hot meals at the gate either.
"If you've got hot food, you've got a question as to how long can it remain good," Garton said.
The airlines that are trying buy-onboard offerings report sharp variations in passenger participation. Spokeswoman Janice Monahan of America West (AWA: Research, Estimates) said that when that Phoenix-based carrier tried a buy-onboard pilot program earlier this year, participation varied from 8 to 80 percent of passengers, even on the same flights on different days, making planning difficult.
The airlines are trying to mitigate the waste and losses that accompany such variation by having an outside catering firm run the program, and assume the risks.
"We're letting different catering companies propose different types of models. Those bids are coming in, we'll evaluate them. Hope to implement a new buy-onboard program early next year," Monahan said.
But Garton said if the caterer stocks a plane with too few of a desired meal to protect against waste, the airline will take the customer service hit.
Right now the airlines stress they're using the food-for-sale programs only on flights that wouldn't have food anyway. But even some of those free meals are scaled back from offerings before the Sept. 11 terrorist attacks, and as pressure continues on the carriers to cut costs, the free meals could become rarer and rarer outside of the first-class or business-class cabins.
"Conceivably, if this takes off, it might be used as an offset on food served on other flights," American's Garton said.
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