Delta's Novel Concept: Real Food in Economy
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Airline food, when major domestic carriers still served it in the '80s and '90s, was always the butt of terrible, clichéd jokes from hack comedians. After the drop in air travel in the wake of 9/11, all the major domestic carriers dropped complimentary meal service in the first decade of the 21st century and replaced it with some kind of buy-on-board program.
Like the complimentary predecessors, these haven't been anything to write home about either. The usually consist of some kind of sandwich or wrap, usually around $7-8.
Delta (NYSE: DAL) is doing something completely different: serving gourmet meals in economy. Well, kind of. They're offering the meals in a pilot program on transcontinental flight from San Francisco and Los Angeles. Here's an example dish of an Antipasto Entrée of Smoked Salmon and Grilled Herb Chicken:
Delectable flavors start with prosciutto and dried figs, wedges of smoked Gouda and Manchego cheeses, pecan nuts, and fresh strawberries with dried apricots and plums. Alongside sliced smoked salmon over fresh fennel slaw and grilled herb-rubbed chicken breast, sliced, with bell pepper and asparagus. Mango dipping sauce on the side. Served chilled.
Are you hungry yet? The service, which Delta is calling Dineup, isn't exactly new-new, having been introduced late last year, but the airline doesn't appear to have publicized it very much, tucking it away on the "in-flight services" page that only weirdos obsessed with airlines and blogging about them check.
This dish, gleaned from a New York to Los Angeles flight, will set you back by $15, which is how much you'd pay for a comparable meal in a casual chain restaurant. If you want one of the special meals, you'll have to buy it at least two days before your flight takes off. You'll have to endure the stares of your envious and hungry seatmates who didn't bother to peruse Delta's website in advance.
Delta seems to be bucking the trend towards bare-bones airline service, even on the major carriers. It's adding more recharge stations to its gates to let customers keep their gadgets powered on their trips.
The trend since deregulation in the late '70s has been for the airlines to race to the bottom on fares. Back when Uncle Sam dictated where to and for how much the airlines could fly, they competed on amenities. Like vinyl records and lava lamps, Delta's reintroducing something popular from the past.
It's a neat idea, but if Delta is going to roll it out on more flights it's going to figure out how to keep costs down. The airline business is by its nature capital-intensive, and it's bad business sense to spend a penny more on capital (in this case, food) than necessary. The airline posted a profit of $854 million last year, with sales of $35.12 billion and a cost of goods sold of $20.9 billion.
United (NYSE: UAL) , which maintains a more conventional buy-on-board program, posted a profit of $840 million, with sales of $37 million and a COGS of $24 billion. U.S Airways (NYSE: LCC), another major airline that's dumped full-service meals in economy, did much better in terms of keeping costs down. The company posted a profit of $417 million, with $13 billion in sales and a COGS of only $4.9 billion.
Delta is also fighting with bargain-basement carriers, epitomized by Southwest (NYSE: LUV). The carrier made its reputation with an all-economy class that served only peanuts, though they've upgraded to "snack boxes" on longer routes. Southwest had a profit last year of $178 million. Its sales were $15.66 billion, with a COGS of $9.75 billion. When even the low-fare carriers have high costs, you do have to wonder about the majors.
Still, this looks like an interesting idea, and one that could allow Delta to distinguish itself from all the carriers getting passengers from point A to point B. Let's see if that actually translates to higher revenues.
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