May/June 2005
INFLIGHT PROFILE • AirAsia
MUSICK
raises the volume at
AirAsia
By Hui Min Neo
AirAsia, based in Malaysia, is Asia’s first low-cost carrier, the brainchild of the
dynamic entrepreneur Tony Fernandes. In just three years it has had a dramatic
impact on the region’s aviation sector, one that is set to grow with the advent of
Chinese flights. Onboard revenues, especially F&B, are a big and growing slice
of the commercial pie as Bruce Musick, CEO of Air Asia’s commercial arm
CrunchTime Culinary Services, tells Hui Min Neo.
A
t the Bangkok offices of low-cost carrier AirAsia,
Bruce Musick never runs out of food. As CEO of
AirAsia Inflight Services, he is surrounded by food
from the inflight menus. But, more importantly, his Thai
colleagues are constantly offering him things to eat.
“In Thailand people snack throughout the office hours,”
he tells The Moodie Report. “The staff at our Thai office
are always coming to me with different kinds of food: ‘Do
you want this? Do you want to try that?’”
This national preoccupation with snacking has led
Musick and his team to develop a popular food & beverage menu onboard Thai AirAsia flights called Snack
Attack. The items offered in the menu are all ‘easy-toeat’, ‘no-mess’ meals.
The Moodie Report
“There is a desire to consume. Great importance is placed
on food in the culture here. Even people who aren’t hungry buy, because snacking is part of the culture,” says
Musick.
The menu varies from flight to flight, but there are generally sandwiches with fillings that pique the local tastebuds such as tom yum tuna, sesame chicken and spicy
cabbage slaw, each going for about THB60 (US$1.50).
There are also SnackPacks costing THB100 (US$2.50),
with each pack containing a chocolate, a savoury and a
beverage.
Critics were sceptical that passengers flying low-cost carriers would pay extra to consume onboard rather than eating or drinking only at their destinations, says Musick.
121
INFLIGHT PROFILE • AirAsia
Chinese travellers prove to be
demanding inflight customers
It is early days in AirAsia’s dealings with
Chinese customers. But Bruce Musick
already has this observation to make: “They
almost demand to buy.
“If the trolley is going too fast, they will
make you stop. They want to know what is
this and what is that.”
The low-cost carrier started to fly to
Macau from Kuala Lumpur December last
year, but its real contact with mainland
China is just beginning. Approval has been
obtained for flights to Chinese cities,
including Kunming and Xiamen, by May.
Musick’s current preoccupation is not how
to get the Chinese to consume, but how to
get enough items onto the planes.
“They are a different group of customers,”
says Musick. “They travel in groups. If you
have three or four rows seated together,
and one person buys something, all will
buy. It’s a generalisation of course, but it’s
true. If one buys a hat or a T-shirt, it drives
a lot of interest among the others.” In some
instances the crew have run out of stock.
“When we start flying from China, it’s
going to be quite a task to figure out how
to manage it all – how to store the merchandise on a 737,” he says.
To get around the problem of air
stewardesses who do not speak Mandarin,
AirAsia has produced a Chinese catalogue
and menu. These are not kept in individual
seat pockets, but stored at the back of the
cabin. They are then provided to any Chinese who may be onboard the plane.
“They are big consumers, and we will have
to track them very carefully,” says Musick,
adding that the catalogue for Chinese
flights is likely to be very different. Cigarettes and liquor, not available on
Malaysian flights due to religious sensitivities, will be an important part of the Chinese inflight service.
“As long as we’re time efficient and process
efficient, I’m very bullish about our inflight
offer on Chinese routes,” he concludes.
122
May/June 2005
But his reply to the doubters was simple: “You don’t understand.
It isn’t need; the issue is desire. It’s not a practical issue, it’s food
and culture.”
He may be right. Led by food and beverages but with proprietary merchandising close behind, inflight sales for AirAsia’s
Thai operations have been posting double-digit growth monthon-month for five of the past six months.
“Thailand is our number one market. Sales per flight have been
+25% higher than on Malaysian and Indonesian flights,” says
Musick.
The carrier’s Malaysia operations have posted an average +40%
growth in sales this year over last year. But despite these monthon-month improvements, says Musick, “The first six months
haven’t met our sales objective.”
He declines to give exact figures but adds: “We went into this
without a trial programme. It took us a few months to figure it
out. Now we are quite clear about what we want to do.”
Without a precedent in the region, Musick and his team had to
develop their own inflight programme. After all, AirAsia was
southeast Asia’s first low-cost carrier when it started three
years ago. Based in Malaysia, it is now listed on the Kuala
Lumpur Stock Exchange. The company has also started operations in Thailand and Indonesia. It began its foray into Greater
China when the first flight took off from Kuala Lumpur for
Macau last December.
AirAsia CEO Tony Fernandes says the carrier has secured
approval from the Chinese authorities to fly from Bangkok to
five cities in China by early May. The destinations include
Kunming and Xiamen. He adds that the carrier is also exploring flights from East Malaysia’s Kota Kinabalu to the Pearl
River Delta in southern China.
The rapidly growing network means that AirAsia has had to
lease more and more planes to cope with demand. And as the
cost of leasing planes rises, Fernandes says that the company
is looking at new income sources, including inflight sales,
onboard advertising, travel insurance and car rental tie-ins “in
quite a big way”.
Novel experience
The low-cost carrier markets in North America and Europe are
well developed, but Musick notes that there are distinctive differences between AirAsia’s customers and those of its European
counterparts.
“So many of us fly so regularly that taking a flight is now like
taking a taxi,” says Musick, who has toured 13 European
The Moodie Report
May/June 2005
INFLIGHT PROFILE • AirAsia
low-cost carriers, including Germanwings, the UK’s
bmiBaby, and Ireland’s Ryanair. “But with our customers
there’s still room to find excitement in flying.
“In Thailand, when we first started our proprietary merchandise, we found that customers were buying pilot mini
bears, plane models and so
on.” Merchandise associated
“Customers on our
with the airline proved an
flights are interested
instant hit.
in the trolleys coming
“Why were they buying all
this stuff? Many of our customers were new to flying,
not regular flyers. It was
something quite exciting for
them. They wanted to take
the flying experience back
with them,” he says.
But now, Musick notes, “We do not encounter price
resistance. Nasi lemak (rice in coconut milk, often served
down the aisles,” says
Musick. The menu
varies from flight to
flight, but there are
sandwiches with
fillings that pique the
local tastebuds and
SnackPacks costing
THB100 (US$2.50),
with each pack
containing a
chocolate, a savoury
and a beverage
The novelty of the flying
experience was also a catalyst
for them to consume food and
beverages onboard. “People
think it’s exciting, so they are in a condition in which they
feel happy spending their money,” says Musick.
Musick recalls that when he was first planning the F&B
menu, sceptics told him that with prices higher than
Proportion of total sales by category
across AirAsia’s network
45%
40%
� F&B
� Proprietary merchandise
� Duty free goods
with egg and fried fish) may be MYR15 (US$0.38) at the
market stall, but you are not in a market. Having a meal
on a plane is an experience.
“We have to set our prices against our competitor – the
airport. If the cost of our items versus the airports is reasonable, we have to get that message to our people. It has
to be measured against where else the passenger would
consume during this period.”
A typical flight departs from KLIA at between 7 and
8.30 a.m. That means that customers would be waking up
at between 4 and 5 a.m.
15%
The Moodie Report
those in downtown Bangkok or Kuala Lumpur it would
be hard to push the food and drinks.
“They would not have breakfast at home, and there would
be no time to stop on the way. Typically they would not
arrive at their destination until about 11.30 to 12 noon.
So they will have to eat something during that period.
The airport, then, is our competitor,” says Musick.
To let consumers know that food onboard is cheaper
than that sold at the airport, AirAsia puts up posters at the
check-in counters. But even when the customer is booking his flight over the Internet, an e-mail confirmation
details food and beverages available on the flight.
“We’re looking at pre-order at the airport, but this is limited by what the airports will allow us to do.”
123
INFLIGHT PROFILE • AirAsia
Short of time
May/June 2005
Beyond the excitement of boarding a flight for the first
time, Musick points out that the curiosity factor plays a
very important part in the company’s inflight sales.
on our experience of the relationship between crew and
customers. Speed is important for us. My enemies are
time and space. We have limited amounts of both, so I
can’t justify 200 items,” he said.
“People are far more curious than in Europe,” says
Musick. “Customers on our flights are interested in the
trolleys coming down the aisles.”
A supermarket, for example, could stock a row of different detergents. But a 7–11 convenience store would have
perhaps only one brand on offer, he says.
That works for his team, but the typical duration of the
short-haul flights doesn’t help sales. “Generally, the
longer the flight, the more we sell. The more time the
cabin crew has to sell, the more they are likely to sell.
Lean catalogue
“It’s down to the pace at which they push the trolley
down the aisle. If it’s moving too fast, it’s almost as if they
Team effort: Without
a precedent in the
region, Musick and his
team had to develop
their own inflight
programme. AirAsia
was southeast Asia’s
first low-cost carrier
are bothering the flight, interrupting it. The more time
people have to ponder, the more likelihood there is of
them buying,” says Musick.
To give individual customers enough time to consider the
items on sale, Musick and his team also decided that the
menu has to be more selective
than it was at first. “One of the
lessons learnt is that the offerings have to be streamlined. In
Thailand we started with 25
beverages. This was slowing
sales. It was taking too long for
the crew to explain what we
were selling. So we tailored a
narrower menu,” he said.
He is now working on cutting
the duty free items (handled by
concessionaire Inflight Sales
Group) on offer from 54 to
about 30.
As he cuts back on offers in the duty free catalogue,
Musick also intends to bring in more ‘novelty things’.
“People want products synonymous with the market they
came from, so for AirAsia’s Thailand flights we may add
products like Thai spa treatment soaps – more local, gift
products. The curiosity factor is important – they stimulate impulse purchasing,” he says.
And with the carrier set to begin its business in China
soon, inflight revenues are set to grow sharply. Inflight
sales will be different in China compared to Thailand or
Malaysia, and more adjustments will have to be made.
Liquor and cigarettes, which are not offered on the
Malaysian menu due to religious sensitivities, are likely to
be an important part of the
Chinese duty free catalogue.
“There are no absolute
must-haves. There’s
nothing that would stay
on the trolley unless it’s
earned its place. If it
doesn’t sell, it doesn’t
move, and it doesn’t stay”
“If you fly Singapore to London you can have 200 products, but on a two-hour flight
to Bangkok there is no time for that luxury. I know certain people in the industry who disagree, but I have to rely
124
To critics who say that there are certain ‘favourites’ which
have to be in every inflight catalogue, he says: “We have
to be disciplined about it. I have a little cart, and my view
is that everything on that trolley has to sell. There are no
absolute must-haves. There’s nothing that would stay on
the trolley unless it’s earned its place. If it doesn’t sell, it
doesn’t move, and it doesn’t stay.”
What is certain, however, is
that the catalogue will be lean.
“We’ve tried so many things;
we’ve tried a wide range of
merchandising. It’s getting
rather complex, and it’s set to
get more complex with potentially major Chinese consumers, while storage remains
limited on a small 737.
“We’ve tried to do everything, maybe too much. We will try to bring it back to
focused products – less diversity, but more focus on
things that sell.” �
The Moodie Report
���
��������
�� � � �
����������������
��������������������������
People buy from
people they like
As of May 2nd 2005 A&E Petersen changes name to Valora Trade Travel Retail
A natural new identity as A&E Petersen has been part of the Valora Group
since 2000.
Valora Trade is one of Europe’s leading distributors of FMCG’s representing in
total 335 brands in 14 countries.
www.valoratrade.dk