Dynamic Pricing of Food and Drink

[davidjohnson6]

Most LCCs as well as some traditional carriers now sell food and drink, rather than just charging more for the fare and providing it free on demand.

Has dynamic pricing of this food and drink ever been tried ? In the same way that when the yield management system raises or lowers the price depending on booking demand, an airline could charge more or less for an item of food or drink at different times of the day, dependent on demand.

Want to fly at 7 am in winter ? That cup of coffee will cost a lot, but the vodka has been reduced in price.
Flying to somewhere rural in France mid-afternoon ? That mini bottle of red wine will be pricey, but the coffee is going cheap.

The big thing, is to transcribe all the sales data from each flight onto a computer if it hasn't been done already, and use this data to predict demand for food+drink items in advance per flight, and set prices accordingly. Perhaps classify each flight into one of a few categories (similiar to VFR / business / etc...) and get the cabin crew to reference the appropriate price list. Magazines can then show just the items with 'ask your crew for the price'

Seems to me just an extension of the black art of yield management combined with the move to ancillaries. Just as a seat is a perishable item, the chance to sell Mrs Smith a snack while she's captive in her seat is also a perishable item. The key is not revenue, but to extract the maximum profit on each snack item for sale without affecting number of sales too much. :E

Coca-Cola were planning to run this for vending machines, but backed down in the end because they were afraid people would get upset. Have LCCs considered trying it ?

[Sunstar320]

I think if LCC's were to try it, time could become an issue. For example, down here in Australia, on a full 180 seat 55min sector between MEL-CBR, do you think CC have time if every passenger asks what price is, then contemplates what they want.

It would drive myself mad I think...

[h&s]

I think it's a very interesting idea, but as said SunStar, maybe not applicable for shorter flights eg <1:30

Further to your argumentation, I also have been very surprised of the number of time where c.crew were not able to give any hot meals because all were already gone, so a yield management based on history but also on real time sales/number of items available would be brillant to maximise your in-flight revenue by reducing your "sold out food" (eg. if there are only 2 bacon sandwichs left, price increases by 2€)

Very good idea, but as always with LCC, difficult to set up because of:
- extra cost: create the software, test it etc
- complexity: of the system, for the cabin crew etc

A simplier mean could be not to change the price during a flight, but according to the route. I can for example easily see that alcoohol drinks can be more expansive than other route on each flight to Ibiza, Riga or Prague the week-ends etc

[davidjohnson6]

Changing the prices in flight would be much too complicated to implement. Something like this can only work if it's simple for the cabin crew to follow. Further, if seat 21A buys a cup of coffee, the person at 21B will expect it to be the same price.

I'm thinking only that a flight be classified in advance into one of maybe 8 types - i.e. classifying the Ibiza flights differently to the 7 am winter flights. Trolley contains a printed price list for each of the 8 groups - as part of the turnaround process, cabin crew just pull out the correct price list for use during the next 2+ hours. Cabin crew are further incentivised to do this, since their commission is also increased.

[racedo]

Its definitely a doable BUT you have to eliminate the price branded menus if you want to do that as you can just see the row developing because someone has a menu with beer at €2 not collected from a previous flight when flight menu says it should be €4.

Also ensure that every sale has to be recorded on a point of sale till when made, so it becomes trackable. Otherwise you leave it potentially open to abuse with a member of CC deciding to implement different pricing and pocketing the difference. Also because they have to key it in the price is already set so no need for them to try and remember it.

[clipstone1]

some of the spending on board can be considerable.....I was on a UK charter last summer 90mins flight and the pax in front had pre-ordered in-flight meals then when the bar came round the family of 5 spent over £40 on drinks and snacks in addition to the meals......I know generally you can't buy the hot meal on board on pre-order but their holiday spend was fairly big if they did that both ways bearing in mind the meals would've been about £30 each way on top of the £40 spent over bar....mind you that's the only way charter airlines really make any cash as the rest if in the tour operator...

[racedo]

Spice

That would be a good one as then can order your drink and whatever from the screen and save the F/A the running up and down the aisle and NO the F/A is not on a menu .

Additionally if you wanted the Chicken or Beef you could order it and then arrange a time for the food to arrive. Also you would know whether it was available of not.

OTOH perhaps kiosks in departures could do the same thing or work in conjunction with the onboard system.

Reckon its only a matter of time.

[smith]

just have a bar-code scanner on the trolley, the software could then work out the price dependant on destination, time of day etc and print a receipt. Would reduce the potential of theft from CC.