Nigerian caterers lose out in N13.5bn in-flight market

Nigerian caterers are losing out in the N13.5billion inflight catering market as a result of tough business environment that has continued to constrain small indigenous players from penetrating the market, BusinessDay’s findings show.
According to the Nigeria Civil Aviation Authority (NCAA), the inflight catering market is open to both global and indigenous players to compete favourably, but the reality is that it is controlled by few catering services, as funding, policies and contract terms have discouraged small scale caterers from penetrating the huge market.
“The market is tough for indigenous players like us as a result of the outrageous contract terms demanded by airlines, lack of funding to procure high standard catering facilities and equipment, and unfavourable government policies,” an inflight catering service provider who craved anonymity told BusinessDay.
“Some of the airlines owe us huge debts for our services and have refused to pay, while some others demand an outrageous sum of over N50million as start-up fee before even agreeing to sign a contract with us. This money is given to the airline just to sustain patronage.
“On the policy side, it takes over one year to get an average catering service provider certified by NCAA to supply meals or snacks to airlines, even after meeting most of the requirements by the agency,” the service provider added.
According to reports by NCAA, air traffic for domestic flights from January to September 2016 was 8,090,816, while the sector recorded 3,272,331 passengers from January to September for foreign flights in the same year.
Experts say considering the October to December rush, the sector will not record anything less than 10,000,000 passengers on local routes and 3,500,000 on international routes annually, considering the figures recorded in January to September.
BusinessDay’s checks show that the average cost of a snacks and drinks on a domestic flight is N350 per passenger, while the average cost of course meals on a foreign flight is N3,000 per passenger. This implies that the market for snacks on domestic flights is aboutN3.5billion, while the market for foreign inflight catering is about N10billion annually. For domestic and international flights, the market will produce nothing less than N13.5billion annually.
Adeola Omikunle, Managing Director, Things Remembered, Catering Inflight Services told BusinessDay that part of the challenges facing indigenous inflight caterers is lack of funds to acquire adequate catering facilities and equipment that will attract foreign airlines to patronise them.
“I have decided to partner with LSG, a global inflight catering service, to strengthen the confidence of foreign airlines in our services and to have an international outlook. If I decide to do it on my own, I may not be able to get patronage from international airlines,” Omikunle added.
She also noted that the 28percent bank interest loan for businesses is discouraging many caterers from investing in the market. “Who will want to invest in a declining market, with reduction in passenger traffic, at an outrageous interest rate of 28percent, against three percent interest rate as obtained in other countries?” she added.
Hakeem Jimoh, Media Consultant, Lufthansa airline told BusinessDay that as an airline customer to the catering company, what the airline looks out for is the best experience for its passengers, adding that on the Nigerian route, Lufthansa introduced some Nigerian food.
“The airlines have a requirement lists and specifications caterers have to meet before signing a contract with them. He said among the requirements are high standard facilities and equipment, clean environment, quality food, amongst others.
Sam Adurogboye, general manager Public Affairs NCAA, told BusinessDay that the number of inflight catering services certified by the authority is just seven.
These include Airline Services & Logistics Plc, Masanawa travels and tours ltd, TAHIR guest palace, Skycare catering services ltd, Things Remembered Nigeria ltd, Equity bakery & Catering services LTD and Angelos Interbiz Ltd.
BusinessDay’s checks show that the Airline Services & Logistics PLC (ASL) and Skycare catering services Ltd which are global organisations control majority of this market, while the rest five catering services, some of which are indigenous scramble to service few airlines.
According to information obtained from the Sky Care website, the catering service “offers services to 85 percent of the Domestic Flights, 15 percent Charter and International Flights. At present, we supply over 1.3 million meals annually. Sky Care offers catering services to Aero Contractors, Arik Air, Turkish Airline, Dana Air, Ethiopian airline, Saudi Arabian airline, amongst others.
Airline Services & Logistics offer services to Iberia, Qatar Airways, British Airways, RwandAir, EgyptAir, Emirates, Air France, Lufthansa, Kenya Airways, Delta Airlines and Continental Airlines.
Things Remembered, an indigenous player in the market offers services to Medview, Overland and few other charter services. Angelos Interbiz Ltd offers services to only domestic airline, while the other three catering services service the few other foreign and domestic airlines.
On the requirements to obtain an inflight catering certification, Sam Adurogboye said “NCAA have a well laid out requirements that must be met if an organization is to operate an in – flight – catering in Nigeria aviation. At first, there has to be an application to the director general to that effect, six months before commencement of operations.”
He said domestic airlines attracts a fee of N250,000, while international airlines attracts N500,000 after they have met NCAA certification to supply food to the airlines, adding that approval is given after fulfilment of the laid out requirements.