Food catering services in the aviation industry
Since the early days of passenger aviation, food and basic nourishment were crucial services air carriers provided as an inclusive service. As the aviation industry evolved with regards to the recent structural market changes, such as the entry of low-cost carriers (LCCs), some airline groups offer various in-flight services to improve passengers’ flying experience and retain customers for a competitive market position. After the deregulation of the aviation industry in the U.S. and Europe around the end of the 20th century, air catering services got disrupted by the shift of in-flight food service offered as an additional service by LCCs. Nonetheless, people need basic food during a flight, and the airline catering market remains dominant within the in-flight services sector. In 2020, the global airline catering market was worth almost 8.9 billion U.S. dollars, a figure expected to grow to 21.8 billion U.S. dollars by 2027.Rapid growth of the in-flight entertainment and connectivity (IFEC) market
In addition to food during a flight, entertainment and connectivity become more and more important for air passengers. People wish to spend their time as they desire while they are on the way for a leisure, business or family trip. Following new trends, the aviation market responded to the changing preferences of air travelers. Although entertainment activities, such as playing a game, streaming a movie or reading some journals, were available to air passengers long ago, there are huge potential improvements that the firms in the aviation industry could achieve. For instance, in-flight internet connectivity was a mere dream prior to 2010s. Yet a visionary idea could lead to a profitable business opportunity, and this attracts new firms or investors. Large capital investments into research and development made in-flight WiFi came true. Since 2012, enterprises working in the field of in-flight services paved the way to keep air passengers connected regardless of where they are. In less than five years, the market for passenger connectivity services increased ten times, generating 1.7 billion U.S. dollars globally in 2019. By the end of 2020s, the IFEC market is expected to reach over six billion U.S. dollars in size. This growth potential attracts more and more companies to explore the market.Firms offering in-flight services: catering
The air catering market is populated with numerous firms that have strong corporate experience and strategy, such as Swiss company Gategroup or LSG Group of Lufthansa. In 2020, Gategroup announced the completion of LSG Group's acquisition. As two market leaders, these corporations estimate how to approach prevailing market problems to remain dominant in the in-flight catering sector. Taken together, these two air caterers hold over 40 percent in the global air catering industry.Firms offering in-flight services: entertainment and connectivity
On the other hand, the firm dynamics in the IFEC market appears to be more vibrant. One could associate these firms as a new market-maker with a vision and a lot to achieve ahead in terms of in-flight connectivity and entertainment. Gogo, Global Eagle, and Viasat are some of the most specialized companies advancing the frontiers of IFEC services. Since most of the aircraft is not equipped with IFEC technologies yet, there are a lot of market opportunities for existing and new-entrant firms.
