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 & bev-
erage menu onboard Thai AirAsia flights called Snack
Attack. The items offered in the menu are all ‘easy-to-
eat’, ‘no-mess’ meals.
“There is a desire to consume. Great importance is placed
on food in the culture here. Even people who aren’t hun-
gry buy, because snacking is part of the culture,” says
Musick.
The menu varies from flight to flight, but there are gen-
erally sandwiches with fillings that pique the local taste-
buds 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 car-
riers would pay extra to consume onboard rather than eat-
ing or drinking only at their destinations, says Musick.

The Moodie Report 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 mer-
chandise 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 Chi-
nese 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. Ciga-
rettes and liquor, not available on
Malaysian flights due to religious sensitivi-
ties, will be an important part of the Chi-
nese 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 propri-
etary merchandising close behind, inflight sales for AirAsia’s
Thai operations have been posting double-digit growth month-
on-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 month-
on-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 oper-
ations 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 explor-
ing 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 dif-
ferences 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 those in downtown Bangkok or Kuala Lumpur it would
bmiBaby, and Ireland’s Ryanair. “But with our customers be hard to push the food and drinks.
there’s still room to find excitement in flying.
But now, Musick notes, “We do not encounter price
“In Thailand, when we first started our proprietary mer- resistance. Nasi lemak (rice in coconut milk, often served
chandise, we found that cus-
tomers 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
down the aisles,” says
“Why were they buying all Musick. The menu
this stuff? Many of our cus- varies from flight to
tomers were new to flying, flight, but there are
not regular flyers. It was sandwiches with
something quite exciting for fillings that pique the
them. They wanted to take local tastebuds and
the flying experience back SnackPacks costing
with them,” he says. THB100 (US$2.50),
with each pack
The novelty of the flying containing a
experience was also a catalyst chocolate, a savoury
for them to consume food and and a beverage
beverages onboard. “People
think it’s exciting, so they are in a condition in which they with egg and fried fish) may be MYR15 (US$0.38) at the
feel happy spending their money,” says Musick. market stall, but you are not in a market. Having a meal
on a plane is an experience.
Musick recalls that when he was first planning the F&B
menu, sceptics told him that with prices higher than “We have to set our prices against our competitor – the
airport. If the cost of our items versus the airports is rea-
Proportion of total sales by category sonable, we have to get that message to our people. It has
across AirAsia’s network to be measured against where else the passenger would
consume during this period.”

A typical flight departs from KLIA at between 7 and

15% 8.30 a.m. That means that customers would be waking up
at between 4 and 5 a.m.

“They would not have breakfast at home, and there would

be no time to stop on the way. Typically they would not
45% 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

40% than that sold at the airport, AirAsia puts up posters at the
check-in counters. But even when the customer is book-
ing his flight over the Internet, an e-mail confirmation
details food and beverages available on the flight.
� F&B
� Proprietary merchandise
“We’re looking at pre-order at the airport, but this is lim-
� Duty free goods
ited by what the airports will allow us to do.”

The Moodie Report 123

INFLIGHT PROFILE • AirAsia May/June 2005

Short of time on our experience of the relationship between crew and

Beyond the excitement of boarding a flight for the first customers. Speed is important for us. My enemies are
time, Musick points out that the curiosity factor plays a time and space. We have limited amounts of both, so I
very important part in the company’s inflight sales. can’t justify 200 items,” he said.

“People are far more curious than in Europe,” says A supermarket, for example, could stock a row of differ-
Musick. “Customers on our flights are interested in the ent detergents. But a 7–11 convenience store would have
trolleys coming down the aisles.” perhaps only one brand on offer, he says.

That works for his team, but the typical duration of the Lean catalogue
short-haul flights doesn’t help sales. “Generally, the To critics who say that there are certain ‘favourites’ which
longer the flight, the more we sell. The more time the have to be in every inflight catalogue, he says: “We have
cabin crew has to sell, the more they are likely to sell. 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
“It’s down to the pace at which they push the trolley absolute must-haves. There’s nothing that would stay on
down the aisle. If it’s moving too fast, it’s almost as if they the trolley unless it’s earned its place. If it doesn’t sell, it
doesn’t move, and it doesn’t stay.”
Team effort: Without
a precedent in the As he cuts back on offers in the duty free catalogue,
region, Musick and his Musick also intends to bring in more ‘novelty things’.
team had to develop
their own inflight “People want products synonymous with the market they
programme. AirAsia came from, so for AirAsia’s Thailand flights we may add
was southeast Asia’s products like Thai spa treatment soaps – more local, gift
first low-cost carrier products. The curiosity factor is important – they stim-
ulate impulse purchasing,” he says.
are bothering the flight, interrupting it. The more time
people have to ponder, the more likelihood there is of And with the carrier set to begin its business in China
them buying,” says Musick. soon, inflight revenues are set to grow sharply. Inflight
sales will be different in China compared to Thailand or
To give individual customers enough time to consider the Malaysia, and more adjustments will have to be made.
items on sale, Musick and his team also decided that the Liquor and cigarettes, which are not offered on the
menu has to be more selective Malaysian menu due to reli-
than it was at first. “One of the
lessons learnt is that the offer- “There are no absolute gious sensitivities, are likely to
be an important part of the
ings have to be streamlined. In Chinese duty free catalogue.
Thailand we started with 25
beverages. This was slowing
must-haves. There’s What is certain, however, is
sales. It was taking too long for
the crew to explain what we
nothing that would stay that the catalogue will be lean.

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.
on the trolley unless it’s “We’ve tried so many things;
we’ve tried a wide range of
merchandising. It’s getting
earned its place. If it rather complex, and it’s set to
get more complex with poten-
doesn’t sell, it doesn’t tially major Chinese con-
sumers, while storage remains
move, and it doesn’t stay” limited on a small 737.

“If you fly Singapore to Lon- “We’ve tried to do every-

don you can have 200 products, but on a two-hour flight thing, maybe too much. We will try to bring it back to
to Bangkok there is no time for that luxury. I know cer- focused products – less diversity, but more focus on
tain people in the industry who disagree, but I have to rely things that sell.” �

124 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