|Friday 2 May, 2003|
Good morning, and greetings from England's ancient city of York, where yesterday I distinguished myself by climbing all 275 steps up to the top of the tower in York's gorgeous Minster. The view was, alas, disappointing - although York is crammed full of interesting looking old buildings when viewed from street level, the view from several hundred feet in the air reveals that while their outsides have been carefully preserved, their roofs have been almost universally replaced with modern red tile roofing!
The last week has seen me struggling with data lines as slow as 21kb, which combined with a busy schedule, has meant that I haven't managed to scavenge much material for you this week. I return home on Tuesday, so hopefully next week will see a return to normal.
This Week's Column : Reference Tools for the Global Road Warrior : I review two books that claim to help business people plan for their international travels. One does help, but the other doesn't, and I also suggest free internet sources that provide the same information.
Talking about books, the internet phenomenon that is Johnny Jet proudly tells me that he now has a book published. It is called You Are Here Traveling with JohnnyJet.com - he is sending me a copy and I'll report to you about it once I've received it.
Deathwatch Part 1 - United : A Chapter 11 bankruptcy seems an extraordinarily one-sided deal - a process that gives a 'heads you win, tails you don't lose' set of options to the company involved. It allows them to arbitrarily cancel any contracts or agreement or obligations that they want, and gives them a huge club to batter their creditors and suppliers with so as to get deals that are better than fair market rates. Surely some degree of reciprocity should be allowed so that a company's trading partners, too, can renegotiate their contracts.
This is particularly the case with United's arrangement with the company that processes its credit card charges. You can imagine how terrified this company is at present - if United actually liquidates, then the exposure for the credit card company could be enormous. They asked the bankruptcy court to be allowed to revise their agreement with UA, and were refused permission to do this. The company is currently paying UA for the value of credit card charges before it gets the money from the actual banks, which means that it is giving UA an unsecured loan of between $320 and $700 million, every day! They are now appealing this ruling.
Deathwatch Part 2 - American : Another roller-coaster ride of a week for AA. Don Carty is out as CEO/Chairman, with insider Gerard Arpey replacing him as CEO. Note the use of the word 'insider'. Arpey has been with AA for his entire career, joining the company in 1982 fresh out of college. Prior to being appointed as CEO, he was President, and has formerly been CFO, and was one of the beneficiaries of the contentious retention bonuses and protected retirement accounts. To date he has been largely a non-entity and has kept out of the public eye, with one curious exception. Media reports talk positively about how he positively responded to the 9/11 events, but a close scrutiny raises troubling questions. According to reports such as this NY Times piece, as soon as Arpey learned of the first hijacking he immediately ordered a 'ground stop' to all planes everywhere in the country.
What a strange thing to do based on a single report of a single hijacking (this was before the single hijacking became two then four, and before the hijackings became suicide crashes). Furthermore, and stranger still, rather than telephoning this order through to operations, he drove from his office to the operations office, thereby delaying this urgent message unnecessarily. Even stranger still is that he apparently didn't check with his boss - Don Carty - before doing this, and left Carty out of the decisionmaking loop.
The bottom line is that Gerard Arpey is hardly 'fresh blood' and as such is unlikely to bring about any substantial changes at AA.
The unions have all now accepted their agreements with AA, subsequent to Carty's departure, with a couple of notable exceptions. The American Eagle pilots claim that they were not consulted on the deal, and the New York mechanics may seek an injunction against their contract because the union leadership did not allow the membership to revote on the contract after the full truth about AA's deals with its executives came out. The NY mechanics have until 12 May to file this injunction.
Meanwhile, the underlying bottom line remains unchanged - $1.8 billion in labor concessions isn't enough for an airline losing $4 billion on an annual basis.
Normally AGMs are boring and unsurprising. This year Delta's AGM saw a mini shareholder revolt, with shareholders passing two motions that the company opposed. The first motion had been submitted unsuccessfully for four years in a row, but now has been passed - it requires the board of directors to seek shareholder approval before offering some senior executive severance packages. 58 million votes were in favor and 49 million opposed. The second measure requires the cost of stock options to be recognized as an expense on Delta's income statement - this passed with 65 million votes for and 41 million against.
Last week saw JetBlue's quarterly profit report, showing a better than expected 34% jump in profit, up to $17.6 million from $13 million the previous year. The company also reported ordering 65 new A320s from Airbus, with an option for 50 more. Still more proof that it is not an industry wide crisis - just as life continued on earth when the dinosaurs disappeared, we are not at risk of seeing all airlines disappear from our skies.
While the US government happily hands over $3 billion to our failing carriers, the more socialist EU is insisting that its member nations do not support their airlines, and is now suing the Greek government to retrieve $213 million in state aid granted to Olympic Airways. With the Summer Olympics in Athens a year away, the Greek government is doing everything it can to keep Olympic going. It has tried to sell a 51 percent stake in the carrier - so far unsuccessfully, and has ordered the airline to overhaul its finances.
The airline steadily loses money and has cost the Greek government some $2.5 billion over the last decade, analysts said, and if the subsidies are repaid, the airline will most likely have to file for bankruptcy protection. Anticipating such a possibility, the Greek government has already transferred some of Olympic's assets to a new company that would take over its operations.
An interesting comparison between US and European airlines - the US has 29 important carriers that between them handle 25% of world passenger traffic, with fleets that average 152 planes. Europe has 78 airlines that handle 10% of world traffic and with an average of 36 planes per airline. Plainly Europe is (over)due for a major shakeup in its airline industry.
The SARS saga continues, and contrary to some reports, the news is not good. Some scientists are now estimating a mortality rate as high as 15%. Worse still, some Hong Kong survivors now appear to be reinfected. And while WHO issued a statement several days ago proudly claiming that SARS was now contained everywhere except in China, that conflicts with the reality of new outbreaks freshly occurring in more countries for the first time (including my home country of New Zealand). Whether for medical or political reasons, Toronto has been removed from WHO's list of places to avoid, and in celebration several Canadian airlines are now either giving away free tickets or 'selling' $1 tickets to people brave enough to visit Toronto.
You're on your way to the airport at the end of a long journey, and your suitcase is very heavy. But do you know exactly how heavy it is? Now that most airlines have reduced their free weight per bag down to only 50lbs, the weight of your bag is more critical than before. A recent review of airport scales in Wisconsin showed that 14 of them were faulty or even illegal. Reader Mike, who passed this on, adds
Last week I commented disparagingly about Swiss International Airlines. Reader Warren confirms my doubts with this story :
As I've said before, I believe that the health dangers of cellphone (and all other high frequency devices) radiation are real and the present situation is very analogous to the tobacco industry back in the 1940s and 50s. Sooner or later sufficient compelling evidence will force a radical change to our increasingly wireless world, but for now an 'addiction' to the 'pleasure' of such devices is causing us all to turn a blind eye to the dangers of filling up our world with growing amounts of high frequency emf radiation. At present the FCC is doing little or nothing, and while individual neighborhoods may sometimes succeed in getting cellphone towers moved away from homes or schools, the most successful reason for protesting a tower is one of aesthetics - 'it looks ugly' rather than one of health!
I was excited to see a headline that the FCC was going to start investigating cellphone transmission towers. But, upon reading the article, it turns out that their concern is not about potential dangers to people, but rather about potential dangers to birds! And other environmental advocates are saying the FCC should also consider the impact of towers on wetlands and fish. But shouldn't the FCC's first priority be to consider the effects on people, and only secondarily to consider the effects on wildlife and inanimate wetlands?
This Week's Security Horror Story : A Mexicana pilot accidentally sent a 'hijack' signal from his flight and so police swarmed the plane when it landed at SFO. Spanish speaking officers climbed up a ladder to the pilot's window and confirmed that the situation was a mistake. Okay, fine - no big deal, right? Mistakes can happen, and as soon as the pilot said 'Look, you can see there is no-one else in the cockpit, it was a mistake, all is fine' and especially after he pointed out that, notwithstanding the hijack alert, the plane actually flew as scheduled to SFO, then everyone would understand and no more fuss would be made. Right?
Wrong. The 168 passengers were then taken away to a special holding area where they were held for two and a half hours while 'authorities investigated' before then being released. Would someone care to explain what took another 2.5 hours to 'investigate' after the pilot said 'ooops, sorry, my mistake'?
You've probably heard about the stupid 20 year old girl who was on a cruise from Mexico to Hawaii with her family. She didn't want to go on the cruise, and instead wished to be back home with her boyfriend, and so wrote three different threatening notes that she hoped would force the ship to turn back and get her home sooner. Instead, 120 policemen boarded the ship at Oahu and arrested her, and she has been charged with two felonies that could bring her up to 10 years in prison.
Now for the truly amazing part of this. The girl, who lives in Laguna Hills, CA, and who was on an expensive cruise with her family, has been declared indigent and a public defender is being paid to defend her. It doesn't seem right that taxpayers end up subsidizing someone that fits the profile of a spoiled middle (upper?) class kid. Chances are she has at least a car back home that she should be forced to sell to help pay for her legal bills.
More problems with both the present and proposed future passenger security screening. I've written before about the problems an innocent person suffers if their name is mistakenly entered onto the government's 'Master Terrorist List', and apparently this is quite a common occurrence. The ACLU says that 339 passengers traveling through SFO last year were found to be incorrectly on this list, and is now suing the FBI and other government agencies in an attempt to find out who is on the list, how one gets on the list, and how one can get off the list.
Their particular case is on behalf of two peace activists who used the Freedom of Information Act to try and find out what happened and why after being detained when trying to fly from SFO. The TSA ignored their request, and the FBI said it had no files on them, referring them instead back to the TSA. TSA spokesman Niko Melendez said those on the no-fly list pose, or are suspected of posing, a threat to civil aviation and national security. 'We do not confirm the presence of a particular name of an individual on a list,' he said. 'It's security information that we just won't do.' While I'm not at all supportive of the peace activists activities, I don't think it fair that people get anonymously placed on this list and hassled just because they have lawful but anti-administration views.
A saddening story about Italy, where an Italian newspaper reports that tourists are being charged way more than locals. One example given was of a souvenir miniature replica of the Colosseum, which sold for 10 euros to local Romans, 45 euros to other Italians, and 105 euros to foreigners! The justification for such overcharging - tourism numbers are down, so the souvenir stall vendors need to charge more to the few tourists that are still traveling. With reasoning like that, you have to wonder if the stall owners aren't former airline executives!
Lastly this week, some 'oldies but goldies' - tales from travel agents. I hope you don't recognize yourself in the stories that follow!
Until next week, please enjoy safe travels.
|David M Rowell aka The Travel Insider|
|ps : Don't forget to visit Joe Brancatelli's site for his weekly updates, too.|
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