Friday 25 July, 2003

Good morning.  Summer continues its hot progress, marked primarily - for me - by the failure of my a/c unit earlier this week.  A 5 piece of plastic, but three days of hot sweaty uncomfort and a $200 repair bill.

It had been my plan to feature the third part of the personal radio services series this week, but a wonderful new product was released this week which I wanted to pass on as quickly as possible.

This Week's Column :  Global Cell Phone Service  :  A new product, developed in Monaco of all unlikely places (but for sale here in the US), makes it easier and more affordable than ever before to use a cell phone in 70+ different countries.  Although you might be changing countries, your phone number doesn't, making it easy for friends and family - or business colleagues - to keep in contact.

Long time readers may recognize this as a rewrite of a column I did in November last year.  Back then, the best global roaming product cost $2/minute to make calls and $1/minute to receive calls, with whole minute billing.  This new product costs 95 a minute to make calls and 35 a minute to receive calls (little more than the domestic roaming and long distance costs on some cell phone plans in the US!) and with per second billing.  Isn't progress a marvellous thing!

Dinosaur Watching :  In this newsletter, I try and summarize sometimes lengthy and convoluted situations into short paragraphs.  But I don't think I've seen, ever before, such an ongoing drama as that which is unfolding at British Airways at present.  Things started off predictably, but then veered off course in the worst possible way.

At the seeming heart of matters is a desire by BA to have their Heathrow airport staff use electronic ID cards and swipe them through a time clock as they go on and off duty.  A simple, commonplace and reasonable requirement, surely - particularly with the heightened need for security and access controls?  BA are also offering a 3% pay rise in return for the 'concession' of their staff agreeing to clock in and out.

Alas, 250 ticket and baggage handling BA staff do not consider this acceptable, and they started a wildcat and apparently illegal strike in protest against this measure on Friday afternoon (total strikers growing in number to between 500 and 900).  Cynics might speculate that the staff don't want a method of clocking in and out that is relatively cheat-proof, but the unions hasten to tell us otherwise.  Their stated concern is that BA might use this new technology to subsequently require them to work split-shifts.  Although BA has said this is not the case, that didn't stop a strike.

Whether or not BA management can be considered partly culpable for allowing their industrial relations to degenerate to a wildcat strike is a debatable point.  However, what is regrettably beyond dispute is that BA's actions to try and 'work-around' this stoppage were appallingly ineffective and have resulted in a tidal wave of discontent sweeping across Britain.

Strike action was concluded on Saturday, but in the little more than 24 hours, over 80,000 passengers had to face cancelled flights.  And then, on Sunday, and Monday, and Tuesday too, these affected passengers were then facing new problems and delays in getting onto alternate flights, and some passengers today - Thursday!!! - are still suffering from cancelled flights.  A lack of clear guidance from BA, and a lack of any sort of management staff at the airport, meant many passengers were helpless and had no idea of how or when they might get home.

BA issued a series of brave press releases.  Unfortunately, each one's positive prognostication for a future fast solution has been, alas, rebutted by each subsequent release!  But let's not forget the precious dears that illegally went on strike, precipitating this chaos, and so here's an award for 'Hypocritical Sentiment of the Week', offered to the union leaders who said staff were returning to work as 'a gesture of goodwill to passengers'.  80,00 + passengers 'thank' you.  Union talks continue, and one of the unions is now threatening more strikes (but legal ones this time with due notice) over Britain's Bank Holiday weekend in August.

The biggest winner out of all of this - Virgin Atlantic Airways (VS).  They said bookings for travel doubled over the weekend as a result of the walkout at British Airways and are continuing at record levels. The airline said it increased the number of call centre staff to cope with the extra demand and staff volunteered to work overtime (BA's staff are striking, VS's staff are volunteering for extra duty....). The airline helped out by rebooking many BA passengers on VS flights.

But the smiles on the friendly people at VS aren't only because of BA's problems.  Perhaps they got to see a copy of the open letter - and picture!!! - that Sir Richard Branson sent to Qantas CEO Geoff Dixon.  I put both the letter and the picture on a webpage so that you too can enjoy  the funniest thing I've seen come from an airline in a very long time.

VS also enjoy having provocative slogans on the side of their planes.  Not long ago, they had the slogan 'Ours is Longer' painted on their new A340 planes - presumably referring to the fact that the A340-600 is longer than a 747-400.  And now they are painting the slogan "BA Can't Keep It Up" on the side of its aircraft, - presumably referring to BA's refusal to sell the Concordes to Virgin. VS will keep the slogan until the Concorde ceases flying in October.

Last week I gave details of the losses earned in the second quarter by some of the dinosaur airlines.  This week, some good news.  Southwest Airlines made a profit - before its government payoff and other special items - of approximately $103 million, up from $84 million in the second quarter of 2002.  The airline is projecting that its third quarter will also beat the third quarter of 2002, and has accelerated the delivery of new planes from Boeing, and plans to receive 25 new 737s in 2004.  CFO Gary Kelly said that their aircraft delivery plan in the next three years is roughly equal to the rest of the industry's combined!

Profitable Southwest, with a better result than the same period last year, received a $271 million gift from the government.  Does that sound like a sensible or fair use of your money?

I also mentioned last week that AA is substantially downsizing its 'hub' at St Louis.  Southwest is now saying that it may respond with a major increase in service to that city.

But Southwest does have one major balance sheet problem.  It has too much cash!  They are considering issuing higher than normal dividends to as to reduce their current $2.2 billion of cash.

Poor Delta, on the other hand, has announced that it will eliminate its quarterly dividend, while forecasting a loss of $200 - $250 million in the upcoming third quarter.

An airline that is struggling to transform itself is America West.  They ended up one of the winners in the last quarter, making its first quarterly profit since 2000.  Excluding special items, they made a $13 million profit, to which needs to be added a $81.3 million gift from the government.

Not only the better US airlines have been making profits.  Russia's Aeroflot announced a net profit for 2002 of $89.3 million, compared to $20.1 million in 2001.

Has JetBlue pulled back and given in to Delta?  JetBlue announced it was reducing its three daily nonstops between Atlanta and Long Beach down to one.  In possible response to JetBlue (and AirTran) starting service on the Atlanta-Los Angeles route, Delta has been piling on extra flights.  JetBlue says that the two cancelled flights are being replaced by an Atlanta-Oakland flight and another Long Beach-Fort Lauderdale flight.

While it is depressing to think that it may have been crowded out by DL, JetBlue is sensibly choosing to fly its planes where it can make the most money with them.  Whereas DL is losing over $1 million a day and cutting back on services (ie it has spare capacity), JetBlue is profitable and is buying planes to add extra services as quickly as it can.  So, although this may be a temporary battle that JetBlue is conceding to a dinosaur, there can be no doubt that JetBlue is winning the profit war while DL continues to bleed cash and cancel its dividends.

Delta's name appears in another context.  The number of passengers that were 'IDBs' (involuntarily denied boarding - ie bumped off a flight due to overbooking) during the first quarter grew by 16% from last year, and reached the highest percentage of any time in the last three years.  Delta had the most bumped passengers (2,222 of the 10,200 were people who had planned to take a DL flight).  It does seem strange, doesn't it - the airlines complain that passenger traffic has seriously declined, but at the same time, they are increasingly unable to transport the people that have booked!

An IDB situation is usually very rare, due to the willingness of people to 'volunteer' to be bumped in return for compensation.  If 10,200 people ended up still left behind involuntarily, after all volunteers had been accepted, something is seriously wrong.

The myth of the internet as a valuable tool for both airline and traveler continues to be exposed.  Orbitz (a travel site actually owned by the airlines themselves!) has just increased the fee it charges customers from $5 to $6 (for 'leisure' fares).  Let's see - if you go to a travel agent to book a ticket, they're forced to charge you a fee, because the airlines no longer pay commissions to them.  But if you telephone the airline directly, you'll often pay more than if you book on their website, and now, if you go to a website owned by the airlines themselves - you'll still pay an extra fee!

Enough already!  Why can't the airlines stop all this chicanery and simply sell their tickets for a price that includes whatever costs they feel appropriate?  Imagine if you went to the supermarket and bought a loaf of bread for $2.50, only to be told at the checkout that you also had to pay another 20c surcharge to cover the supermarket's stocking charge, plus another 2c to cover local taxes, and a 1% surcharge because their utilities bill has increased, plus another 3.72c to cover the cost of Health Department inspections, and so on and so on.  Why should the dynamics of buying an airline ticket be any different to buying most other things?

Several weeks ago I was expressing my cautious delight at the WHO announcement that SARS had been 'contained'.  Except that, ooops - it isn't.  A day ago Australia announced its first official case of SARS.

This Week's Security Horror Story :  Airport security killed 629 people last year?  It has become conventional wisdom to accept that the hassles associated with airport security are discouraging people from flying, and forcing increased people onto the roads.  With airfares lower than they have been for several years, the inconvenience of air travel has to be one of the factors that has brought about fewer people traveling by air, but more people driving the roads.

This week the National Highway Traffic Safety Administration advised that road fatalities increased by 629 last year.  The number of fatalities per mile driven has remained constant at a historically low level, but the total traffic increased, and so too did the number of road deaths.  Draw your own conclusions.

And here's another reason to risk your life on the roads.  This article tells about Southeast Airlines installing multiple digital video cameras on its planes to record all actions and conversations of its passengers.  It says it will store the tapes for ten years!  Major airlines seem to be avoiding comment on what their plans may also be.

A ComAir flight attendant was arrested on charges of starting an airplane lavatory fire that forced an emergency landing on 8 May.  Intriguingly, the defendant, Turhan Jamar Lamons, has also been charged with making a bomb threat against an AirTran flight one week after 9/11.  Back then he worked for AirTran.

You may have heard the proverb about letting sleeping dogs lie, but what about letting fully fueled and armed World War 2 bombers remain buried beneath the airport runways at Berlin's Schoenefeld airport?  This article tells a fascinating story about this recent 'find'.  The related statistic that there is three times as much building space below ground in old WW2 era bunkers than is - today - above ground in Berlin is a fascinating piece of trivia.

I dislike eating with disposable chopsticks, and I similarly dislike plastic cutlery, which invariably breaks when you most need it.  Some airlines have been cautiously re-introducing metal cutlery, and we sometimes see a ridiculous situation where we are given a plastic knife but metal fork.  Well, as we all realize, a fork can be just as dangerous a stabbing weapon as a knife, and this was, alas, proven on a Thai Airways flight when an altercation between two passengers resulted in one stabbing the other with a metal fork.  What's next - paper knives and forks?

On a lighter note, long time travel agent Peter swears that this story is true.  He writes :

I was reminded of a story from about 1964 when I was in the travel business in Corpus Christi. Back then, there were not these huge reservation centers there are today. Braniff had an operation in Corpus Christi, so when people called Reservations, they usually got one of the counter agents at the airport.  One day, a young Lt. JG from the Naval Air Station called and asked how much it cost to fly to Pensacola.  The Braniff counter agent asked "First class or Coach?"

The naval flier said "Yes."

The agent replied "Yes, what?"

The flier said "Yes SIR!"

Don't you sometimes get the feeling the airlines wish we were still all that obedient these days!

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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