Friday 12 December, 2003

Good morning.  After 38 hours without power, normal service was restored late last Friday night, and the flickering unstable power from my generator was replaced by wonderful pure current from the utility company.  It is amazing how we take such things - truly marvels of modern civilization - for granted until we lose them, isn't it.  It is also a bit sobering to realize how fragile and vulnerable our electricity distribution network is, not only to wind, but also - dare I say this - to terrorist attack.

Taking things for granted is a sub-theme of this week's feature article as well.  As long time readers know, I'm often critical of Boeing, and I've felt a growing need to shift from my occasional and disconnected comments to a total review of Boeing, where it has been, and where it is going.  Perhaps it is because I live in Boeing's former home town of Seattle, but I feel almost a sense of national betrayal at Boeing's loss of market share, compounded by its recent indecision about future airplane development and shifting most of its future aircraft building off-shore.  A new Boeing 7E7 with Rolls-Royce engines will have less US content than any new Airbus with GE engines.

This Week's Column :  Where Is Boeing Going (parts 1 & 2) :  In the first two parts of what will be a five part series,  I look at Boeing's history and hint at how its very success also laid the groundwork for its subsequent fall (to be reported next week).  In only a decade, during the 1950s-60s, Boeing won itself unquestioned dominance as the world's best passenger aircraft manufacturer. But after two decades of resting on its laurels, Boeing is now losing the right to that title, while Airbus is winning on every front, with every airplane type.

Thanks to everyone that wrote in about the new logo.  With opinion being overwhelmingly in favor of this design, it is now 'official'.  I will have a new home page for you to preview next week, and will probably spend most of the Christmas/New Year break converting over the several hundred pages of content to the new format.

You know Christmas is getting close when you can no longer order gifts through websites and select standard delivery (this happened to me today).  If you're still hunting for gifts for friends and family, don't forget my gift giving guide from last week.

It appears that I'm not the only person having difficulty getting AT&T to allow their cell phone number to be transferred to another carrier.  Earlier this week the FCC stepped in - more than half the complaints it has received about slow number transfers relate to AT&T.

Although AT&T says that all problems have now been solved, my number has still not been transferred to T-Mobile, two and a half weeks after the request was made.  Amazingly, I had a call from T-Mobile last week advising me that, due to the delays, they were giving me a $35 account credit - this being amazing not only because I hadn't asked for it, but also because it is most definitely not their fault!

Death Watch :  It is several months since I've placed an airline on Death Watch, but this week US Airways finds itself in this unfortunate spot.  Although they're only recently out of their Chapter 11 bankruptcy, they're admitting they've misjudged the marketplace and need to lower their operating costs still further.

Most serious is the move by Southwest into one of the hubs that US formerly dominated - Philadelphia.  Southwest has announced it will start service from PHL on 9 May, initially with daily nonstops to Chicago (MDW), Las Vegas, Orlando, Phoenix, Providence and Tampa Bay.  US can't bludgeon Southwest out of these markets, and agrees it will have no choice but to drop its fares to Southwest's very much lower pricing structure, eroding the profitability that US Airways needs to achieve on these routes.

On Wednesday Standard & Poor's put US Airways' debt on CreditWatch negative.  Earlier in the week, analyst Ray Neidl of Blaylock & Partners wrote in a report 'We do not believe that US Airways can survive in its present form' and rated the stock as 'sell', saying that the airline could be forced to re-enter Chapter 11 as early as next year if it can't restructure itself.

US Airways shares have dropped by almost one third since their Oct 21 relisting on the Nasdaq.

In unrelated US Airways news, last week I reported that Expedia had increased its booking fee from $5 to $8.99 without telling anyone.  It turns out that this increase only applies to bookings on US Airways.  Expedia and US Airways are arguing the details over a new contract, and Expedia decided to do this to place some public pressure on US.

And so, in a 'tit for tat' move, US revoked Expedia's ability to sell its tickets completely.  Expedia sales represent 2%-3% of US's total sales.  Commenting on the situation, Expedia spokeswoman Andrea Riggs says the company considers US Airways 'a valued partner as we are striving to work this situation out.'  Both companies have a strange way of showing how they value each other.  Negotiations are 'continuing'.

Dinosaur WatchAir Canada reported that it flew 2.4% fewer revenue passenger miles (RPMs) in November, compared to November 2002.  In comparison, Canada's two largest discount airlines both reported massive increases.  WestJet had a 47.4% increase in RPMs and Jetsgo had a staggering 309% increase.

The IATA association of international airlines said that overall international passenger RPMs increased by 2.5% in October compared to same month last year.  September traffic was also up.  It is getting harder and harder for Air Canada to find excuses for its poor performance.

United Airlines VP-Ted Sean Donohue said bookings for Ted have been "solid" and "very positive" since sales began two weeks ago, although he noted that the new service is being launched during the peak air travel season.  Donohue also said there has been some confusion over Ted's pricing as some customers have found Ted's fares to be not only higher than other low cost carriers but higher even that full fare charging United.  In a message to staff he said 'We [United] have always been competitive on leisure pricing and we will continue to be competitive. With Ted, we've just simplified [the pricing structure].'

Reader Foy was flying first-class on Delta between Atlanta and St Thomas.  He called DL to ask what sort of meal service would be provided, and was told it would be a 'full' lunch - this seemed to be appropriate - it was a more than three hour flight during the lunchtime part of the day.  Guess what sort of 'full' lunch DL treats its first class passengers to these days?  A 6" pizza.  Nothing else.  Looks like DL sure has its cost controls in place - but perhaps a bit more attention to customer service is called for!

Last week Qantas announced its new low cost airline, to be called JetStar.  Curiously, unlike its parent airline Qantas and its major competitor, Virgin Blue, JetStar will have a tight 30" seat pitch, two inches less than the other two airlines.  This prompted Sir Richard Branson of Virgin to comment 'they do seem to be more like a one-star airline than a JetStar airline'.  Ouch - which is probably what you'd also say after a long flight in such a tightly packed plane.

This week's low cost airline announcement is from Singapore Airlines, who will launch a subsidiary to be called Tiger Airways.  It will fly a single type of aircraft to destinations within four hours flying time of Singapore's Changi Airport, and will start operations in the second half of next year.

Singapore Airlines (SQ) is also at odds with Sir Richard Branson's main airline, Virgin Atlantic Airways (VS).  VS recently won fifth-freedom rights to fly London-Hong Kong-Sydney, in exchange for Cathay Pacific getting rights for Hong Kong-London-New York.

SQ isn't letting the fact it owns 49% of VS prevent it from now protesting against VS's new rights, and is apparently seeking extra Heathrow slots itself as part of the deal.  And, of course, if SQ gets its way, that will strengthen the hand of bmi British Midland, also protesting the deal and wanting some more LHR slots, and if both of those carriers get more LHR slots, then other carriers, elsewhere, will want all sorts of other things too, and we'll end up in a stalemate with no-one getting nothing.  But that negative outcome would probably suit SQ just as well, although it would be a massive disappointment for VS.

'I'm sorry, I don't understand; I don't speak English very well.  Please repeat to me in my native tongue, or else I'm not obligated to do what this agreement requires me to do.'  You could be hearing these words a lot more in the travel industry after a travel agency appealed against the Airline Reporting Corporation (ARC) terminating its ability to issue airline tickets.  ARC terminated its ticketing rights after the agency made repeated errors in reporting its weekly ticket sales.

The agency argued in arbitration that the reporting procedures were complex, and that ARC should have better allowed for the fact that some agencies in the USA are staffed by people that can't speak English sufficiently well to follow their procedures.  The arbiter agreed and reversed the agency's termination, and directed ARC to immediately arrange for Spanish language training.

As an immigrant myself, who also doesn't speak American, I of course completely sympathize with this very sensible decision.  Should I again own an agency, I'd expect ARC to immediately arrange for New Zealand language training, and until such time as it does, expect to be allowed to make any number of errors with impunity.

Computer error in your favor!  Boeing's computer modeling of its new 777-300ER plane proved to be inaccurate, with real world performance enabling a 2.4% increase in range and a 2% increase in maximum take-off weight.  This is good news, of course, but it is also surprising that the multi-million dollar computer design systems were that far off in their projections.  And it is also about all the good news that Boeing had this week.  The government is now widening its probe into potentially unethical business practices, investigating deals reaching back two years.  And the UK Ministry of Defense, which also is about to sign a massive tanker contract ($18 billion) is now thought to be looking more closely at an Airbus alternative to the joint Boeing/BAE proposal.

In continuing bad news for Boeing, the Airbus super-jumbo A380 has landed more sales.  Qatar Airways signed up for two A380s, and interestingly said that it would be placing only 460 seats in each of the A380s.  Last week I'd observed how the plane, with notional seating for 555, may be configured for as many as 800 or even 900 seats if some airlines choose to sacrifice the concept of a spacious cabin layout and instead simply squeeze as many seats in as possible.  Qatar Airways also ordered two A340-600s, and will be putting 325 (instead of 380) seats in these planes.  The airline also took options on two more A380s and eight more A340s, in a total deal valued at $3 billion.

And Malaysian Airline System said it had signed up for six A380s, bringing the total orders for the new plane up to 137.  Although Boeing said that there would be no market for such a huge plane, it is interesting to note that the orders for the A380 are following fairly closely in line with the pattern of early orders for the 747.

I received an email from a reader thanking me for including a link to the site last week.  Well, in fact, I didn't link to that site, but after visiting it, I wished I had, and so I'm mentioning it now as a very worthy cause at this gift giving time of year.

You've probably noticed the horrible way the dollar has plunged 45% in value compared to the Euro over the last 12-24 months.  Currently one Euro costs about $1.22 - an all time high.  But wait and while - relief might be at hand.  This article suggests that by the end of 2004, the dollar will be worth more than the Euro again.  Here's hoping!

If you are traveling to Europe, or anywhere else abroad, are you among the 51% who have some type of travel insurance?  A Travel + Leisure survey found that 3% of respondents had to be hospitalized at some point while traveling outside the US, a potentially very expensive and often very frightening experience.  If you're a JoeSentMe . com supporter, you can buy Medjet Assistance at a special discounted rate.  This might be the best present of all to give to yourself or a loved one this Christmas.  And I'm sure Joe Brancatelli would love your support, too!

Good news if Newark is your airport of choice.  It is no longer the worst airport in the country for late flight arrivals.  It's now the second worst, with Seattle's Seatac Airport suffering the most delays.  Seatac had 20.5% of all flights arrive more than 15 minutes late in October, Newark had 'only' 19.3% late.

This Week's Security Horror Story :  If you read anything at all about terrorist attacks around the world, you'll know that suicide bombing is increasingly the terrorist's weapon of choice.  A suicide bomber in a cafe can kill as many as 20 people.  A suicide bomber on a plane can kill ten or twenty times that number - even more if the plane crashes in a populated area.

So what protection do we have against suicide bombers boarding our planes?  Nothing.  Metal detectors don't detect plastic explosives.  Checked baggage X-ray machines are also close to useless.  Although several security alerts have been posted this year warning that terrorists might try and sneak explosives onto planes disguised inside cameras, cell phones, or even stuffed animals (most recently on 5 December), there is no technology being deployed to detect these things.  Checked luggage is now tested for such things, but not carry on luggage, and definitely not people themselves.  Taking off your shoes and putting them through the X-ray machine will not accurately tell the screener if there is explosive in them.

Companies that have developed detection systems say attracting the TSA's attention has been frustrating.  Executives complain that while new technologies must meet certain TSA detection standards to win certification, the TSA has yet to tell them what the standards are.

"It's an endless development cycle," said a security technology executive, who requested anonymity because his company's products are being reviewed by the TSA.  The executive said it often seems as though the TSA's technology lab doesn't intend to move technology outside the lab. "Someone has to make a decision that this technology has reached a point that it can significantly improve security, and then you need to put the equipment out there and determine how it operates in the real world," the executive said.

Last year, three technology companies took matters into their own hands. They invested $1 million to showcase their equipment at Orlando International Airport and have it tested by two independent research organizations.

The results, which were not made public but were submitted to the TSA this summer, showed the technologies could detect explosives and other weapons at more than twice the rate of today's security checkpoints, according to SRI International and the National Safe Skies Alliance, a nonprofit aviation testing group partially funded by the TSA. The companies are still waiting for the TSA to respond.

I'd mentioned, last week, about the enormous cost of the Federal Air Marshal program, and contrasted it with the almost complete lack of any tangible results.  Here's an interesting story about how three FAMs were specially requested to be on board a recent flight between Seattle and Honolulu, due to concerns about the presence of an potentially violent and deranged ex-criminal on the flight.  He did indeed turn nasty, and it required all three FAMs to subdue him.

Some people might think this justification of the FAM program, but this is not what the program is designed for.  The FAM program is to protect us against unexpected terrorist attack, not to escort violent (ex)criminals when they choose to take a flight somewhere.

In other news about the FAM program, the FAA has decided that FAMs can now be trusted to be alone on board a plane and no longer need to be escorted by flight attendants.  At this rate, soon the FAMs will be trusted as much as the cleaners and caterers.

Lastly this week, the headline proudly boasts 'Innovative New Advertising Medium Takes to the Skies!'.  What is this wonderful development?  Advertising on tray tables.  The press release goes on to say

Through high quality, aesthetically pleasing prints located on the top surface of the airline's tray tables, advertisers will have a one-of-a-kind opportunity to reach a very desirable demographic for an extended period of time.

America West has developed this program, and their passengers will doubtless be delighted to learn that they now have, as their VP of Marketing, Ken Feldman describes it, 'a novel opportunity to learn about the products and services offered by quality, forward-thinking advertisers'.

I guess it seemed like a good way to try and hide the fact that your tray table is no longer being covered by a tray holding a meal.

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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