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Friday 11 June, 2004 

Good morning

As regular readers know, I'm quick to find fault in our industry and government leaders, and freely criticize politicians from both sides of the political spectrum.  But, in what I hope you'll accept as a non political statement, I sadly record the passing on Saturday of one of the people from the 20th century who I most respected.

President Ronald Wilson Reagan had a simple view of the world, and many people mistakenly thought this straightforward approach implied that he was, himself, simple minded.

Maybe the reason these people failed to appreciate his deeds was explained by a sign on his desk that read  'There is no limit to what you can accomplish if you don't care who gets the credit'.

One of his top advisors said 'he knows so little and accomplishes so much' and if one were to ignore the issue of his intelligence and merely measure the man by his achievements and impact on the world, he deserves highest praise.

This, surely, is the fairest measure of the man.  Most people credit Reagan with accelerating the demise of the Soviet Union, and of vastly improving the economy in the US.  Not all readers will place him on such a pedestal as I do, but hopefully we can all agree that he was, at worst, no worse than many other presidents, and, at best, very much better than most.

Interestingly, a 2001 book, Reagan, In His Own Hand seems to dispel the myth of him being a simple minded person.  It publishes his own drafts of speeches he gave, showing him to be well read with a broad grasp of many complex issues.  These speeches resound as appropriately today as they did when initially given - for example, his 27 October 1964 address, 'A Time for Choosing'.  I wonder if anything has changed between then and now when he observes that total funding for a program to help poor families was $4600 per family, but the actual amount handed out to each family was only $600 - the balance being government overhead and waste.

My life, and that of countless millions elsewhere in the country and world, is the better for his presidency.  Please join with world leaders, ordinary people, and me, in appreciating and respecting his life, and in grieving his loss.

Do you connect to the internet via a dialup or high speed (cable or DSL or dedicated) connection?  High speed internet use grew 42% last year, with a total of 28.2 million high speed internet connections at the end of 2003.  All these connections can provide both internet and VoIP telephone connections.  If you have high speed internet and use the phone a reasonable amount, you should check out the new generation of VoIP phone services.

I reviewed two of these a while back, and here now is a review of a third similar service.  I also added a comparative table detailing the respective features and costs of the three different products.

This Week's Column :  VoicePulse VoIP Phone Service :  A feature laden phone service, giving excellent quality connections, unlimited local calling and 200 minutes of long distance, all for only $14.99/month, and with none of the panoply of surcharges most phone companies add.  Enjoy the technological wonder that is modern VoIP phone service.

Dinosaur Watching :  The airlines are back asking for more money from the government.  In testimony given to the House Transportation and Infrastructure subcommittee, they said that rising fuel costs undermined the beginning of an industrywide recovery and they could not afford to pay an extra $435 million in security-related fees.

Committee members indicated they will continue to subsidize the cost of war-risk insurance premiums (a $600-700 million a year gift to the airlines), and did not seem to close the door on waiving further security fees.  In a statement that is in equal measure both positive and negative, committee head John Mica said 'While Congress may assist the airlines with mandated security costs and war-risk insurance, let me make it clear that Congress is not going to underwrite losing airline operations. The airlines now in trouble must be prepared to fend for themselves.'

At present, security costs are paid for in small amount by the airlines, in a larger amount by passengers (in the form of security fees on tickets) and in largest amount by the government out of general funds.  The airlines are already getting a good deal, even without any further government subsidy.

Not all airlines were asking for a bailout.  Joseph Leonard, CEO of AirTran, urged Congress not to interfere too much with the free markets and said some carriers might need to fail. "Anything the government does to subsidize the inefficiency and discourage competition will fail." He also said the government should not be postponing the day of reckoning for aviation business models that no longer work and should keep the exit doors open and let inefficient carriers, be they low-cost or high-cost, fail.

A GAO report, also submitted to the committee, said the industry's financial problems were concentrated among hub-and-spoke legacy carriers.

On 21 May - only three weeks ago, I was reporting the contradiction between United officially saying that it was still planning to emerge from bankruptcy this summer while also extending their special bankruptcy financing through to the end of the year.

So who is now surprised when UA announced that it won't be ready to emerge from its Chapter 11 this summer due to lingering uncertainties about its financing.  It has targeted fall as being 'more realistic' and requested a three month extension from its bankruptcy judge.

United isn't just dragging its feet for no good reason.  Its future in large part rests on the outcome of its application for a $1.6 billion loan guarantee from the government, with the interesting Catch-22 being that these loan guarantees are intended for airlines that show this is their only and last-ditch chance of raising funds.  So UA can't disclose that it has alternate plans if the loan is turned down, because if it did so, it would be disqualifying itself from the loan.

United's self denial remains firmly in place.  Their future apparently depends on oil prices, according to CEO Glenn Tilton, who says that if oil prices drop down to the levels they'd earlier expected, then they hope to make an operating profit next year (an operating profit is very much less than a net profit).  He didn't dwell on what would happen if oil prices remained at levels above their projection.

And United blames its first quarter loss of $459 million on the conflict in Iraq, the weak economy, restructuring costs and problems with aircraft leases.  United seems to consider itself totally blameless.  Everything is someone else's fault.

United remains the only major carrier in Chapter 11, but might it be joined by Delta?  JP Morgan analyst Jamie Baker suggested, in a report released June 3, that Delta might file Chapter 11 as early as the end of this year, and even if Delta received a 30% wage cut from their pilots, this might not be enough to keep the airline out of a bankruptcy.  He raised his loss projection for Delta's 2004 year from $4.93 a share to $7.78 a share.

Standard & Poors now rates 11 of the 12 major carriers in the US as below investment grade.  Their Managing Director added 'The balance of power between the low-cost and legacy airlines has reached a tipping point, and the advantage now is clearly with the former.'

This is the crux of the matter.  Not fuel prices.  Nor the 'weak economy'.  The dinosaurs' real problem is the competitive pressures that are changing the airline industry, permanently, and for the better.

Former US Airways CEO David Siegel has resurfaced.  He is now Chairman and CEO of the Gate Gourmet Group, an airline catering company.  So - do you think this means airline food is about to get better or worse?

There was a time when airline alliances oneWorld and Star seems evenly balanced, or possibly oneWorld the slightly stronger of the two.  But Star now seems by far the larger alliance, with a 28.8% share of global passenger traffic.  Star grew even more this last weekend when TAP Air Portugal and South African Airways were approved as future members.  At the same time, Swiss announced it would not proceed and join oneWorld.

Further to my discussion about Aeroflot in the last two weeks, they have just announced their 2003 financial results, with a net profit of US$127 million, being an impressive 42% increase on 2002.

An airline that doesn't yet exist, but which enjoys remarkable prominence in the news, is the new Virgin branded US airline.  After a public process of choosing where to base themselves, and encouraging cities to bid for their business, they announced a split - their corporate headquarters will be in New York and their operations base in San Francisco.

This cleverly gets them both $11 million in hard and soft cash grants and incentives from New York and another $15 million from San Francisco.  They say that in total they could create as many as 3000 jobs over the next five years.

Virgin USA's president Fred Reid said the airline will be a totally new operation, rather than created by buying out an existing airline operation, and is currently seeking US investors.

Another new airline, all-business class Primaris, says it has received final authorizations from the DoT and the FAA and plans to commence flights Oct. 15.

The airline will operate five Boeing 757s in a 108 seat layout with two seats either side of the center aisle, offering service from Newark to Chicago Midway three times a day and Los Angeles (LAX) twice a day. The airline also will operate between Chicago Midway and LAX twice a day.  The airline is based in Las Vegas - but nothing is known if they received tens of millions of dollars to choose that city.

I expressed puzzlement last week that Southwest was making an open unlimited early retirement offer to its staff.  The unusual nature of this offer was thrown into further focus with their announcement that in May they had an 11.7% increase in passenger traffic compared to May last year.

For the first five months of the year, Southwest now has an average 11.3% increase in passenger traffic, with a stronger load factor (68.6% compared to 64.8%) as well.  These excellent numbers make their early retirement offer all the more puzzling.

2003 figures have been released and show Atlanta Airport as the world's number one airport in terms of passenger traffic, with 79.1 million passengers.  Chicago O'Hare came second (69.5 million) and London Heathrow was third (63.5 million).

Are we in for a summer of flight delays and disruptions not seen since 2000?  If not this year, then definitely next.

This year promises to be the busiest year for air travel ever, as measured by passenger numbers, but due to most flights having a larger percentage of seats filled, the count of actual flights has not increased proportionately.  FAA Administrator Marion Blakey said this week that 19 of the 35 major airports are running at levels above those experienced before the September 11, 2001, hijack attacks.  'Chicago has greater delays right now than the worst of the summer season of 2000' she said.  And that's without factoring in increased security delays, either!

United and American are due to reduce their peak-hour takeoffs and landings by 2.5 percent on June 10, after a 5 cut cut implemented in March yielded little improvement.  Blakey indicated that more schedule cuts were possible.  'We're really looking at whether we are going to have to take further action. It has not been going as well as we hoped.'

Problems at O'Hare unavoidably ripple through our entire airspace, causing problems at other big airports, especially in the eastern half of the United States.

Congratulations to Midwest Airlines, named best US airline in Travel and Leisure Magazine's annual survey.  Singapore Airlines won the award for best international airline.

JetBlue announced on Wednesday it was adding another 30 A320s to its current order for 123 A320s with Airbus.  JetBlue plans to take up to 17 planes each year between now and 2012, and has 60 A320s already in its fleet.

This will make JetBlue the fourth largest customer in the world for Airbus, in terms of number of planes ordered.

Perhaps in part because of that, Airbus said it plans to increase its production rate of A320 family planes by 20% next year.  Including the JetBlue order, Airbus has taken orders for 91 A320 family planes this year, compared to Boeing's single-aisle plane orders of 35 (a mix of 717, 737 and 757s).  Airbus also said it plans to announce another customer this year for its super-jumbo A380, and said this project remains on track in terms of budget and timing, with a first flight scheduled for early 2005.

CEO Noel Forgeard expects Airbus will beat Boeing in terms of plane deliveries again this year (last year was the first time Airbus had ever delivered more planes than Boeing) and he further expects Airbus to take more orders, making it the third year in a row Airbus has beaten Boeing by that measure.

For its part, Boeing said it could see as many as 200 orders for its new 7E7 this year, and is in discussions with 20 airlines representing a potential order total of 500 7E7s over the next few years.  Currently it has received orders for 52 of the new more fuel efficient plane.

One airline that is apparently not on Boeing's 7E7 prospect list, but which is on Airbus' A380 list, is Cathay Pacific.  Their soon to be COO Tony Tyler said the 7E7 was probably too small for their needs, a comment also made by Emirates, which has said it likes the efficiency improvements built into the 7E7 but that it also wants a bigger airplane.

Interestingly, Tyler referred to being interested in an advanced version of the 747 that apparently Boeing is again (again) (again) considering.  Will this apparent renewed interest by Boeing in enhancing their now almost obsolete 747 come to anything?  Unlikely.

Most airline pilots work about 80 hours a month.  Some work as little as 65 hours, and almost none work over 100.  A proposal in Britain to slightly increase the number of hours a month that pilots work has the British pilots' union, BALPA, up in arms and warning of airport chaos due to cancelled flights by their pilots if they feel overworked.  BALPA said that if airline pilot hours were increased, the likelihood of crashes would increase six-fold.

This is not the most ringing endorsement of the flying skills of its members!  Some might think it provides another reason to accelerate the development of remotely piloted and pilotless planes.

Winning this week's 'I'm from the government and I'm here to help you' award is the Canadian government, acting to protect the privacy of its World War 2 veterans.  Air Canada had offered to give free tickets to 100 veterans so they could fly to France to participate in the D-Day celebrations.

Citing privacy concerns, Canada's Veterans Affairs Minister John McCallum reportedly declined the offer of round trip airfare for World War II veterans to Paris so they could represent Canada in D-Day celebrations in Normandy.  The department refused the offer because privacy concerns prevented it from being able to confirm if an individual was, in fact, a veteran.

The latest capability for the cell phone equipped road warrior has been unveiled in Britain - an ability to book flights on your mobile phone.  But not the old fashioned way, not by simply dialing a travel agent or airline, but instead connecting to a cell phone compatible website.  Details here.

Have you done any SMS text messaging?  The US lags behind the rest of the world in using this brilliant technology, although use is starting to grow here, too.  But, be warned.  That short message you send may not be as temporary or as private as you think.  As this story details, the wireless phone companies may be storing copies of these messages for weeks, months, or even years, and they may be used as evidence in criminal (and, who knows, perhaps civil) proceedings against you.  Big Brother is watching, listening, and remembering.

Perhaps this is part of the reason why the cell phone industry comes second bottom on a consumer satisfaction list of 40 industries, and second from the top in BBB complaints.  More details here.

Would you like Wi-Fi with your Big Mac McDonalds plans to add Wi-Fi to 6000 of its stores.  It will cost you $8 for a day of access, or $20 per month.

I wrote a few months ago about a USB security key to prevent unauthorized people from accessing the data on your laptop - a particular worry if your laptop should be lost/stolen.  Here's a fascinating story that reveals how widespread this problem is, and how useless most normal forms of security are. 

This Week's Security Horror Story :  More than 500 passengers were delayed up to an hour and perhaps more at Long Beach on Tuesday, due to what the TSA described as 'an unknown machine malfunction' with one of their metal detectors.  The passengers had to be rescreened after the 'unknown machine malfunction' was discovered.

So what was this unknown machine malfunction?  The TSA refused to say, doubtless for security reasons, and merely said that the malfunction was being investigated.  But at least two airport and law enforcement sources told the Long Beach Press-Telegram that the problem was simple.  The metal detector had been unplugged for at least 15 minutes.

Why doesn't the TSA have the honesty to admit to a stupid mistake?  Why do they have to try and baffle us with nonsense instead of honestly telling the truth?

And what were the chances that one of the 500 passengers who may have gone through the metal detector while it was unplugged was a terrorist with a bomb under his jacket?  Was it really truly necessary to mess up 500 people's travel plans?

The major problem we have is that TSA is a Soviet-style centralized bureaucracy serving 440 airports.  No, not my words.

These words come from House Aviation Subcommittee Chairman John Mica, who went on to say 'I know TSA intimately. TSA has had problems because it is a centralized system. It will never get it right. Until there is reform, they will not be able to address security needs or schedule the requirements of 440 airports across the country.'

The TSA responded by claiming the fact that air travel numbers are growing once more is proof that 'the flying public has voted their overwhelming confidence in the men and women of TSA'.

Is there a single one of my 10,000 readers who will admit to having overwhelming confidence in the men and women of the TSA?  Let's hope the TSA is better at detecting terrorists than it is at detecting public sentiment.

Reader Jeanne reports on an interesting security problem

I was working in El Salvador recently, attending an airline conference. We were able to check in to our TACA flights and pick up boarding passes at a desk at the Radisson Hotel. Very convenient! On the negative side, almost everyone got sick. Otherwise, a wonderful country and we really enjoyed our time there. The recent killing of the former CEO of TACA was very much on our minds, but did not deter us from attending the conference.

When I went through the metal detector at the airport, they asked to search my bag. They pulled out the two VERY small bottles of locally made hot sauce and said they had to confiscate them.  I was shocked. I always carry on wine, or other glass items to prevent breakage. But the issue was not the glass, it was the hot sauce! Seems I might throw it in the pilot's eyes??!!!

A new approach to 'proving beyond a reasonable shadow of a doubt' has been introduced in my own state of Washington.  Traditionally in a criminal case, there is a presumption of innocence and the prosecution have had to conclusively prove the guilt of the accused.  This has now been swapped around in DUI cases, where a new law (Substitute House Bill 3055) took effect yesterday requiring juries to consider breath-test results 'in a light most favorable to the prosecution'.  Although more than 90% of the 35,000 - 40,000 DUI arrests in WA each year already result in conviction, supporters of the new legislation felt that too many potentially guilty people were exploiting what they considered to be loopholes. More details here.

DUI is a socially unacceptable activity, but surely the more serious the crime (and punishment!) the more strict the standard of prosecution should be.  The continued irony of having our young people fighting and dying to bring 'freedom' elsewhere in the world while we're giving away our freedoms at home puzzles me.

Several weeks ago I wrote that my BA flight from Seattle to London had no British beer on board.  Reader Duncan vicariously passed my complaint on to the BA Executive Club Customer Relations Department, who responded by sending him a pack of British beer.

I suppose it is only fair that if he complains on my behalf, he gets to enjoy the beer on my behalf, too.

With Father's Day pending, travel web sites as well as retail stores are trying to sell various themed gifts.  I think this one would be my favorite.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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