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Friday 27 August, 2004 

Good morning

The internet is a strange and unpredictable thing.  After setting a new daily, weekly, and monthly record for visits on Monday, we then, on Wednesday, saw the quietest day of visitation (for a Wednesday) since 12 May.

Due to the steady increase in daily web traffic (at least until Wednesday, anyway) I have been considering switching to a new higher capacity hosting service, but am worried their speed is actually slower than the present hosting arrangement.  If you have a minute, please click to the new trial service and let me know if you find their speed of displaying pages to be  average/acceptablebetter than average,  or  slower than average.

If you're like me, one of the most depressing things about travel is living in a succession of generic soulless hotel rooms.  Here's an easy and elegant solution :

This Week's ColumnThe Wondervase portable flower holder : This is an ingenious item that weighs next to nothing, folds flat for packing, is inexpensive, and which transforms into an elegant vase to hold flowers in and brighten up your hotel room.

Dinosaur watching :  I wrote two weeks ago about United's curious request for a four month extension of time to complete its reorganization - curious because, while asking for a four month extension, UA said it actually needed six months.  After saying it needed six months, and asking for four, United then reached an agreement with increasingly uncomfortable creditors who were threatening to file for the right to offer their own restructuring, and ended up accepting a mere 30 day extension.

Needless to say, another extension will almost certainly be requested in 30 days time.

And United has also taken back its claim of a month ago that it was forced to stop making payments to its pension plans under the terms of its latest round of financing.  It issued a 'correction' saying their decision to halt payments was based instead on 'prudent business judgment'.

So shafting your employees is now prudent business judgment?

Talking about prudent business judgment, how best to describe Northwest's latest decision?  Following hot on the heels of Delta's thinking out loud about potentially charging people if they wanted to speak to an American rather than Indian reservationist, Northwest will start charging everyone - travelers and travel agents alike - if they book and buy their tickets other than on the NW website.  If you want to book with a NW phone agent, you'll pay $5.  And if you should need to get your ticket at the airport, you'll pay $10 for the privilege.  These fees will also be levied on frequent flier bookings.

In addition, travel agents who book NW flights electronically through their computer reservation system will be charged $7.50.  This represents the illogical extreme conclusion of the process that first started when airlines began cutting back their commission levels to travel agencies - now travel agents not only don't earn a single penny in commission, they actually have to pay NW $7.50 to be able to sell a NW ticket!  NW says travel agents are free to choose if they wish to pass this cost on to their customers or not - a transparent attempt to try and avoid the responsibility for the inevitable and essential pass through of this fee.

An even more puzzling comment from Northwest came from their Executive VP of Marketing and Distribution, Tim Griffin, who said 'The profitable, sustainable carriers today are low-cost carriers.  Since we compete with low-cost carriers on price, it is essential that we compete with them on distribution costs'.  Ignoring the accuracy of his claim that NW competes on price, I wonder exactly why he thinks adding a $5 - $10 fee on top of their fares helps them to compete with low cost carriers?

Some other airlines have adopted a reverse approach - they quote a fare and then offer an internet discount.  NW's approach is an attempt to trick people by showing a lower starting price for their fare, competitive with other airlines, and then having their ticket issuing fee hopefully lost in with all the other taxes and fees, so that no-one will notice the total for taxes and fees is $5-10 higher on NW than on other carriers.

There can be no doubt the other dinosaurs are watching the marketplace reaction to NW's booking fee very closely.  If there is a substantial outcry, no other carrier will match, and NW will probably back down, offering some lame excuse about having listened to what their customers requested.

Most threatened by NW's actions are the computer reservation systems (CRS) used by travel agencies.  About a decade ago, the then American Airlines CEO, Bob Crandall, was reputed to have said that if he had to choose between the airline part of his business or the Sabre CRS side of his business, he'd choose Sabre in a flash.  Sabre was thought to be more profitable for American than their passenger services.

A small group of about four of these CRS companies, primarily owned by airlines, had an absolute lock on how airline tickets were sold.  The only way people could buy tickets was either through the airline's (800) number or ticket office, or through a travel agency, and all airlines and travel agencies used one of these CRS systems to look up flight information and sell tickets.

As a travel agency owner, dealing with the CRS vendors was difficult and unpleasant, and they could dictate the terms and rates charged for their services free of any concern of new competition, while providing rudimentary computer services that were a good ten years obsolete compared to 'state of the art' in normal computer programs.  The CRS vendors would charge huge amounts of money to airlines - adding a fee every time a flight was booked or changed - or even cancelled!  Recognizing that travel agencies were the essential consumer of the services that the airlines actually paid for, the CRS vendors increasingly would offer 'productivity credits' - an agency booking lots of flights would not only get their CRS equipment for free, but could even earn thousands of dollars a month in cash payments - money that often made all the difference between being profitable or not for the agency.

The cash bonuses for booking flights - and the cost penalties if agencies didn't make their quotas each month - even saw some agencies deliberately booking flights for imaginary passengers, just for the money from their CRS vendor.

The advent of the internet provided the airlines with a new way to distribute their fare and schedule information to the public, to travel agencies, to each other and to other booking services.  The airlines wisely sold their interests in their CRS operations at top dollar, and the CRS companies are now looking very much like a vulnerable cost center, as shown by NW's new booking fee of $7.50 imposed on travel agent bookings through a CRS.

One of the CRS's has already started to fight back.  Sabre first said it would show NW's flights at the bottom of their computer displays, potentially hidden away on a second or third page of information that few agents ever look at.  Law suits were threatened by both Sabre and NW, and now Sabre is saying they'll add the fees on to the quoted price of NW's fares, again causing NW to drop lower in the listings of available fares.

There may be another reason for NW's actions as well.  It could be that NW's key motivator is not just to make money from collecting these extra fees, but to force customers and travel agents away from using cost comparison services.  The CRS's provide an unmatched source of convenient competitive information, making it very easy to make a fully informed choice about all flight options and fare prices, on all carriers.

Do you really think, on NW's own website, you'll ever be presented with competitive information on other airline schedules or fares?  Of course not!  This will undoubtedly result in people paying more to travel with NW without realizing their other airline choices open to them, or accepting less convenient flight times with NW when better schedules were available with another carrier.

I've commented before that the real reason airlines are keen to kill off travel agencies is to rob travelers of the convenience of choice.  And I'm sure this time too that at least one of NW's objectives is to make it more difficult for you to comparison shop their fares/schedules against those of competitors.

This is an absolute no-win for NW passengers.  81% of NW's ticket sales are expected to attract one of these fees.  Your best bet is not to reward bad behavior, and not to book NW in the future. 

United is adding a $15 fee if you book frequent flier award travel by phone.  Gary Leff has a complete and searing indictment of why this is unfair and of how inadequate UA's web booking engine for award redemption is.  United also is increasing the change fee on a web award from $75 to $100.

Those 'free' tickets are looking less and less free, aren't they.  Although some people think it fair that frequent flier award tickets should be heavily restricted, I disagree.  These tickets are not free - they have either been earned by you in return for flying many qualifying flights, or the miles used to get free tickets have been purchased - either by you, a credit card company, or some other company.  Airlines generally sell their frequent flier miles for 2c each, sometimes for much more.

Now think, for example, about flying over to Europe during the high summer season.  The cheapest discounted coach fares are probably going to cost you about $400-650, depending on where you're flying to/from.  If you redeem miles for a frequent flier award, you'll spend 50,000 - 65,000 miles.  At a value of 2c a mile, you're paying $1000 - $1300 for a ticket that you could buy for less than half the price.  And if you bought the ticket, you'd earn about 10,000 miles, so the actual total cost and opportunity cost of the 'free' restricted no-frills coach ticket is $1200-$1500 (60,000 - 75,000 miles).

Airlines should offer at least as many 'free' frequent flier tickets as they do their lowest priced discount coach tickets per flight, because they're actually making as much as twice as much money from the free ticket as from the $500 ticket!

Talking about flying to Europe, there's good news and bad news for BA passengers.  The good news - this weekend's threatened strike has been called off.  But the bad news - BA has been cancelling up to 50 flights a day at Heathrow all week, due to 'staff shortages'.  Apparently an unusually high percentage of staff have been calling in sick, and BA lacks sufficient staff reserves to be able to compensate.

BA showed its typical inept approach to customer service when, faced with chaos and impossibly long lines at its customer 'service' desks, and growing numbers of frustrated and angry passengers, they called in the police to control their customers!

It is hard to understand how an organization with tens of thousands of staff ends up unable to reliably man check in counters and to operate scheduled flights.  Maybe a solution to BA's problems and cancelled flights can be found in Australia, with the CityRail services around Sydney.  CityRail is apparently regularly hiring taxis to take passengers distances of up to 80 miles when they cancel train services.

And a newsflash just in from Scott in London - BA is joining forces with arch-rival Virgin Atlantic, but not to offer shared flights.  Instead the partnership is to promote London's candidacy for the 2012 Olympic Games.

BA's problems - too many passengers - would probably be something that Alitalia would dearly love to experience.  Alitalia's problems are more severe, with the company's chairman taking a leaf out of US Airways Chairman's book (see last week) and saying that Alitalia could be faced with collapse within 20 days if its latest restructuring plan is not approved.

Meanwhile, we're a week closer to US Airways' self imposed threat of liquidation, with 21 days to go, and currently a breakdown in the talks between the airline's management and pilot union representatives.  At present, the only sort of ticket I'd feel good about for travel on US beyond mid September would be a free ticket.

If you're not depressed by the terrible state of the airline industry and might be interested in an investment into an airline, here's an opportunity you might find hard to miss :  Iran's parliament has approved a plan to sell off 49% of Iran Air; the government would retain the other 51%.  Don't be dismayed by the airline's aging fleet or poor financial showing (it apparently lost about $125 million last year), and don't worry about your 51% business partner.

Here's an interesting approach :  Alaska Airlines has announced measures to, as it describes it, reduce costs, speed decision making, and allow for better internal communication.  It is cutting about 9% of its management positions.  Hardly a glowing testimony to the value add provided by the people who are to lose their jobs.

Normal is a relative thing :  Orbitz (the airline owned website) saw a 17% drop in bookings for July, but described this as a return to more normal travel buying trends.  However, Cheap Tickets saw an 8% increase, Travelocity reported a 15% increase, and Expedia enjoyed a 20% increase in July.

If you buy a low priced Yugo, you know nothing is included, and everything is optional and extra.  If you buy a high priced Jaguar or Cadillac, you expect that almost everything is included and few things are extra.  This is sensible and easy to understand - if you pay five times as much for a car, you expect much more for your money.  The same holds true with airfares as well - travel first class and you'll get extra amenities, services, and comfort.  But can you immediately name the travel industry sector in which the exact opposite occurs?

I experienced an epiphany of understanding about hotels almost twenty years ago.  I was reluctantly staying at a ridiculously expensive five star hotel in Boston (there was a convention in town and all moderate hotels were booked out).  I wanted some ice, because - disappointingly - there was no in-room fridge.  Neither could I find an ice bucket, nor could I find an ice machine anywhere in the corridor.

I called the front desk and was told that because they were a deluxe hotel, they provided free ice via room service for the added convenience of their guests.  Needless to say, after a tip, the 'free ice' was far from free, and the half hour wait, late in the evening, for a small quantity of ice, when all I wanted to do was quickly cool down a drink then go to bed, wasn't very convenient, either.

Since that time, I've realized the surprising contradiction between expensive and affordable hotels.  The more expensive the hotel, the less that is included (apart from fancy soap in the bathroom), and the more costly the extras are.  For example, expensive hotels are less likely to include a free breakfast; indeed, in Britain you can often work out the relative pricing policy of the hotel by ascertaining its breakfast policy.  Good value hotels include a full cooked breakfast, more pricey hotels offer only a continental breakfast, and the most expensive hotels don't include breakfast at all.  Add to that lower priced hotels quote you a price inclusive of 'service charge' (whatever that might be) and all VAT and other taxes, whereas higher priced hotels quote you a price to which you must then add a 17.5% VAT and sometimes a mandatory service charge as well, and the differences become even more apparent.

A new survey by Smith Travel Research for the American Hotel and Lodging Association reveals another area in which less cost brings more service.  Nearly half of luxury hotels charge their guests for in-room internet access, but only 17% of mid-priced hotels charge.

What should you do if you find a high priced hotel that also has a high price for internet access?  Complain!  Not only might this result in a reduction in your bill for your stay, but it might help the hotel change its ways for the future.  As proof, the report also shows that the number of hotels charging for local calls has dropped, largely as a result of customer complaints.  66% of hotels were charging for local phone calls in 1998; now only 38% charge.

Broadband is appearing not only in hotels, but increasingly in our homes.  July marked the first time that the number of home broadband connections exceeded the number of home dialup connections.  51% of homes in the US now have broadband, a massive increase from 38% a year ago.

Is this good news?  Norwegian Cruise Lines says it will be the first to offer cell phone service on their ships, even when cruising far from land.  The service will be first introduced on Norwegian Sun next month, and will be fleet-wide within a year.  Service will be available only to people with GSM cell phones, and will be on both the 900 (international) and 1900 (US) MHz bands.  You'll get what seems to be normal roaming service from your normal wireless carrier while on their ships, with no extra fee levied by NCL.

Good news for Boeing - sort of.  Singapore Airlines confirmed the order of 18 777s that it has held options on for several years earlier this week.  The announcement was expected, but what was surprising was that SQ chose not to convert any of its 777 options to orders for 7E7s.  More details here.

This Week's Security Horror Story :  At the risk of being politically incorrect, the man who applied for a job as a baggage handler at Birmingham International Airport in Britain does not look like your typical middle class English country gentleman.  Furthermore, he lied on his application about his past employment and banking information; and even though a simple internet search would have revealed his true identity (he used his real name) the 'background checks' failed to determine these discrepancies and allowed him to work in the secure area at the airport.

Anthony France, 31, quickly identified a vulnerability in the employee security screening procedures and used this to smuggle what was apparently a bomb, in his shoe (!), through security and then place the device in a part of a plane where he was not supposed to be unaccompanied, right alongside a fuel tank (which was helpfully labeled as such so he'd know where it was).

Fortunately, Mr France is an investigative reporter, not a terrorist, and his device was a simulated not real bomb.  More details of how dismayingly easy it is for a bad guy to get access to a plane here.

More on Senator Edward M Kennedy's problems ending up on the 'no fly' list.  Apparently the name that was on the list was 'T. Kennedy'.  And so, any and every person who could, in any variant, end up spelling their name as T. Kennedy, wherever in the US they were and wanted to fly to, would be refused permission to fly, and unless they were the senior senator from Mass, they probably wouldn't even be told why they were not allowed to fly.

In my small local phone book (not the main Seattle one) there are eleven listings for 'T. Kennedy', and more for E Kennedy.  How can the government realistically attempt to enforce a 'no fly' list when it has nothing more specific than a command to ban everyone with a name similar to T Kennedy from flying?

Another prominent Democratic member of Congress, Rep. John Lewis of Georgia, said he also has been singled out for extra scrutiny when he flies because someone on a watch list has the same name.  Lewis said he can't get an electronic ticket, must show extra identification and has his luggage checked by hand.

Lewis said one airline representative in Atlanta told him, 'Once you're on the list, there's no way to get off it.'  Lewis said he filed a complaint with the Department of Homeland Security and even considered a lawsuit.

This week, Lewis got a call from another John Lewis - a faculty member at the University of Houston - who told him he also had encountered problems at airports because of his name.

Let's just hope we don't have suspected terrorists with the name J Smith (or, even worse, D Rowell!).

Two pilots for All Nippon Airways were suspended for 60 days after they opened up the cockpit during a flight from Kansai to Dublin in July for passenger tours.  A relief pilot on the flight was also suspended for 20 days for failing to stop the tours.

See if you can guess what happens next....

You're going through security screening, and the TSA officer finds a pocketknife in your carryon.  You start yelling 'this isn't mine, the terrorists put it there'.  What happens next?

And then, after the knife has been confiscated, you pull a key ring out of your handbag and tell the TSA agent that it also belongs to the terrorists, and throw the key ring at TSA agents standing round watching you.  What happens next?

And then, as you board the plane, you say in a loud voice 'we're all doomed'.  What happens next?

Well, if this happens at Boston's Logan Airport, and you are 81 year old actress Bea Arthur, star of the Golden Girls tv show, nothing is what happens next.  A spokesman for the airline who flew her on to her destination said 'Miss Arthur was cracking jokes and was a real character'.

Remind me to tell you my joke about a bomb next time we're going through security together....

Talking about jokes, reader Al responded to my lack of interest in spending a night in a former East German women's prison by suggesting I stay here instead.

And finally this week, thanks to Terri for this travel story.

One blonde asks the other 'Which is further, London or the Moon?'.

The other replies 'Well HELLOOOOO....., can you see London?!'

 Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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