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Friday 18 February, 2005 

Good morning

AOL rejected the newsletter last week on behalf of all 1000+ AOL readers, due to what it considered to be 'objectionable content' (I challenge any reader to find anything objectionable in last week's newsletter).  Not only did it reject the newsletter, but it sent each one of the 1000+ newsletters back to me, meaning my email on Friday morning had almost 100MB of returned newsletters, courtesy of AOL.

So, if you use an AOL email address (and please consider changing!), you can find last week's newsletter here.  Even if you don't want to read the entire thing, please do visit this part - after introducing the feature column (reviewing the latest greatest thing in noise reducing headphones) I pass on an incredible 25% discount offer from Travel Essentials, which applies not only to the noise reducing headphones, but to everything else in their store as well (except for items already on sale).  To qualify, simply use the discount code 'Solitude' (without the quotes) when checking out.  This is a stunningly wonderful deal, but only lasts for one more week.  This time next week, it will have gone.

Travel Essentials usually has very competitive pricing on everything they stock, sometimes even the lowest on the internet.  Take 25% off that, and figure in free shipping too (on orders over $100) and allow for the fact that the company is a reputable established company - operated by Bob Bestor's (of Gemutlichkeit fame) son - and there's no reason to stop you from getting headphones, luggage, travel clothing, or whatever else catches your eye, all at rock bottom prices.

Thanks go also to the people who responded to my suggestion that, if you save a bunch of money at Travel Essentials, you might like to share a little of your savings with us by clicking on this link.

More thanks - this time to everyone who responded to the instant survey on how you read the newsletter.  Results might be skewed a bit due to not having any AOL users in the responses, but here's how the answers went :

A very high percentage (82%) of people read the newsletter online - another confirmation that Travel Insider readers tend to be in the upper quartile of technology adopters.

I have a different sort of question to ask you this week.  A reader told me that he recently - for the first time ever - signed up for a Paypal account, and almost immediately thereafter, noticed a strong increase in spam, particularly from people trying to trick him out of his Paypal account details.

This could be simply a coincidence, but as a retired Judge, he feels it better not to trust to coincidences, and so he asked if anyone else has recently signed up for a Paypal account and similarly experienced a noticeable increase in spam.  Please let me know and I'll pass your responses along.

Yesterday was a moderately good day for people flying into, out of, or within Europe.  New EU passenger rights legislation require airlines to give passengers financial compensation when their flights are cancelled or delayed, or when various other unfortunate things go wrong.  This is good, and further highlights the lack of passenger rights in this country.  As readers know, this is a subject I'm developing, and so for this week, part one of a two part series :

This Week's Feature ColumnWe Need an Airline Passenger Bill of Rights :  The EU have just introduced new measures requiring the airlines to fairly compensate passengers for delays, cancellations, and other problems.  It is time for the US to catch up and to give us at least as many consumer rights when flying as we have when buying a loaf of bread.

Dinosaur watching :  Happy birthday, Ted?  Saturday saw the first anniversary of United's strangely named low fare subsidiary, Ted.  During the year, the subsidiary has definitely grown - it started with 20 flights a day to four cities, and now operates 208 flights to 15 cities, carrying more than 27,000 passengers a day.

But is it a success?  No-one really knows.  Although a public listed company, United doesn't need to disclose this level of detail in its annual accounts, and indeed, even if it was to show such things, it is possible to make the subsidiary look either very profitable or massively unprofitable, depending on how UA allocates its fixed costs of operation.

Happy birthday also to JetBlue, celebrating now five years of operation.  Is JetBlue a success?  Now there's an easier question to answer!  Perhaps surprisingly, JetBlue isn't all that much larger than Ted.  They operate 276 flights a day, to 30 cities, and while they don't say, I'll guess they carry about 35,000 passengers a day.

Interestingly, while JetBlue is still tiny, it has a market capitalization of $1.95 billion.  As for the entire United operation, it is worth fourteen times less - $140 million.

Although United has a market capitalization of only $140 million, it said on Monday it has received four offers of debt financing worth as much as $2.5 billion to help it emerge from bankruptcy.

If you know of a banker who would lend me 18 times as much money as I had equity, please pass his name on to me!  I have this very attractive business plan I need financed that starts off with paying myself a $5 million a year salary...

United declined to say who was offering to be so generous with their money, and pointed out the slight catch associated with the offers - they are contingent on the airline trimming yet another layer of costs - in this case, a massive $2 billion more.  At what point is it going to be truly impossible to cut more costs, and which round of employee wage/benefit take-backs will truly be the last?

But even United's $140 million valuation is good money compared to the offer made on ATA's Chicago Express operation.  NatTel LLC put in a bid of a mere $25,000 for the 17 aircraft commuter line with the stipulation that the deal move forward before the airline stopped flying. Chicago Express is scheduled to shut down March 28 unless more bids are received.

And now for an airline that mightn't make it to its first birthday.  FLYi - Independence Air.  On Wednesday they skipped an interest payment that was due, but say they hope to make the payment within the next 30 days if they can 'successfully and timely' conclude their restructuring efforts.  One of their 73 leased regional jets was repossessed last week.

Isn't that unusual - an airline attempting to restructure itself without going into Chapter 11!

Independence Air seems to be in a race against time; it desperately needs to bring its new Airbus planes on line to replace its present mismatched fleet.  I wish them well.

US Airways deathwatch :  The ailing airline received a double blow this week.  Southwest Airlines will start operating ten daily nonstops from US Airways' semi-abandoned Pittsburgh hub, including service between Pittsburgh and US' Philadelphia hub.  And AirTran will start service out of US' Charlotte hub, initially with six daily flights.  Both airlines start their new flights on 4 May.

But don't count US totally out of the game, just yet.  Intriguing rumors are floating around, suggesting a knight might come riding out of the east on a silver steed and in some way rescue some part of the airline....

Here's some non-news.  The US airline industry is in the worst shape it has ever been, according to America West CEO Doug Parker, speaking earlier this week.  And he had some more non-news to offer - he predicts airline consolidation, with the 'Big Six' possibly reducing to the Big Two or Three.  Full details here.

Although the US airline industry may be in bad shape, the Australian airline, Qantas, is in excellent shape.  They yesterday announced a record first half profit of A$458.4 million (US$360 million), up 28.1% on last year.  What impresses me most about Qantas is that their management hasn't waited until they're at death's doorstep before suddenly discovering the need to cut costs.

Their hard-charging CEO, Geoff Dixon, has been relentlessly driving cost reductions through the company every year, so that Qantas is and remains ahead of the curve rather than slipping behind it.  Qantas expects over an A$1 billion profit for their full year (ending 30 June), making them perhaps the most profitable airline in the world.

The Australian government sold off and privatized Qantas some time in the early 1990s, but Qantas has continued to enjoy a very protected status, and one reason for its marvelous profit may be its lack of open competition.

Although the 'Kangaroo route' between Sydney and London is very competitive, Qantas and BA have been given special dispensation to jointly operate flights on this route, making it the dominant airline pair.  And QF's most profitable route is thought to be across the Pacific to the US, where it has only one competitor - United Airlines, hardly a competitor at all.

Singapore Airlines has been asking the Australian government for rights to fly Sydney to Los Angeles for nine years.  But if you think the US carriers are good lobbyists in the US government, you haven't seen anything compared to Qantas with the Australian government.  Qantas has convinced their government, year after year, that allowing SQ to compete on the Pacific route would spell certain disaster for Qantas, Australia, and perhaps the entire planet.

Thus far, the Australian government has chosen to believe Qantas, but this is becoming increasingly difficult as Qantas keeps announcing bigger and bigger profits, and the local Australian tourist industry not unfairly points out that more flights would mean lower fares, which would mean more tourists and a growth in the tourist industry and Australian economy as a whole.

We are now seeing some extraordinary statements by Australian politicians, who - for reasons we can only guess at - are desperate to protect Qantas.  One, Bruce Baird, said it could be argued both ways whether it was a benefit or not to tourism to open up the route.  Another, Bob Baldwin, said (after claiming that SQ rarely discounts its fares)

I don't subscribe to the theory that by having more planes flying it would be better.  More people may fly, but at what price?

Apparently Mr Baldwin thinks that, unlike everywhere else in the world, for air travel to/from Australia, if you add more competing airlines and more flights, air fares might go up rather than down.  As a New Zealander, I have to struggle not to make an Australian joke when reading such lunacy.

I wrote about disappearing pillows last week.  Reader Candice says it isn't just disappearing pillows, but rationed blankets and food, too :

Two weeks ago I flew from NY to Buenos Aires in Delta's Biz Elite Class (there is no first class) and asked for a second blanket to keep me warm during the 9 hour segment from Atlanta to BA. The TA told me the airline allots only one per person and since the flight was full, there were no extras to go around.

Flew home yesterday and again asked for an extra blanket. Well, since there were a couple of empty seats in Biz Class, they were able to get me an extra one. Gee, I felt like I won the lottery!

Can't believe they're spending so much in new uniforms while the service continues to be terrible. I practically had to beg for a glass of wine with my dinner. Oh and the FA never served us the appetizers. The other side of the plane was on dessert while we still had not gotten the main course yet.....though they got the appetizer and the wine too! Too bad I picked the wrong side to sit on!

Continental's President, Jeff Smisek, came up with a clever one liner, but unfortunately his comment showed that his cleverness stopped with the one liner.

He said that Delta's new Simplifares are 'simply stupid', and added 'Our friends in Atlanta [ie Delta] kind of finished off the domestic system for us.'

It is not clear what he means by 'finishing off the domestic system' - does that mean CO is to give up on domestic services?

The simply stupid part of his comment is the criticism of DL's change in fares.  On the other hand, DL's CFO Michael Palumbo does understand what it is all about - he said that while his own airline may indeed earn lower total revenues from the new fare structure, the new fares will protect DL's routes from low-cost competition.

And that is indeed what it is all about.  Delta understands that the object of the exercise isn't to set sky-high prices, but rather to be competitive with the new price-setting force in the marketplace - the low-cost carriers.  While other airlines are still pretending that low-cost carriers are unimportant and irrelevant, DL understands they need to be able to match their low-cost competitors if they are to survive.

As someone who occasionally dabbles in public relations, I find it easy to recognize and admire people who are immeasurably better at the art of presenting black as white than I will ever be.  Winning an award as PR spokesman of the week is AA's Tim Wagner.  Here's the background, and then his award winning quotes.

The US Postal Service stopped using American Airlines and US Airways to carry their first class and small package mail as of last Saturday, due to both carriers failing to meet performance goals, including on-time delivery.  Other airlines have taken over the profitable mail carrying.

Rather embarrassing, wouldn't you say?  Well, no, you wouldn't say that if you were Tim Wagner.  He said he didn't view the fact that USPS has stopped sending mail via AA as a suspension of its contract, but rather the agency 'exercising its right to control the amount of mail it sends on American's jets'.

He then conceded that the amount of mail that AA is handling 'is down from what has been standard in the past'.

AA is estimated to have formerly carried about 10% of all US mail.  Now that the amount of mail it is handling is 'down from what has been standard in the past' it is carrying 0% of US mail.

With the lovely new A380 super-jumbo becoming more real with every passing day, there is an unusual clamor of anti-A380 stories appearing in the press.  None of them show any degree of underlying sense.

For example, the Chicago Sun-Times (hmmm, isn't that where Boeing is headquartered) ran a story on 16 Feb about how the A380 will have problems getting insured, because it can handle more than 500 passengers at a time.  But let's not forget that some 747s (all coach class) have up to 568 passengers in them at present, and even a regular three class 747 has up to 416 passengers.  Extending insurance coverage from 416 passengers per plane to 500 passengers per plane doesn't seem impossible, and was done before, for example when the first 747s (with 330 passengers) replaced earlier and 707s (with up to 220 passengers).

And a CNN story on 15 Feb, datelined Seattle (hmmm, isn't that where Boeing used to build airplanes?) makes the startling discovery that not many airports will be able to accept A380s when they first start flying.  Here's a newsflash to CNN :  No-one is suggesting the A380 will be used on the east coast shuttle, or for other short haul domestic flights, any more than 747s are currently used on such services.  The A380 will only ever be used for long haul services between a limited number of the world's largest airports.

Meanwhile, Boeing's corporate implosion continues, with its latest reduction in manufacturing capability being the sale of its Wichita manufacturing plant.

How much of the new 787 will actually be built by Boeing itself?  Just the tail fin.

However, Boeing has been all cock-a-hoop this week with the launch of its latest version 777, the 777-200LR.  Although it has only sold five of these (to two airlines) Boeing is crowing about the plane having such a long range that it can fly between any two cities in the world, if fitted with three extra fuel tanks.

But, strangely, the range of the 777-200LR with the three extra fuel tanks is quoted as being 10,900 miles.  It is 11,390 miles between London and Auckland, New Zealand; still further from the north of Scotland to the South Island of New Zealand.

Have you ever noticed how cruise brochures show happy couples relaxing in the sun on the ship's deck, with calm water all around?  In the interests of full disclosure, on our blog we publish a photo of the Grand Voyager at sea on Monday this week.  I can't see any passengers on its decks...

Sea trials will begin on May 19 for the Pride of America.  The ship formerly sunk at its berth in the Lloyd Werft shipyard during construction. The ship will be delivered to NCL on June 6. There will be a series of inaugural festivities and cruises in the UK and the US before it sets sail for Hawaii on July 23.

A rose by any other name department :  The International Council of Cruise Lines, a lobby group for the cruise lines, has asked the Center for Disease Control to eliminate the word "outbreak" from their health reports. Michael Crye, CEO of ICCL said 'If they used the words "increased incidences" it wouldn't be misreported by the media.'

The group also wants the CDC's vessel sanitation program web site to show how many passengers are reported sick during each day of the cruise, to show that many passengers do recover while on the ship.  I'm sure this helpful information will encourage all of us to go take a cruise.

Hertz announced on Monday it would add a $2.50 per rental booking fee onto all new bookings from Wednesday.  Apparently Hertz has been watching the airlines charge its customers for the privilege of buying tickets, and decided it wanted a piece of that action, too.  They justified it by saying it was required

... due to the proliferation of increasingly complex reservation systems and distribution channels over the past decade. Managing stand-alone and integrated systems and distribution channels has resulted in significant increases in staffing and IT-related expenses.

But after howls of protest from everyone, on Tuesday Hertz announced the $2.50 fee has been placed on 'indefinite hold'.  A curious turn of phrase - I guess in English, what they meant to say was 'gosh, we thought we'd be able to slip this extra fee in with all the others and have no-one notice or care, but seeing as how we didn't get away with it, we'll wait until some other distraction gives us a new chance to bring it back.'

Underlying the probability we will see this again, their VP of Corporate Affairs, Richard Broome, said the need to add the fee still exists.  'Those issues are still there and at some point will have to be dealt with' he said, ominously.

Suggestion to Mr Broome :  Use computers to simplify your business, not complicate it.  Use computers to add efficiencies to your booking systems, not take away from them.

This week's security horror story :  I mentioned last week how loopholes in being allowed to print your own boarding passes could allow terrorists to board planes without having their names checked against the no-fly lists.

Reader Jason writes

While I was at my local grocery store last week, I noticed a sign stating 'due to the high amount of forgeries, coupons printed from the internet will no longer be accepted'.

Ironic how we can board planes with home printing, but not save a $1 off our groceries!

And a necessarily anonymous reader wrote in to say that he too has a similar experience to that reported last week - if he flies with ATA, he gets hassled at great length before being allowed to fly, but if he chooses any other airline, he has no problems.

There's obviously something very strange with how the 'no fly' list works.  Or is it so sophisticated, perhaps, that it knows certain terrorists are only likely to be found on, eg, ATA flights?

A common refrain of mine has been that it makes little sense to make it very difficult for lawful visitors to the US to be admitted into the country while leaving our southern border wide open for terrorists to simply stroll across as it suits them, to be greeted by kind hearted well-wishers offering them drinks of water in the desert.  At last, it seems someone in officialdom is starting to realize this might indeed be a vulnerability, and also, it seems, al Qaeda has been considering the Mexican border as an easy means of entry.

Good news?  The TSA this week unveiled its 'Pledge to Travelers'; described as a statement of rights and expectations for all persons who go through the airport screening process. The TSA says, with a perfectly straight face, that this pledge is their latest demonstration of the their ongoing commitment to customer service in the fulfillment of its security mandate.

So what exactly is the pledge?  It has seven points :

  • We pledge to do everything we can to ensure that your flight is secure

  • We pledge to treat you with courtesy, dignity, and respect during the screening process

  • We pledge that if additional screening is required, we will communicate and explain each step of the additional screening process

  • We pledge to honor your request for a private screening at any time during the screening process

  • We pledge that if additional screening of your person is required, it will be provided by a screener of the same gender

  • We pledge to accept all feedback and to consider your input as a vital part of our effort to continually enhance the screening experience

  • We pledge to respond to your comments in a timely manner

And what happens if the TSA fails to honor any of the seven points in its pledge?  Ummm - apparently, nothing.  So, they pledge (does this mean the same as 'promise'?) certain things, but without any compulsion to make good on them?  That's really impressive - not.

Good news for all of us with a warm place in our hearts for Israel.  The Department of State is looking at lifting its warning on travel to Israel, now that the Israeli and Palestinians have declared a de facto cease-fire. The travel warning has been in effect since September of 2000. The West Bank and Gaza would not be included.

And, a reason to travel there - El Al are adding high speed internet to their international flights in and out of Tel Aviv.

Or, for a different type of vacation, maybe you'd enjoy one of the new Globus 'Da Vinci Code' themed vacations, based on the settings in the book by Dan Brown.  Their seven-night Breaking the Code tour begins in Paris and concludes in Edinburgh, Scotland, which house the Tapestry in Stone, said by Freemasons and the Knights Templar to be encoded with the information about the location of the Holy Grail.  The also have a 13 night extended tour.

Lastly, reader Bert offers this urban legend story

I was at the airport, checking in at the gate when an airport employee asked, "Has anyone put anything in your baggage without your knowledge?" To which I replied, "If it was without my knowledge, how would I know?" He smiled knowingly and nodded, "That's why we ask."

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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