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Friday 4 March, 2005 

Good morning

I try and write new articles based on what has proved popular, although this is a bit like navigating down the freeway by looking in the rear-vision mirror.  This analysis is complicated further because the ongoing popularity of articles is often simply a mirroring of the prominence they are given in Google search results.  For whatever reason, some of the most popular articles on the site have been surprises, and some of the articles I think to be the best have proved to be of little ongoing interest.

The most popular articles, by a large margin, are the several series on cell phones - how to use them internationally, and how to unlock them.  The second most popular series is, rather to my surprise, that on airline luggage issues.  I'll be adding another couple of articles on cell phones in the next few weeks, but here for this week is something more on airline luggage :

This Week's Feature Column :  Swany carry-on luggage :  Here are reviews of two distinctive carry on bags.  One is good, the other not.  Find out which is which and compare them to the other eleven carry-on bags already reviewed.

Dinosaur watching :  Just about all of the major US carriers have discontinued their food service.  Some now offer food for sale, and others just don't provide anything at all.  However, one brave airline continues to provide food in both coach and first class, and says it has no plans to discontinue this service, because it believes providing meals on board will win it customer loyalty and positively distinguish it from its competitors.

Is this plan working?  You decide.  Can you name the airline, and will you chose to take a flight with this airline based on it providing free food?

Please provide your thoughts in the fast two question survey here.  Results will be provided next week.

United filed its latest monthly operating report last Friday, showing a net loss of $326 million for January.  The good news - the actual operating loss was 'only' $151 million, before one time and unusual items, including a massive $138 million in reorganization costs.

Part of the reorganization costs were the $13+ million in fees paid to United's professional advisors.  Beneficiaries of this $13 million included $1.4 million to consulting firm KPMG, $2.4 million to law firm Kirkland & Ellis, and nearly $5.7 million to management consultants McKinsey & Co.

Let's say that these three companies are billing United $250/hr for their time.  This means that between them, they have 225 people working full time on United's bankruptcy.  Two questions :  Why doesn't a firm the size of United have sufficient in-house competency to meet most of these needs; and, after more than two years in bankruptcy, just how much value has United received from these monthly payments of multiple millions of dollars to consultants?

Putting a fine point on these questions is a comparison between United's $326 million loss this January, and its loss in January 2004, which was 'only' $252 million.

That doesn't look like progress to me.  United last made a profit in 2000.

On the other hand, United's fellow Chapter 11 member, US Airways, reported a $720.4 million profit for January.  You read correctly - almost three quarters of a billion in profit.

Too good to be true?  Well, alas, yes.  Included in this net profit was a $881 million gain that the airline made after ending three of its pension plans.  Let's figure that one out - employees lose their pensions, and the company makes a $881 million profit!  Does that sound fair?

The airline had an actual operating loss of $134.3 million, up from a $58.7 million loss in December.  More 'progress', I guess.

In addition to losing $134.3 million, the airline burned up $195 million in cash.  This leaves the airline with only $543 million to spend - less than three months at the January rate.  Now that US is staring imminent financial crisis in the face, it is switching from medium and long term planning to very short term planning, with chaotic results.

For example, in October the airline announced new service to Panama City and San Salvador.  Now it says it will cancel the service (but not until May).  US also announced cutbacks in service from Fort Lauderdale that were started less than two weeks ago.

There are other cut backs to San Juan and Newark, and the airline is returning 11 jets back to their lessors.  More alarming perhaps is the cut back of flights from Philadelphia and Charlotte - two key hubs for the airline and which are now coming under pressure from low cost competitors.  While the few flights affected are a very small part of their total operations at these two airports, it is a retreat in the face of competitive attack that does not bode well for their future.  See my blog entry on 'US Airways' Last Stand' (at Charlotte).

To put their January loss into context, this one month loss is greater than the total financing US secured from Air Wisconsin ($125 million).

Meanwhile, US Airways' current CEO shows his lack of appreciation for his salary, by saying 'It's a pimple.  The money does not mean anything to me.'  But he is keeping it, pimple or not.

Maybe he is being envious of his predecessor when he says this.  Previous CEO David Siegel managed to bag $6.3 million for his efforts last year, even though he left in April.

It is now official.  The US Airways debacle with their baggage messups and flight cancellations last Christmas was not due to a high level of staff absenteeism (as was suggested by the airline at the time).  The Dept of Transportation released their report into the situation on Wednesday and found the airline knew in advance it had insufficient staffing for its schedules, and that flight attendant absenteeism was similar to, and in some cases lower than, the levels in 2003.

50,000 passengers were stranded last Christmas, more than half the airline's flights were delayed, and 5% were completely cancelled.  Tens of thousands of bags were variously lost, pilfered, or damaged; and to this day the airline doesn't exactly know how many bags were mishandled.

Now for the really good news :  The report says it has no way of knowing if US Airways has sufficiently corrected its internal systems to prevent such a problem from re-occurring or not.

Here's an interesting 'trial balloon'.  Northwest Airlines' CEO Doug Steenland said, last month, his airline is considering unbundling services that are currently included in the price of airline tickets.  This probably means you would pay to check each piece of luggage, for a meal or drink on board, and so on.

But he mentioned one currently bundled service in particular - credit card fees.  That would be rich - they already charge you if you try and buy a ticket, in person, at the airport (eg with cash), and now they are considering also charging you to buy a ticket the way they want you to - ie, online through their website, if you use a credit card for the purchase.

Memo to Doug :  Try buying a ticket, online, with cash.  Kinda difficult.

Standard & Poor's have placed four airlines - American, Continental, Northwest and America West - under Credit Watch Negative.  One of the reasons for this is a concern about the impact of oil price increases.

With oil this week breaking through $53 a barrel, in marked contrast to airline industry projections for average per barrel prices for 2005 in the mid $30s, this is a timely action.  More alarming still are some of the price projections from OPEC, and the underlying demand mechanism that will prevent any appreciable drop in oil prices.  Discussed in my blog.

Bad luck comes in threes fives.  The undercarriage of a Pakistan Airlines 777 caught fire while taxiing to a gate in Manchester this week.  This is the fifth undercarriage fire for a Pakistan Airlines 777 in eleven months since they started flying 777s.

333 passengers on board had to exit the plane via emergency chutes, and 33 of them suffered injuries as a result, seven of whom had to be hospitalized.  This might sound like a lot, but a 10% minor casualty rate is fairly standard when a plane is being evacuated via its emergency chutes.

Cynics and naysayers would have us believe that the new Airbus A380 super-jumbo will be crammed unbearably full of passengers.  Certainly this is what happened with the 747, with the initial airline dreams of airplane lounges and other space consuming amenities being replaced by more and more seats, but as we get close to the first commercial flights of this plane, there is - encouragingly - no sign yet of the same developments with either Singapore Airlines or Qantas, two of the very first airlines to get A380 deliveries.

Qantas announced some details of its A380 cabin plans this week.  All three cabins (first, business, coach) will have 'social zones' where passengers can mix and mingle.  There will be upgrades to all three cabins and seating, including coach class, which is to have roomier seats designed by Recaro and enhanced in-flight entertainment.  It is believed the Qantas planes will have about a 500 person capacity, which is down from Airbus' suggested 555 person count.

Spot the difference.  San Jose Airport is in the process of a massive redevelopment, with a current total cost of $2.8 billion, and a completion date estimated variously between 2012 - 2016.

This is a rather troubled plan, because to recoup these costs, it will have to increase the landing fees it charges airlines up to the highest level of any west coast airport.  The reason this is a problem is because the most flights in/out of SJC are operated by Southwest, who has threatened to move across the bay to Oakland if SJC doesn't lower its projected new fees.  Only a fool would choose to call Southwest's bluff on such a pivotal issue as that.

Meanwhile, Malaysia's Kuala Lumpur Airport is planning to build a new dedicated terminal for budget airlines.  The terminal will have 40 gates and will be able to handle 10 - 12 million passengers annually (about the same number as use SJC in total).  It will open next year and its cost is expected to be $26 million - one hundred times less than the SJC development.

Lufthansa is considering suing the US government, claiming it lost millions of dollars when it had to cancel 77 short and medium haul flights, affecting 5,000 passengers when Air Force One came to Frankfurt.  The airline also said that 92 outbound flights and 86 inbound flights were delayed about an hour when the President visited Mainz, close to Frankfurt.

And British Airways is seeking $1 million from the US government, claiming that it was unreasonably required to return on of its planes back to Britain due to the alleged presence of a possible terrorist on board.

Well, one thing is for sure.  We now know how desperately BA hates having to turn its planes around once they've taken off.  We know this because, immediately after takeoff from Los Angeles on Saturday 19 February, a BA 747 had an engine failure.  Rather than land back at the airport, the pilot chose to fly his crippled plane all the way to London - eleven hours and 5000 miles away.  Well, actually, no, the plane didn't make it all the way.  Because a plane flying on only three engines can't fly as high, it burns more fuel while flying at a lower altitude (with more air friction), and so the flight had to declare a fuel emergency (on top of its engine 'non-emergency') and land short of London, in Manchester.

As this flight showed, a 747 can fly on three engines, indeed rumors persist that some airlines will routinely switch an engine off in flight if the plane is enjoying strong tail winds and is ahead of schedule.  It is okay to turn an engine off when you can always restart it at will, but to fly with a totally failed engine is a different story.  Think of it like driving your car without a spare tire - your margin for error is substantially reduced.  Yes, a 747 can also fly, more or less, on two engines, although fuel management and risk factors become even more extreme.

As many military pilots know, when one thing goes wrong with a plane, for whatever reason, other things become much more likely to also go wrong. Systems are more stressed, the cause of the first problem might impact on other systems, and who knows what else. When one thing goes wrong, the prudent thing is to immediately abort the mission/flight, call an emergency, and land asap.

FAA rules require US airlines to land at the nearest suitable airport after an engine failure.  A spokesperson for the FAA said about the BA escapade "we are concerned." How's that for a dynamic response.

Amazingly, BA would have us believe that financial issues had nothing to do with its decision to press on to London (or, as it turned out, Manchester).  BA first tried to tell us the engine failure occurred one hour into the flight (the engine failure occurred at 100 ft as the plane was taking off from LAX).  When that claim was contradicted by the facts, BA's Senior 747 Captain, Doug Brown, said the only issue was 'what was best for passengers'.  He also said the 747 is as safe on three engines as on four.

Question to Capt Brown :  Why don't you take one of the engines off all your 747s and always only fly with three engines?

There's an interesting footnote to this story.  At least one of the articles about this appalling event referred to BA as saving about $200,000.  Makes you wonder how BA calculates its $1 million claim for diverting its other flight, doesn't it.

More drunk pilots.  A Delta pilot, suspected of being drunk, was detained by German police at Frankfurt just as he was about to fly to Atlanta on Monday this week.

The incredible imploding Boeing :  Boeing has apparently decided there is no commercial sense in building airplane parts, merely in doing some of the design, final assembly, and marketing.  So how to understand the actions on the part of not just one but two French companies opening assembly plants in Boeing's back yard in Washington state to make wheels, brakes and control units for the 787?  How can French companies succeed at something Boeing has given up on?

A rose by any other name :  The Washington Post reports there is a move afoot to change the name of BWI airport. A bill to change the name to Thurgood Marshall Baltimore Washington International Airport is currently in the Maryland General Assembly. A name change would cost about $2.1 million and would be the first since 1973 when the airport was known as Friendship International. Thurgood Marshall was born in Baltimore in 1908.

While many of us delight in referring to Washington National Airport by its new name of Reagan National Airport, I mean no disrespect to the late Supreme Court justice by wondering how many people will choose to say something like 'tomorrow I fly from LAX to Thurgood Marshall Baltimore Washington International Airport'?

What a waste of $2.1 million.

I blogged before about Delta's new fantasy flight attendants.  Not so happy are Air Canada's flight attendants, who have filed a formal grievance against the airline.  Flight attendants say their new uniform has a skirt that is too tight, and shirt that has too wide a collar.  Air Canada says the uniforms project an image of modern sophistication.

This Week's Security Horror Story :  A couple of co-workers decided to play a practical joke on a colleague.  They placed some ball bearings in a metal tube, crimped down the ends, and hid the tube in their colleague's car.  The object was to create an annoying rattle which the man would find difficult to locate.

Sadly, the rattle proved easy for Canadian customs officers to locate as the man attempted to drive his car across the border.  They deemed the object a 'suspicious device' and possible explosive.  So they closed the entire border crossing for four hours at 4.40pm last Friday, right before Friday evening's traffic peak.

Better safe than sorry, eh?

Bad news for smokers.  From 14 April, you'll no longer be allowed to take any type of lighter onto a plane with you.  More bad news - you can't carry lighters in your checked baggage, either.  More more bad news - you can't send lighters through regular mail, also.

Possible loophole :  You can still carry up to four books of matches with you.  But that too is 'under reconsideration'.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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