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29 April, 2005 

Good morning

Although officially ended, contributions have continued to flow in for our fundraising drive, with another 44 readers helping out during this last week, making for 356 readers thus far.  If there were yet another 44 readers out there who chose to participate, we'd make a total of 400....  :)

Or maybe I should take up a new collection so I can buy one of these.  Definitely an interesting gift to give yourself or to that extremely special person in your life who probably already has everything else.

A small request to people who mailed in checks.  If you haven't received an email from me to thank you, that means I don't know your email address.  Please let me know who you are, because I hope to have a small number of special offers to pass on to donors during the months ahead.

And talking about special offers, here's one for everyone - a reminder that the Pro Travel Gear website continues its 25% discount on everything they sell (including the Plane Quiet and Solitude noise reducing headphones) through next Thursday 5 May.

My feature last week on how to book airport parking brought a few replies indicating that while the service I liked may be very good in Seattle, it is not without its faults at other airports, including most notably Austin, where it still points to the old Bergstrom airport that was closed some years back (in fairness to APR they don't actually offer any parking service there, but even so....).

Reader William has an interesting approach to airport parking.  He writes

As airport and airport vicinity lots become so expensive, one option that is worthy of serious consideration is the Hertz/Avis/other brand lot.  I fly mostly out of Sacramento or SFO, rarely OAK, and it has become less expensive for trips of anything from 7-8 days and up to consider two one-way car rentals, especially if you won't require a larger model.  I simply pick up the car at my local, off-airport rental location, drop it at the airport, and reverse at return arrival.  Even with the ridiculously high user facility charges at SFO, this is less expensive than a park/fly plan at a local hotel, and the rental car shuttles at most airports seem to operate at a higher frequency than the hotel or parking lot shuttles.

Talking about cars and driving - and problems that can occur - brings me to

This Week's Feature Column :  Pack-a-Cone Safety Cone : Not that I'll admit my lovely Jaguar ever breaks down, but I do feel safer with one (or two or three) of these portable hazard flashing cones in its trunk.  Click and find out why you should carry some too.

Dinosaur watching :  Remember the extended saga of United asking the ATSB for a government guaranteed loan, first for $1.6 billion, then for $1.1 billion, and the three times it took the ATSB to finally say no and mean no?  The government guarantees were available through June 2002, but it was two more years after the 'final' deadline for applications until United stopped applying and was finally and fully refused.

Well, there's more than one way to skin a cat.  Or, if you're an airline, there's more than one way to get money from the government.  In a new deal with the PBGC; in return for being bailed out of its pension obligations, United will repay $1 billion as a loan and issue $500 million in new equity when (if!) they exit their Chapter 11.  So the government is :

(a)  Bailing UA out of billions in pension fund obligations

(b)  Extending a $1 billion loan to UA (but to none of the other airlines)

(c)  Becoming a major shareholder, to the tune of $500 million, in the new UA post-Chapter 11

Almost makes you wish that United had simply been given the $1.6 billion it originally asked for, doesn't it.  Might have been cheaper in the long run, and fairer to the other airlines.

The PBGC is also the largest unsecured creditor at US Airways.

Last week I wrote about US Airways asking for another extension of time to file their reorganization plan.  Their deadline was 15 April and they asked for it to be extended until 30 April.  I'm writing this late on 28 April, and as of yet, nothing has been filed.

I don't blame US Airways for working the system as best they can.  I blame the extraordinarily gullible and pliant judge, who has yet to encounter a US Airways filing he didn't like.

Why bother with a judge at all?  Why not just tell US Airways they are free to do whatever they please?  Our Chapter 11 system is hopelessly broken when both United and US Airways can miss deadline after deadline with no penalty or sanction, and while both airlines continue to lose more and more money with each passing month.  Meanwhile, the unfair advantage of Chapter 11 enjoyed by these two airlines is forcing - if not encouraging - their competitors to join them in bankruptcy.

The betting is once more targeting Delta as the airline most likely to soonest join UA and US in Chapter 11.  After losing $1.2 billion in the first quarter alone, it continues to burn $4 million in cash every day, and has $3.5 billion in major cash commitments to meet during the balance of this year.  It is hard to see how DL can make it through 2005 unless something drastic changes.

Here's an interesting and complex issue.  The FAA has accused Wichita of "unjust economic discrimination" because the city was using public funds to guarantee AirTran would not lose money if it offered new flights out of the city.

Delta competes with AirTran on flights to Atlanta and does not receive a subsidy. From Delta's perspective, it is not fair that a low cost competitor has its costs reduced even further on a route it directly competes on.  It is easy to understand Delta's point of view, isn't it.

But, there are two sides to every story.  From Wichita's perspective, when Delta operated the route without competition, airfares were unfairly high.  Since arranging for AirTran to start service, the mayor says the city's citizens have saved up to $85 million in airfares, and the number of passengers flying out of Wichita has increased by 33%.  The city is guaranteeing up to $7 million in losses to AirTran.

So what is fair?  Perhaps it is easier to see what is not fair - DL's previously too-high fares.  If DL hadn't been gouging Wichitans, this issue may have never arisen.  And from the city's point of view, its $7 million guarantee is proving to be an enormously good investment.

Suggestion to DL :  Instead of rushing to the FAA to ask for help, why not make a deal with Wichita whereby you promise to keep your fares at their present low levels no matter what happens to competing services.  Only then is the playing field truly level.

And suggestion to other cities that also suffer from too little airline competition and too-high airfares :  Send someone to talk to the Wichita city government.  And send someone else to talk to AirTran.  Or JetBlue.  Or Southwest.  Or America West.

Talking about AirTran, their CEO had this to say at an aircraft maintenance conference this last week :

A lot of people believe that what's happening in the airline industry is temporary and that eventually we'll return to the good old days. These are the good old days. People who believe this is temporary are kidding themselves.

AirTran reported on their first quarter yesterday.  The good news :  Revenues increased 24.2%, with a 19.5% increase in passengers and a 70.5% load factor, their highest ever.

The bad news :  They lost $8 million, compared to a $4.1 million profit last year.  Increased fuel costs caused their cost per available seat mile to increase 7.7%; if fuel was not factored in, their costs would have dropped 0.4%.

The solution :  An 8% increase in all fares would seem to simply solve that problem.

Whether or not they increase their fares, AirTran seem to be trying to spread their costs over a broader base, and announced their plans to grow capacity by 15% this quarter, 23% in the third quarter, and 27% in the final quarter of the year.

Who was the highest paid airline executive in 2004?  Here's a hint :  Which airline has been in bankruptcy the longest and continues to lose more and more money?  Yes, as reward for these distinctive achievements, Glenn Tilton, CEO of United, earned more money than any of his colleagues.  He earned almost twice as much as CEO of the only profitable major carrier, Southwest.  Gary Kelly of Southwest received $628,000.  Tilton received $1.2 million.

While our airlines continue to blame their losses on high fuel costs, other airlines elsewhere in the world seem less troubled by the cost of their fuel.  The latest international carrier to report excellent results is fast growing Emirates, with a record US$708 million profit for their fiscal year ended 31 March, a 49% increase over the previous year.

The secret of their success?  Chairman Ahmed bin Saeed Al-Maktoum tells us that which US carriers apparently fail to understand :

These results prove once again what has always been clear to us: We can count on our customers to support Emirates as long as we deliver on our side of the equation - the best aircraft that money can buy, the best ground and inflight service in commercial aviation and the best overall flying experience at a competitive price.

Emirates is opening up new services in Seoul, Alexandria and Hamburg this year, and will be adding Beijing on 1 Feb 2006.  It is also increasing its flights to New York, and is studying the possibility of joining that most exclusive of clubs - airlines that offer round the world service.

They've also called on Airbus to stretch the A380 to make it larger.  Apparently the world's newest and largest passenger plane is already too small for them!

Talking about the A380, it had its maiden flight this week, a four hour flight over southern France that seemed to be conducted without any problems.  Assuming all goes well on the additional 2500+ hours of flight testing, Singapore Airlines will operate the first commercial flight, in/around the third quarter of next year, and the first flights to the US will be from Sydney, operated by Qantas, either late in 2006 or early 2007.

Here's a good picture of what to expect inside the plane.

Our government claims to support free markets and ethical standards.  So how to reconcile these ideals with their actions against Nigeria and its new airline?

The US and Nigeria signed an open skies agreement in 2002.  But now, in 2005, Nigeria's new national carrier, Virgin Nigeria, has been refused permission to fly to the United States.  Why?  Because 49% of the airline is owned by Sir Richard Branson's Virgin Group.  And what is wrong with that?  Well, nothing; it is standard for countries to treat airlines from one country that have minority holdings from other countries as still being a national carrier of their 'flag' country.

But the US government has a beef with what they claim to be Britain's anti-competitive aviation policy - primarily the restriction on US airlines flying into Heathrow, an airport that is maxed out with no significant remaining capacity for any extra flights from any airlines, no matter where in the world they come from or go to.  And so - follow this chain of logic - because the US government has an argument with the British government, it is banning Nigeria's new national airline from flying to the US because it has a minority British shareholder - a shareholder that is in no way associated with the British government.

If the US government has a dispute with the UK government, they should address the matter directly with Tony Blair and whoever else is responsible.  Or perhaps ban BA from flying to the US.  Picking on an impoverished African nation's new startup airline is an act of immoral cowardice.

The US GAO issued an interesting report on Monday.  The commercialization of air traffic control services in Australia, Canada, Germany, New Zealand and the UK has generally resulted in lower fees to major carriers and with no compromises in safety.  38 countries have privatized their ATC services, with the US being one of the few holdouts among the major western nations.

The FAA provides both the ATC services and the regulatory oversight (of itself) in this country.  Supporters of this arrangement argue that privatizing air traffic control could lead to safety compromises - a rather predictable claim that would seem hard to refute.  But the GAO study shows that cost saving measures in these other countries were primarily as a result of eliminating administrative and middle management positions, and the private operators invested into new technology to make their controllers more productive.

The study says 'anecdotal information suggests that safety regulation improved when the regulator was separated organizationally from the air traffic control provider' and hard data from New Zealand and Canada shows fewer 'near miss' type incidents since privatization.

Sounds like a good thing to me.

I wrote last week about Boeing's surging recovery in sales against Airbus.  In the past, Boeing sometimes walked away from deals, delicately holding its nose, and sniffing about Airbus offering unacceptable discounts which Boeing did not want to match.  I'd always thought this a ridiculous act on Boeing's part, and it seems they may have quietly wised-up.

This interesting article picks up on information disclosed in a regulatory filing by Boeing customer Ryanair, revealing the approximate price they paid for an order of 70 737s in February, with the pricing also being backdated to an earlier order already in the system for 89 more.  The planes list for between $61.5-$69.5 million according to Boeing's website.  Ryanair's cost?  About $29 million each - less than half price.

This information was formerly one of Boeing's most carefully guarded secrets.  And now, every airline executive worth their salt should be demanding to get similar discounts, and similarly backdated, on their own Boeing orders.

With some reluctance, due to the imprecise nature of this measure, I've updated my Boeing statistics page to show a history of Boeing's and Airbus' annual new plane orders.

Boeing's good news continued in a steady stream this week.  Air Canada ordered $6 billion worth of planes on Monday from Boeing - 18 777s and 14 of the new 787s.  And then Air India approved a $6 billion purchase of 15 777s and 20 787s a day later.  Note these are order values based on list prices, so actual values might be less than half these numbers.

The new 787's production run is now sold out all the way into 2011.

A lot of luddites are seeking to ban cameras in cellphones.  I wonder how they would react when confronted with this story of how a man saved his own life by the use of his camera cellphone?

The story doesn't report the brand of phone he used.  But it probably wasn't Siemens.  Siemens' cell phone division is currently losing $2 million a day and is seriously for sale.  If the company can't find any takers, it is likely to close the division down entirely.  So, if you've got a few spare dollars, it might be an interesting investment to make - I've always very much liked the Siemens range of phones and would be sad to see their demise.

This Week's Security Horror Story :  A United flight from NYC to SFO made an emergency landing at ORD on Tuesday, due to a report of 'suspicious material' on board the flight.  A passenger on the flight observed a suspicious thing in another passenger's carry-on and reported it to a flight attendant.  The flight attendants and flight crew impounded the 'suspicious material' and after examining it, decided to divert and make an emergency landing in Chicago.

The plane was directed to a remote area where passengers where evacuated.  A bomb and arson squad complete with dogs inspected the entire plane, and law enforcement officials questioned the passenger about the suspicious material.

Oh yes - the suspicious material?  An MP3 player, a couple of bottles of homeopathic medicines, and assorted connecting cables.

We're making it more and more difficult for foreigners to enter the US, to transit through the US without leaving the airport, and even now seeking to control who is allowed to fly nonstop through the skies above us without landing in the US at all.  This is believed to have major impacts on inbound tourism.

Meanwhile, what are the Canadians doing?  After having noted how Vancouver has been losing out on Alaskan cruise ship traffic, with Americans preferring to board ships in Seattle, thereby avoiding border crossing hassles, they have liberalized their own border rules.

Cruise ship passengers who fly into Vancouver on the day of sailing can now transfer directly to the ship without clearing customs and immigration, and at the end of their cruise will disembark and transfer to the airport, again without passing through customs and immigration at the cruise terminal. Passengers will be taken by special bonded buses and enter the airport from a designated cruise ship facility.

Those crazy Canadians.  Don't they understand the dangers they're exposing themselves to?  All for the sake of a few lousy millions of dollars in extra cruise ship revenues!  We're so lucky to be living on the other side of the border, where our authorities have a clearer understanding of 'the big picture'.

Many thanks to everyone who responded to our special bulletin about problems with the proposed RFID enabled new US passports.  The State Department was apparently surprised by the extent of opposition that flooded in to them, and has now conceded that, yes, there might be some problems with their planned implementation of these chips in passports.  So they've decided to make them more 'secure' and to encrypt the data stored on them.

This is an improvement on their earlier plan, but fails to address the fact there is no bona fide reason or need to have RFID technology in our passports at all.

Non-smoking reader Jeff writes in with a good idea to assuage the problems caused by the new TSA regulation banning lighters from both carry-on and checked baggage :

The TSA should institute a 'recycling' program for the confiscated lighters.  If you have a lighter seized at the checkpoint, you get a chit which you could exchange for a different lighter when exiting the secure area at your destination.  This will prevent polluting landfills unnecessarily, and will diminish the danger of metal trash cans filled with butane laden devices at security check points.

Conventional wisdom tells us the new TSA screeners are very much better than privately contracted screeners.  Unfortunately, as this article reports, conventional wisdom is wrong.  A congressional investigation found that airport screeners employed by private companies do a better job at detecting dangerous objects than do TSA screeners.

Progress is a funny thing, isn't it.

Here's an amusing example of TSA security at its most thorough.

Lastly this week, thanks to reader Norm for these indications of being too connected to the internet (is that possible) :

- You refuse to go to a vacation spot with no electricity and no phone lines
- You spend half of the plane trip with your laptop on your lap.... and your kid in the overhead compartment
- You refer to going to the bathroom as 'downloading'
- You start introducing yourself as "Jim at I-I-Net dot com"
- You turn up the volume real loud when leaving the room so you can hear if anyone IM's you
- All of your friends have @ in their names
- Your dog has its own webpage
- You check your mail. It says "no new messages." So you check it again
- You name your children Google, Friendster and Blogger
- You wake up at 3 a.m. to go to the bathroom and stop and check your e-mail on the way back
- You take a speed reading course to keep up with the scrolling
- You order pizza online - because you can't be bothered to call
- You double click your TV remote

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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