[Web version of this newsletter]  [Newsletter Archives]  [Website Home Page]  [Please Donate Here]

Black Friday 13 May, 2005 

Good morning

The offer of a free phone and SIM from Mobal brought in another rush of people choosing to help support The Travel Insider.  Thank you, everyone.  The response was so strong, we ran out of phones (Mobal had sent us 100) by 9am on Friday morning last week.

To everyone's delight, Mobal very graciously agreed to send another shipment to us, which has enabled us to confirm all requests for phones, and leaves us with a few more available.  So if you too would like a free international cellphone and SIM, here is a reprise of the details :

The kits comprise

• A refurbished Nokia 5110 (formerly one of their rental phones)
• Two batteries
• Multi-voltage charger and plug adapters
• Instruction manual
• Mobal SIM

The 5110 is neither the newest nor smallest phone Nokia has, and it is a single band 900 MHz phone.  This means it works in most of the rest of the world, but not everywhere, and it will not work at all in the US.  It is locked to only work with Mobal SIMs, and out of fairness to Mobal (who obviously hope you’ll use their SIM to generate some airtime revenue), I won’t be unlocking them.  Because they are both used and free, the phones have no guarantee, but were tested by Mobal before sending them to me.

The Mobal SIM gives you a UK based phone number that works in over 140 different countries. There are two distinctive and positive features of these SIMs.  Firstly, the phone number is yours for life.  You don’t have to pay any sort of monthly fee, and it doesn’t expire, even if you don’t use it for a year or more.

Secondly, rather than having to pre-pay money onto the SIM, you are conveniently billed to a credit card each month you use the SIM.

Airtime rates aren’t enormously cheap, but neither are they enormously expensive.  If you expect to use a cell phone, internationally, for only a limited amount of calling, the Mobal SIM might be a good solution because of its great convenience.  If you visit a few countries a lot, you should use pre-paid SIMs for each specific country, but when visiting other countries, you will find the Mobal SIM handy there.

The Mobal SIM works in any unlocked GSM phone, so if you already have a GSM phone, you can use the SIM in that, too.

If you’d like one of these phone and SIM kits, email me. I’ll reply, confirming there is one available, and will ask you to send me a donation of more than $15 :  $10 to cover the priority mail shipping to you, and $5 or more as a contribution to The Travel Insider.  Please don't send a donation until after I've confirmed a kit remains available for you.

And a quick reminder - if you're looking for a set of the high-end Solitude noise-reducing headphones, they remain available with a 30% discount at the Travel Essentials website through next Friday.  The discount code is MAMA.

As the summer travel season inexorably draws nearer (I prefer May and June to July and August for travel to Europe) many of you are sure to be spending time in Britain.  For those of you traveling to Britain this summer, or any other time, I've prepared some notes on my favorite method of travel in that beautiful country :

This Week's Feature Column :  How to Travel around Britain by Train :  Train travel in Britain is generally faster and cheaper than flying, and always more comfortable and convenient.  Here's how to make best use of Britain's extensive network of train services.

As an aside, although I like the trains in Britain, the government body, Network Rail, that oversees the rail infrastructure in Britain could give lessons to the US airlines when it comes to unfairly padding the pockets of their management.  As a result of a good year last year with delays at a four year low, senior managers earned bonuses of up to 55.6% (as much as £280,000).  On the other hand, train drivers earned bonuses of as little as £1,112 (which I'll guess to be well below 10% of their wages).  Details here.

Dinosaur watching :  I've several times commented quite harshly about the extraordinarily unquestioning and meek compliance offered by United's bankruptcy judge in response to almost everything United asks of him, but have always felt a bit uncomfortable doing so.

On Monday this week Judge Wedoff's decision to forbid a group of creditors from jointly negotiating with United came under harsher criticism than I'd ever dared utter, with phrases such as these being bandied about :

  • ... the reorganization dragged on ...

  • Two and a half years later, United is losing more than $1 billion annually and is not promising to propose a plan of reorganization any time soon. Some creditors are bound to have second thoughts.

  • No wonder that the second circuit has described as “bordering on the frivolous” a contention that the antitrust laws forbid creditors to coordinate their positions in bankruptcy.

  • Given the breadth of §1110(a)(1), United’s demand for an injunction might have been denied out of hand. Instead, however, Bankruptcy Judge Wedoff entered a temporary restraining order forbidding the trustees to repossess the airplanes. ...  This is hard to reconcile with the statute’s text. ... Moreover, the judge did not explain why United’s antitrust contention is strong enough to support injunctive relief in the teeth of a statute that curtails remedies.

  • For obvious reasons, the prospect of stasis is delightful to United and its unsecured creditors but unsatisfactory to the lessors.

  • What is more, the antitrust claim [upheld by Judge Wedoff] is thin to the point of invisibility. [my emphasis]

  • If an antitrust problem lurks in the post-bankruptcy dealings, United is as much an offender as the lessors are. The lenders want to shop the planes, selling future months of their remaining useful lives to the high bidders. United, by contrast, wants to limit these lessors to a single bidder (United itself) and deny them the benefit of competition, even though United is unwilling to pay the price agreed at the end of the competitive financing process, and even while United itself remains free to shop for better terms and return these 14 planes if it finds such terms. In other words, United fancies the position of monopsonist, which the antitrust laws forbid on equal terms with monopoly.

These comments came from a three judge decision in the US Court of Appeals, overturning Judge Wedoff's earlier decision.  There's lots more, and I've placed a PDF copy of the decision on the site if you'd like to read it (nine pages in length).  Suffice it to say that, in very proper and legal language, Judge Wedoff was thoroughly told off by the Appeals Court judges.

Bottom line - aircraft lessors are now free to repossess eight of United's planes, unless the airline brings its lease payments up to date.  Hardly a massive impact on their fleet of about 450 planes, but it may allow the lessors of 175 other planes United leases to club together and present a common front in negotiations.

This however is one of the smaller problems that United has encountered this week.  In a manner reminiscent of the phrase 'careful what you wish for in case it comes true' Judge Wedoff has (surprise surprise) ignored United's staff's objections and allowed the airline to default out of its pension obligations, without penalty.

The only people suffering a penalty are United's past and present employees, who will experience varying amounts of pension curtailment, and we innocent taxpayers, who are getting lumbered with an initial liability for $3.2 billion of United's default, with more likely to follow.

In response to this loss of benefits, the unions are beating their drums as they traditionally do, threatening strike action.  Will it actually take place this time?  Unlikely, but not impossible.  The mechanics union (AMFA) have said they'll honor other unions' picket lines - in other words, they are saying 'you go first, and we'll shelter behind you'.

The mechanics are also suggesting the normally laughable notion that mechanics at seven other airlines might go on sympathy strikes.  There is however a slight chance this might happen on this occasion - all employees of all airlines should be very worried, because United's competitors can't idly allow United to uniquely gain this massive cost advantage.

The flight attendants have dusted off their 'Chaos' threat - unscheduled wildcat mini-strikes, and acted like a bumbling group of ineffectual fools when a group of them stormed into a class being taught by United board member and Northwestern's Kellog School of Management Dean, Dipak Jain, attempting to present a petition to him (as if he'd care).  Alas, the class was actually being given by a guest lecturer; Dean Jain was nowhere to be found.

United's general counsel matched bluff with bluff by writing that United 'will discipline - with reluctance but without hesitation - up to and including termination, any flight attendant who engages in CHAOS activity.'  The airline called on the union to drive this point home to its members.

AFA spokeswoman Sara Dela Cruz called United's letter 'laughable' and said the union is set for action if need be.  'We're ready to go,' she said.

Hopefully she knows where it is she's ready to go to, and will get there soon.

Although Judge Wedoff's decision allowing United to drop its pension plans was announced on Monday, the unions are now proving slow to respond with actions rather than words.  Not that I'm encouraging them to strike; but I do wish they'd stop mouthing off when everyone knows it is largely meaningless rhetoric rather than serious threats.

United has finally announced its first quarter result.  They've thrown away another $1.07 billion in the first three months of this year, including a staggering $768 million in reorganization costs.  For Q1 2004, they lost 'only' $459 million.

A disgraceful result?  Well, United's CEO Glenn Tilton sees it differently.  He says :

In an extremely tough industry environment, we made progress in executing our business plan. Our revenue plan is tracking well against the reallocation of capacity to robust international markets, with more improvement to come. Progress to reduce costs throughout the system has been substantial and we are pressing ahead to further reduce costs and inefficiencies in all areas of the business.

Should we agree with Mr Tilton that losing more than twice as much as in the first quarter of 2004 shows great progress in reducing costs?  To see things from his perspective, it is true that without one time items, the loss would be 'only' $302 million compared to $326 million in 2004.  Which might perhaps be progress, but at a glacially slow speed.

United has lost $5.8 billion since declaring bankruptcy in December 2002.  One has to wonder where the $5.8 billion came from if United was already bankrupt in December 2002.  Amazingly, the airline still has another $1.4 billion in unrestricted free cash to lose.

Bankruptcy is a funny thing, isn't it.

Talking about bankruptcy, Delta is back on deathwatch.  On Wednesday the Prudential Equity Group revised their target share price for DAL from $9 down to $1.  Ooops.  Prudential projects a bankruptcy filing in early 2006, unlike some other observers who are expecting one in the next three to four months.

This follows a statement from Delta on Tuesday, warning 'we believe that we will record a substantial net loss for the nine months ending Dec. 31 and that our cash flows from operations will not be sufficient to meet all of our liquidity needs for that period'.

Delta said it is considering selling off assets and (of course) more cost cutting, but added  'There can be no assurance that we will be able to implement any of these strategies or that these strategies, if implemented, will be sufficient to enable us to maintain adequate liquidity'.

Translation :  Inability to maintain adequate liquidity = filing for Chapter 11 bankruptcy.

There are some points in common between DL and UA :  Both lost just over $1 billion in the first quarter this year; both have an airline within an airline (Song and Ted), both have about $1.5 billion in cash remaining, one is in bankruptcy and one teetering on the edge, and both have hired McKinsey to advise them.

Here's an interesting statistic - in a recent filing, United says it now competes with discount airlines on 81% of its domestic routes, up from 72% in 2000.  Discount airlines are adding capacity, with 97 new planes being delivered to discounters (more than 60 going to Southwest, JetBlue and AirTran alone) and are increasingly moving to operate trans-continental services, formerly one of the more profitable reserves of the dinosaurs.  The pressure on the dinosaurs will only increase.

And talking about new trans-continental routes and growing discount carriers, Independence Air is now operating new coast to coast service to places such as San Diego, Los Angeles, Las Vegas, San Jose, San Francisco and my own home town of Seattle.

Last week I urged you to fly Independence Air if at all possible to help them grow to sustainable profitability.  I've decided to practice what I preach, and so will be flying them from Seattle to Dulles and probably on up to JFK in the next week or so, as soon as time allows.  I'll be traveling with a bag full of noise-reducing headphones for some in-flight comparisons, and because the flight SEA-IAD is a red-eye, am hoping my 1st Class Sleeper will get me some rest.

Reinforcing my contention that Independence Air is benefiting us all is this USA Today article, which says Independence Air is the largest force driving down airfares along the East Coast.  Seriously - if you're flying a route they operate, please fly them.  I was tempted to try and negotiate a Travel Insider special deal with them for readers, but their fares are so low already it isn't really possible or necessary to offer any sort of appreciable discount.  With fares sometimes as low as $29 one-way to Florida, how much of a discount could be hoped for!

So go and happily pay them full fare.  We need them to survive.

Of course, if you're shifting your business to Independence Air, you're probably shifting away from some other east coast carrier, like, for example, US Airways.  And just as well if you do so.  The latest Air Travel Consumer Reports by the DoT show a sad state of affairs at US.  The airline came second last out of 19 airlines for Q1 2005 (Comair was bottom).

Potential merger partner America West was close to US at the bottom of the pile, so perhaps the two airlines have more in common than first meets the eye, and the merger might work after all.

Things were bad for all airlines in March.  Planes were late more often, and more often because of reasons the airlines can control.  Bags were more often mishandled and more customers were being bumped off overbooked flights.

In March, US Airways was the most-complained-about of the 19 airlines in the report.  And it had the worst record of any major airline (No. 17 of 19) for handling bags in the first quarter.  About 12 of every 1,000 US Airways passengers complained about mishandled bags, twice the industry average.

US Airways was late more often than almost all the other airlines in the report. Only AirTran and JetBlue (weather related) were worse.

No new news about the possible merger between America West and US Airways, other than the belief that they want to get the details sorted out prior to America West's annual meeting on 17 May (next Tuesday).

And now for some outrage.  US Airways is seeking court approval, from the judge who 'just can't say no', to approve a retention plan for key employees.  The airline said, in court papers filed on Monday, that the merger talks have created anxiety among some salaried employees and corporate officers about their future employment prospects.

A reasonable person would think most employees should be starkly terrified of their prospects if the merger does not take place, but US senior management are keen to spend more money that isn't theirs and which they don't really have on - hmmmm - themselves.

US goes on to tell the court these merger talks have created an increased risk of accelerated, unplanned departures of employees who are 'absolutely critical' to its operations.  It wants to offer expanded severance benefits and discretionary retention payments to these absolutely critical individuals, and says that its management ranks have already become dangerously thin.

Oh - guess how many people in their dangerously thin management ranks are absolutely critical?  One?  Ten?  Twenty?  Keep guessing.  It will take you a long time to get to the figure US Airways claims :  One thousand, eight hundred and ninety eight.

With 9 May marking the one year anniversary of Southwest (WN) starting service in Philadelphia, there is a chance to observe the results of the so-called 'Southwest Effect' (that which occurs when a low cost airline starts up service on routes otherwise only served by expensive dinosaurs).

Although Southwest now has 10% of Philadelphia traffic, PHL traffic as a whole has grown 30%.  All airlines have benefited (by matching WN's low fares).  And let's see some examples of where this traffic growth has come from, and what has happened to the airfares :

  • Traffic between Philadelphia and Providence has increased by 859% (more than 90,000 passengers), while the average one-way fare paid by these passengers has plummeted from $259 to $44, a decrease of 83%.

  • Traffic between Philadelphia and Manchester, NH, has increased by 828% (more than 75,000 passengers), while the average one-way fare has dropped from $245 to $43, a decrease of 82%.

  • In the third quarter of 2004, the average one-way fare between Philadelphia and Chicago Midway fell 46%, while traffic increased by 137 percent.  In addition, the average one-way fare between Philadelphia and Chicago O'Hare (an airport WN does not serve) fell 44%, while traffic increased by 28%, showing that Southwest's arrival in new markets benefits sister airports and other airlines.

  • One-way fares between Philadelphia and Raleigh-Durham have dropped 74%; one-way fares between Philadelphia and Phoenix have dropped 33%; one-way fares between Philadelphia and Los Angeles have dropped 33%; one-way fares between Philadelphia and Las Vegas have dropped 27%; and one-way fares between Philadelphia and Tampa Bay have dropped 20%.

  • Traffic to Houston Hobby, Oakland, and Raleigh-Durham has increased by triple digits, while the average one-way fare on these routes has declined 40% - 70%.

Are travel agents an endangered species?  Or are travel agents coming back in reinvigorated form?  The 2005 National Business Travel Monitor found that 32% of business travelers use a travel agent, up from 25% a year earlier.

This study also recorded that travelers perceive the worst place to find the best price on travel items was direct with hotels, airlines, and car rental companies.  Only 13% of travelers mentioned them as the best source for the best price, down from 16% in 2004.

This perception is very accurate, at least for hotels.  A recent survey by KPMG shows that 75% of hotels fail to deliver on their web 'lowest price' guarantees. The research was conducted across 330 hotels in 16 countries and found that although 43% of hotels offered best web rate guarantees, only 27% of them delivered their price promise.   KPMG said, in releasing the report, 'These survey findings are surprising considering the amount of effort being made by hoteliers to direct customers to their own booking channels.  Hotels want their customers to book direct but in practice, hoteliers aren't delivering consistent prices and customers will continue to use other booking methods which offer more attractive room rates.'

Marriott announced that selected of their Marriott and Renaissance hotels will begin installing high-definition televisions in their rooms.  They plan to have 50,000 32" flat panel HDTVs installed within four years.  The screens will also serve as large monitors for your laptop.

One of my pet hotel peeves is the hotel brochure that says 'located only five minutes walk from downtown' - a claim that all too often conflicts with a reality whereby the hotel is more like five miles rather than five minutes from any reasonable definition of downtown.  Christopher Elliott writes in the NY Times that not only are hotels cheating on their walking distance claims, but now they're cheating on their names too, with some hotels being as much as a two hour drive from the city they take the name of.

Sir Richard Branson and his empire keeps popping up in unusual places.  His latest venture, Virgin Life Care, will be a foray into providing affordable health care for the 45 million Americans who are physically unfit and/or too poor to afford regular healthcare coverage.

Low cost healthcare for unhealthy people?  That sounds stupider than an airline business plan!  Sir Richard explained he will be promoting his new product through gym memberships (apparently he believes lots of poor and unhealthy people sign up for gym memberships) and by providing discounts on Virgin Atlantic flights as incentives for users to get healthier.  Are poor unhealthy people really likely to want a discounted airfare to Britain?

Business partner Humana's CEO said that Virgin Life Care would 'create products and services for health care consumers that are liberating, life-enhancing and fun.'  Uh huh....

Maybe not quite so healthy - but probably more popular - is the move by Universal Studios in Hollywood to offer an 'all you can eat, all day long' flat rate for food.  The cost is $19.95 for adults and $11.95 for children under 48" tall.  The passes include unlimited drinks as well as food.

The catch?  You can only eat at two of the many different food outlets - Jurassic Cafe and Mel's Diner.

Disney in Orlando are introducing a great new service.  When you check your bags for your flight to Orlando, you don't need to collect them at the airport.  The bags will travel all the way to your hotel room.  And, when returning home again, you can check your bag at the hotel rather than need to take it to the airport.

Bad news for Airbus.  Long time loyal client Northwest is to buy 18 of Boeing's new 787.

Good news for Airbus.  Emirates is anticipated to place an order for 50 A350 planes.  The A350 is Airbus' new plane being developed to counter the 787.  Airbus has also received an order for ten from Spain's Air Europa.

Kudos to Boeing.  Boeing engineers have found a way to increase the size of aircraft toilets. On Wednesday  the U.S. Patent and Trademark Office granted Boeing a patent for a bathroom that expands into passenger doorways between cabins when a plane is in flight. The new bathrooms give passengers more room for changing clothes and diapers without taking up more room in the passenger cabin.  Once in flight the lavatories would rotate into the emergency doorways via giant turntables (this is, apparently, not a joke). A suitable locking mechanism can be provided in case of turbulence so a passenger couldn't be trapped.

Hands free in Chicago :  As of 8 July, it is illegal to hold a cell phone and drive in Chicago.  $50 fines for the unlucky.

This Week's Security Horror Story :  I'd written last week about the female FBI agent who was allowed to take her loaded firearm onto her flight, but who had her nail file taken from her carry-on as being too dangerous.

Observant reader Bob points out that nail files are actually specifically listed by the TSA as being permitted in carry-onsWhat absolute idiots the TSA are when they don't even know their own policies.

Reader Sue asks an unanswerable question

I was returning to Boston from San Antonio on Friday. Checked luggage, then took it to TSA screener, who asked if I had any matches or lighters in my suitcase.  I had matches, which he asked me to remove, AND PLACE IN MY CARRY ON LUGGAGE!  Why is it okay to carry matches aboard in carry on luggage and not okay to have them in my checked suitcase, out of reach?

Here's an excellent article on the dismal waste of money being poured into so-called security projects.

But why should the government care if it wastes money?  It will simply tax us some more to compensate.

And talking about wasting money, not all the security costs/losses are simply monies wasted on malfunctioning equipment.  Our self-inflicted wounds, post-9/11, are greater than any damage that occurred on that fateful day.  It is of course hard to put a dollar value on the compromises to our liberty and freedom that have been made in the name of safety and security, but many other actions do have clear dollar costs alongside.

The tens of billions of dollars in airport security, which by all reports have not materially increased our safety at all, and much of which has been wasted on inappropriate and ineffective equipment is one clear example.  Another is the loss of tourist revenues - as we make our country less and less friendly to foreigners, and as we continue to make US visas more difficult to obtain for foreign visitors, we're going to get fewer international visitors.

But according to the US Commerce Department, foreign visits to the US increased by 12%, with 46.1 million visitors, who spent $97.3 billion while in the US.  So what is the problem?  The problem is that international travel, across the board, increased by much more than this 12% in most other major tourist destinations.  The US is losing its share of international travelers, and according to the Travel Industry Association of America, the US' share of international tourism has dropped 38% since 1992.

The most recent data I could find, from the World Tourism Organisation, shows travel to the US was at  50.9 million in 2000 (7.4%) and in 2002 it was 41.9 million, or 6.0%.  A Financial Times article claims there were 770 million global tourists in 2004, meaning the US had a 6% share in 2004 as well.

But - think of this.  If the US were able to return back to the 2000 market share of 7.4%, it would have earned an extra $22.7 billion in foreign exchange - money that is desperately needed to try and shore up our balance of payments, money that would single-handedly fund just about every imaginable security scheme, money that would create a quarter million jobs, money that could help a dozen different programs and services.

In general terms, our 'domestic security' not only fails every objective measure of actually creating the secure environment it promises, but is costing us $20+ billion a year in lost foreign exchange income from tourism.  Osama bin Laden must be laughing himself to sleep every night as he watches the damage inflicted on our country by ourselves vastly exceed anything he could inflict.

You've probably heard about the light plane that flew close to the center of DC, causing as many as 35,000 people to evacuate federal buildings - ie, being told to run for their lives, as far away from the buildings as possible.

Two points of interest :  How close did the plane actually get?  And what if this was not a slow flying (less than 150 mph) single engined propeller plane, but instead a faster flying (more than 450 mph) passenger jet?  The certain truth?  By the time the fighters had scrambled, the jet would be all over downtown DC.

We're told the authorities determined, long before the Cessna landed, that the pilots did not pose a threat.  So why then were the pilots spread eagled prone on the tarmac and 'subdued' upon landing (see the picture in this article)?

Governments around the world like to regularly issue travel alerts, warning their citizens against travel to various nasty places.  Usually there are few surprises in these warnings.  But earlier this week the Australian government warned its citizens against traveling to Perth, the capital of their own state of Western Australia (it was a mistake, we're told).

Talking about mistakes, and lastly this week, here's a story passed in from someone who assures me it may be true :

As I was standing in line at the airport to check in, the man in front of me was giving the ticket agent all sorts of trouble. Even though he had a coach ticket, he was demanding a free upgrade to first class or, failing that, "at least business class!" as compensation for some imagined slight. It appeared the agent was doing everything possible to please the man, even though the airline had done nothing wrong. He firmly refused any free upgrades, and the customer kept raising his voice louder and louder. So much so I thought the agent would call security, but no.

The agent, in fact, kept perfectly poised. He finally got the man to leave by handing him a $10 meal voucher (which he'd have to walk at least five minutes down the concourse to cash in, effectively getting him away from the place for at least 10 minutes).

Then it was my turn. I stepped up, smiled at the guy and told him, "I don't know how you kept your cool with that jerk."

"Oh, it wasn't too hard," said the agent in a gracious and subtly southern accent. "I've dealt with his type before."

"I still don't understand how you managed to stay so calm when someone is yelling at you like that!" I said.

"Well," he said, "you obviously know you're both heading to Denver?"

"Yes," I said.

"His luggage," said the agent, a twinkle returning to his eye and his voice getting very quiet, "is going to Dallas."

Today is Black Friday.  Be careful.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

If this was forwarded to you by a friend, please click here and subscribe to the newsletter yourself
If you ever wish to unsubscribe, simply reply to this email and set the subject line to say 'unsubscribe'.