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12 August, 2005 

Good morning

I'm now back home after a return journey that was happily much shorter and extraordinarily better than the journey to Auckland.  And, much as I like New Zealand, it's good to be home, and particularly to be enjoying broadband internet once more.

But, as a second home, or as a winter home, there's no doubt New Zealand is a wonderful choice (and they do offer broadband down there, too).

I had another gourmet meal last Saturday night, at the Craggy Range Winery in Havelock North.  Open fires heated a huge circular room with very high ceilings, where sumptuous food was excellently served, and of course a wonderful variety of New Zealand wines was offered to wash it down with.  Many of the wines were available by the glass, making it possible to sample your way through a mix of different wine and food combinations.

Three of us had variously three or four courses of food each, two bottles of wine, and pre-dinner drinks.  The cost - a very moderate US$210.  The tip?  Nothing, of course.

I continue to worry that my own understanding of never tipping in NZ is outdated, but my two companions were both adamant that I shouldn't tip, not even to round up to the nearest dollar or ten dollars.

I received some criticism for not immediately writing my Qantas review after a disappointing experience on the way down.  I've had the good fortune to fly Qantas many times, and I know that 95% (or more) of the time Qantas excels itself.  So why write a review of one of the 5% of times when it doesn't; this is not fairly indicative of the typical Qantas experience.

It is much more accurate to base any review on multiple samples of the product being reviewed, and now that I've had an extraordinarily good return flight experience I can offer you both the good and the bad in even handed measure.  Indeed, this review ended up being so gargantuan in size I needed to split it into two parts, both of which are now available for you to enjoy :

This Week's Feature Column :  Qantas Business Class Review :  Qantas is the airline that originally invented business class, back in 1979.  Its latest upgrades feature a 'Skybed' lie-straight seat with 17 buttons to control its adjustments.  It is a definite improvement on their earlier seat, but I have to wonder if the judges who awarded it an Australian Design Award have one arm longer than the other.

This week also saw Qantas' announcement of adding nonstop flights from San Francisco to Sydney, and one stop service from Vancouver.

The San Francisco service will start on 29 March next year.  It is great to see Qantas returning to its roots and routes - when Qantas first started flying to the US, 51 years ago, it flew exclusively to San Francisco, and it is only about ten years ago that it discontinued service there.  Welcome back, Qantas.

As a contrast to the excellence of my Qantas flight from Auckland to Los Angeles, my Alaska flight from Los Angeles to Seattle gave me another reminder of why we hate the airlines - because they crassly lie to us purely for their own convenience.

Mid-way through the perfectly smooth flight the captain came on and said 'We're projecting the possibility of a bit of turbulence up ahead, so we're turning the seatbelt sign on'.  And, immediately after he did that, guess what - the flight attendants started going through the cabin offering a beverage service.  The ride continued to be perfectly smooth, causing me to suspect the pilot flat out lied to us, and simply turned the seat belt sign on for the convenience of the flight attendants.

Dinosaur watchingDelta is having problems finding a merchant bank to give it credit card acceptance facilities.  Delta's current contract expires on 29 August, and apparently they can't renew it on the same terms as before.

The big problem Delta faces is the requirement to post a massive up-front cash bond with the bank.  This is to give the bank some security in case DL stops flying and the bank finds itself confronted with chargeback requests from people who'd bought cancelled flights with their credit cards.

Delta's stock continues to tank.  This time last week it was at an all time low of $2.24.  Thursday evening this week it is at $1.79.  The company now has a market capitalization of a mere $257 million - compare that with its tiny competitor, AirTran, currently worth $961 million.  Or its other competitor, JetBlue, currently worth $2 billion.  And market giant Southwest is an $11 billion company.

Makes you wonder why one of DL's competitors don't simply raid their petty cash jar and buy up 51% of DL's stock for a measly $129 million, and then vote to liquidate.  Chances are they'd get their entire investment in stock back from liquidation proceeds, and perhaps some more besides.  And their own airline would find itself with one less competitor.

Readers know I am a self-appointed cheerleader for Independence Air.  It seems I haven't been cheering loudly or long enough, as they've just released their second quarter result, and it is, alas, a bit of a shocker.  The bad news is they had a loss of $98.5 million, more than 50% higher than Wall St's expectations.  This leaves them with unrestricted cash of only $66 million.

And so it makes for gloomy but unsurprising reading to see this comment in their 10-Q filing (my emphasis)

The Company currently is relying primarily on its current cash, cash equivalents and short-term investments and on operating cash flows to provide working capital. However, cash provided by operations is negative and is projected to continue to be negative for the remainder of 2005, and cash balances and cash flow from operations are not expected to be sufficient to enable the Company to meet its operating expenses, working capital needs, expected operating lease financing commitments, acquisition or financing cost of aircraft and other capital expenditures, and debt service requirements as they come due for the remainder of 2005 and into 2006. The Company has no lines of credit or other borrowing facilities to generate cash and essentially all of the Company’s assets have been pledged as collateral to secure the Company’s outstanding debt and other obligations. The Company’s ability to pay its debts and meet its other obligations as they become due is dependent upon its Independence Air operations earning revenues at levels that have not been achieved to date and further reducing its costs in the long-term and identifying and realizing additional internal and/or external sources of liquidity in the near-term. If the Company is unable to raise significant funds in the near term whether from internal or external sources, the Company will not be able to meets its obligations as they become due. Such matters raise substantial doubt about the Company’s ability to continue as a going concern.

Since that statement, and adopting a strategy of throwing the pursuing lions an arm in the hope it will delay them sufficiently to escape, Independence has sacrificed its future in return for gaining some more present.  It has deferred deliveries on 16 Airbus A319 planes, getting a $31.2 million refund from Airbus, plus no longer needs now to raise $15.6 million in additional debt to pay for part of the plane order this year.  Airbus is also allowing Independence to defer another $11.5 million in other payments.  All in all, a $58.3 million saving - hopefully enough to buy it another quarter of operations.

But at what longer term cost?  One of Independence's biggest problems at present is its operating costs per mile are sky high.  It is costing the airline 17.2 cents per available seat mile to operate.  This is much more than twice what true low cost carriers are paying, and is largely due to the expensive to operate regional jets the airline has been using, prior to rolling out its new A319 fleet.

So, I continue to urge you to fly Independence Air if at all possible, but suggest you also pay by credit card for any tickets you buy, and don't buy tickets too far into the future, especially if they are for 'mission critical' travel that you couldn't reschedule if the Independence Air flights become, ahem, unavailable.

I generally adopt a cynical 'wait and see' attitude to airline strikes.  Almost invariably, after a lot of inflammatory talk, the union quietens down and/or the two sides back away from confrontation.  But there's a storm looming at Northwest that seems much more likely to result in 'industrial action', but I'm not sure if you'd call it a strike or a lockout.

A cynic might say that NW management is provoking its mechanics into striking and the airline's real objective is not merely a reduction in salary costs, but an entire rewrite of the terms of employment, such as to make a complete replacement of all affected staff (under new terms and conditions) a desirable outcome.

A less cynical person would simply observe that NW desperately needs to improve its operating results, and employee wages are always 'low hanging fruit' on the cost cutting tree, and would note with approval NW's responsible actions to ensure that if its employees do go on strike, the airline will be able to continue to offer service to the traveling public.

And a cautious person would ensure they're not booked on any NW flights from 19 August.  Here's an interesting article on what is happening there.

Most people tend to roll their eyes and laugh when someone mentions Hooters Air - an airline spinoff of the restaurant chain, and featuring two 'healthy' Hooters Girls on every flight (in addition to the regular number of flight attendants).

But while people laugh, Hooters has been quietly beavering away, steadily busting out into new markets and enhancing their pairs of cities with more flights to more destinations.  It will be serving another four destinations from St Petersburg-Clearwater come 28 October.  Here's their current route map.

Bad news if you were hoping to fly BA yesterday, today and who knows how far into the future, too.  BA has cancelled all flights from Heathrow, stranding more than 20,000 passengers on Thursday alone.  And that's not all.  Because BA stopped flying out of LHR, pretty soon, the airport filled with parked planes, so more BA flights couldn't come in to Heathrow, stranding thousands more passengers at other airports, all around the world.

BA apparently finds it preferable to cancel flights entirely than to reschedule them to operate to one of the many other airports around London.  I wonder if BA's customers agree with BA on this point?

And the cause of this major chaos?  Initially, BA's caterers at Heathrow, Gate Gourmet, fired a large number of its employees due to a dispute over work practices.  This restricted but did not eliminate the provision of food onto BA flights on Wednesday, but on Thursday, BA's own ground staff staged an unofficial (but very real) 'sympathy strike' in support of the catering company's sacked employees.  This meant all flights had to be outright cancelled on Thursday.

Matters then got worse.  BA's counter staff didn't like having to deal with upset and angry passengers, and so their union arranged to withdraw the counter staff, too, based on 'health and safety' concerns.  Are we to believe that the mild mannered counter staff have never encountered a passenger upset with BA before?

(Update - BA have now cancelled Friday flights through late in the day Friday.  This may extend further.)

Although these problems are not directly BA's fault, the airline has to stand front and center and accept culpability for scoring 22nd out of 24 European airlines in terms of bag handling reliability and ontime arrivals.

I received an email from reader Sean this week, who mentioned, in passing, that he was one of my youngest readers.  This got me wondering, and so I thought I'd ask to see who our youngest and oldest readers may be.  This would be fun information to know.

If you're under 22, please email me and tell me your age.

I also know we have readers up to 79 years of age.  If you're over 79, please email me and tell me your age.

It is too soon to say 'I told you so', and I really hope to be proven wrong, but my prediction of $100/barrel oil by the end of next year is seeming increasingly likely to be proven correct.  On Thursday oil prices broke through the $66 price point, and this article, while filled with a strange mix of contradictory good and bad news about oil, quotes analysts as being not surprised if prices go above $70 or even $80.

If you're an airline, any increase in the price of oil is very good news, of course.  If your airline is losing money, you have an instant scapegoat to blame for the results of your bad management.  And if you're a skillful manager, then you can look forward to extra windfall profits by way of adding fuel surcharges many times higher than the actual increase in fuel costs you're incurring.

I've written about the vast discrepancy between what airlines pay for fuel and what they claim from us as fuel surcharges before, for example here and here.  So it should come as no surprise then to read that BA saw its earnings rise 36% in the quarter to 30 June.  BA said it expects full year earnings will exceed forecasts, due to favorable exchange rates and fuel surcharges.

One interesting side effect of increased air travel and airlines doing all they can to minimize their fuel holdings has been some airports needing to ration fuel and coming within hours of running out entirely.

One more side-bar comment about increasing fuel prices.  It isn't just the oil producers who are enjoying extra profits.  So too are the refiners.  Three years ago, the cost of gasoline, expressed per barrel, was $4.14 a barrel more than the cost of crude oil.  Today the cost of gasoline is $7.75 a barrel more than the cost of the oil itself.  And, for once, spare a single tear for the airlines.  The spread on jet fuel was $2.59 a barrel back then, and now is a mammoth $11 a barrel.

Someone, somewhere, is making too much money.

International travel from the US set a new record high in 2004.  61.8 million people went abroad, up from the previous record, set in 2000, of 61.3 million.  2005 is expected to comfortably exceed 2004.

The most popular three countries to visit were Mexico, Canada and the UK.  If one ignores Mexico and Canada, due to being on the same continent, then the top three long-haul countries become UK, France, then Italy.  More details here.

If you're planning an overseas trip yourself, maybe you're wondering where the safest places on earth are?  Researchers at Columbia University and the World Bank have gathered data showing which parts of the world have been most ravaged by nature -- floods, droughts, earthquakes, cyclones, volcanos and landslides -- over roughly the past 25 years.  The Atlantic Monthly says the research is intended to help identify those areas of the globe where prevention should receive the highest priority but it may also serve to identify those areas where the dangers of natural calamity are smallest.

If you're wanting to avoid such risks during your next vacation, consider traveling to Siberia or north-central Canada, the two safest places on Earth.

And if you're looking for safe places, perhaps you should also avoid the world's worst airport(s).

I'd written a couple of weeks back about how the proposal to lengthen the period each year the US observes daylight saving might cost airlines considerably due to clashes in when they have slots at airports.

Since then the proposal has become law, to take effect from 2007, and it seems all of us may have issues, with a mini Y2K challenge potentially causing problems with equipment that automatically changes its time based on when it believes daylight saving starts and stops.  The current formula for when daylight saving starts and finishes has been in place, in the US, since 1987, and in Europe since 1996.  More details here.

I remember I was in Russia in the mid 1990s, and less than 24 hours before the scheduled date for daylight saving time starting, the government changed its mind and rescheduled the event for a week later.  That made for a chaotic day or two.

Here's yet another danger to worry about with mobile phone usage.

But here's a fascinating new application soon to be released for your cell phone that might encourage you to risk blindness.  (See also my earlier review of a similar gadget - lie detector software on cell phones.)

Somewhere in this story is a new product opportunity.  Someone needs to develop a full body protective sleeping suit.

This Week's Security Horror Story :  There's more depressing nonsense about the new US passports in this article.  For example, the State Department is now claiming that using an RFID chip to store personal details in a passport is more secure (than traditional methods), because the chip data can't be altered.

Well, that may seem true to a State Department employee with very limited imagination or real world knowledge.  But here's a thought - why bother altering the chip data?  Why not simply cut the present chip out and replace it with an entirely different one?  If it is possible to invisibly cut out and replace the photo on the front page of a passport, surely it is even easier to cut out and replace the hidden chip inside the passport.

In an apparent concession to some of the concerns we raised earlier this year, the data on the RFID chip is going to be encrypted.  To be able to read the data, the Customs/Immigration Officer needs to first swipe the passport through an OCR reader to scan the same two lines of text at the bottom of the front page of the passport, which will now include a decoding key.

But ..... but.....  The rationale of the RFID chip is to allow for convenient remote reading of the passport.  And now - if we are to believe the State Dept - the passport must first be physically read in an OCR scanner to get the decrypting code for the chip's data.  They're also claiming they've reduced the range of the RFID chip down to 3 inches.  If that is the case, and the passport needs to go through a physical reader and be held very close to it to display the RFID data, what is the remaining value of having an RFID chip?

We're not being told the whole truth here.

And do we really know just how far away those RFID chips can be read?  We're expected to believe the chips in our passports will only work from 3 inches away.  But here's a US Customs/Immigration RFID tag with a claimed 30 ft range.  And here's a technology the British are proposing, putting RFID chips onto all car registration plates.  Their chips could be read from 300 ft away.

Fortunately, not all RFID applications are potentially bad.  Here's a very useful application - reducing the incidence of stray cow fraud in India.

Here's a great idea for those of us cursed with lead feet.  The Bisso Insurance Company in Sweden is now offering Swedish drivers insurance against speeding fines and parking tickets.  An annual premium of $112 will pay for up to three speeding tickets as long as you're not going more than 19 mph over the posted limit.  Each ticket typically costs $106 - $270.

I'm pleased to be returned home from New Zealand.  Public drunkenness has been reaching alarming proportions in NZ, particularly when country dwellers move into the big cities.  Fortunately the worst offenders are being sent to detox centers to help them sober up before returning them back to where they were found.  As spokesman Robyn Webb quite rightly says, 'This is important because they have partners and families'.  Details here.

And lastly this week, one of the defining attributes of our NZ tour in October is that it gives us a huge coach with lots of room - two seats for every tour member.  But if you'd prefer a more budget way of touring around beautiful New Zealand, here's an approach you might wish to consider.

Until next week, please enjoy safe travels.

              David M Rowell aka The Travel Insider

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