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25 November, 2005 

Good morning

I hope yesterday's turkey dinner was as enjoyable as my lamb dinner (I'm from New Zealand, hence lamb not turkey) and I also hope you didn't eat quite as much as I did.  Most of all, I hope you're not reading this at work on Friday, but rather have the pleasure of a four day weekend.

I've been enjoying a quiet time doing 'invisible' work on the website this last week; updating pages that have been aging beyond useful relevance, and preparing for next week's 'Christmas Gadget Gift Giving Guide'.

Keeping the several hundred pages of content reasonably fresh is a never-ending task akin to painting the Golden Gate Bridge; if you ever encounter anything that needs updating, please let me know.

Several people tried to 'jump the gun' after last week's feature on satellite radio, and asked me which of the two services I recommended.

In preparing an answer to that question, your feedback a couple of weeks ago was tremendously helpful, and extraordinarily positive - there was no consistent theme of any type of weakness or limitation in either service, but rather an almost unanimous chorus of enthusiastic praise.  Truly, if you spend time in your car, you'll love satellite radio as much as those of us who already have it.  And so :

This Week's Feature Column :  Choosing your Satellite Radio Service Provider :  The two service providers both offer excellent service and a huge range of different program choices, most with no advertising.  There are some subtle differences, however, and this article tells you what you need to consider prior to choosing either XM Radio or Sirius.

Do you have an att, optonline, or comcast email address?

If so, your weekly newsletter is being randomly filtered out by your service provider.  It seems this is a clumsy and maladroit attempt to filter out spam on the part of three large companies who should know better.  So anyone who sends a lot of identical mail to their users gets service interruptions and problems, limiting the amount of mail that goes through.

If you've received a spam filter alert email from me, please do all you can to complain to your service provider and insist they whitelist this newsletter.  (I've tried contacting these people myself, but can't get anyone to acknowledge the problem or help solve it.)  Or ask me for a free Google Gmail account and switch to a much more professional level of email service, with a 2.7GB storage capacity.

I will be deleting email addresses from these service providers that continue to bounce back to me.  The congestion it causes in my inbox each Friday is horrific, especially if I'm traveling at suffering from a very slow dialup connection.

Dinosaur watching :  They might be freshly out of their second bankruptcy, and with a new structure boosted by their merger with (= buyout by) America West, but it would be premature to say US Airways has finally created a sustainable business model for the future.

And who is raising doubts about their future?  None other than US Airways, themselves.  In a filing to the SEC on Wednesday, the company said it faces 'significant challenges' and may not perform as expected.  Ooops.

The company said significant operating losses continue, and will likely extend into 2006.  It also said that it now 'cannot assure' the $600 million in operating cost savings and synergies it had earlier been projecting.

The integration of US Airways and America West 'will be costly, complex and time consuming,' US Airways said, and management 'will have to devote substantial effort to such integration that could otherwise be spent on operational matters or other strategic opportunities.'

I've always been puzzled by the type of investor who would choose to invest in US Airways in any form.  The answer to that question became clear on Wednesday - plainly US Airways is the ultimate contrarian investment.  After the SEC filing, the airline's share price rose 1.5% to 47 close at $32.97.

Strangely, US Airways overlooked the industry's favorite scapegoat.  It didn't make a prominent mention of fuel costs; perhaps due to the softening in jetfuel prices.  Not so United, however, who opened their corporate press release with an immediate accusation that a $169 million increase in their fuel costs was responsible for their net loss of $698 million.

That loss, by the way, is not for a fiscal quarter, and definitely not for a full year.  It is for the month of October alone.

Why is it unfair for United to blame increased fuel costs for their loss?  There are many answers to this question, the most obvious of which would seem to be the simple fact that United has been steadily increasing its fares and adding fuel surcharges in response to its increases in fuel costs.

Indeed, their release hints at this when it discloses a 9% increase in revenue per seat mile.  Some of this revenue increase is due to selling more seats, but the rest is due to charging more per ticket.

When will United's management stop blaming others and start accepting some culpability for their continued losses?

While United and other carriers are struggling to increase their fares as much as possible, there's one airline happily looking forward to the day when it can give all its tickets away for free.  This is profitable European discount carrier Ryanair.  As this article reports, last year they gave away for free 25% of all their tickets, and they see this figure increasing.

How can they do this?  What is the catch?

Well, yes, there is a catch.  They charge you for every conceivable extra.  And they plan to introduce inflight gambling, which they believe (hope) will provide a major income source, reducing the need to charge for tickets.  A bit like Vegas hotels giving free rooms, drinks, and food to regular gamblers.

Talking about airfares, don't you hate it when you go to buy an airfare that was advertised at one price, only to find there are hundreds of dollars of taxes, surcharges, fees, and other costs to be added.  There should be a law against such deceptive advertising?

Well, apparently there already is - in New Zealand, where national carrier Air New Zealand has been found to have breached the country's Fair Trading Act.  Fourteen of twenty ads submitted to the Auckland District Court by the Commerce Commission were found to be false or misleading, and the airline is now facing a further 335 charges under the Fair Trading Act.  With fines of up to NZ$200,000 (US$140,000) per offence, there could be a substantial penalty involved.

The airline says it has changed the way it advertises its fares.

And talking about misleading advertising, I'd mentioned last week the ridiculous claim that it would cost an airline $39,000 to fly an extra 2500lbs of weight on a 3000 mile journey.  My guesstimate was the cost would be closer to $91.30.

I corresponded with the journalist who wrote the article, and he told me the original data came from the airline lobbying group, the Air Transport Association.  But was it simply an innocent mistake, and a misplaced decimal point?

Incredibly, when the journalist asked the ATA to substantiate or to correct their claim, the ATA said they couldn't!  Quoting from the journalist's email to me

The delay in posting a correction was because I was awaiting accurate information to give readers. Over the weekend, the ATA told me they couldn't provide accurate data, but Boeing came through yesterday.

Are we to believe that the ATA - an organization with a mega-million dollar annual public relations and lobbying budget - is unable to correct errors it makes and can not give accurate data on how much it costs their member airlines to operate their planes?

One also wonders how it is the ATA is able to provide bad data, but unable to correct it when told it is wrong.

And the actual cost?  According to Boeing engineers, it is about $130 (acceptably close to my $91 guess).  ATA's number was 300 times too high.

These are the same people who are continually spouting 'facts and figures' to our elected representatives in never-ending pleas for special help to the airline industry.  Makes you wonder what else might be misstated by a factor of 300, doesn't it.

While thinking of fuel costs, last week I complained that no airline had reduced their fuel surcharge to recognize the reduction in fuel costs.  This week, one airline - only one - dropped their surcharge.  Many thanks indeed to Virgin Atlantic, who reduced their surcharge by $6 per sector (from $55 down to $49).

This is courageous on their part because many times the fuel surcharge is a 'hidden' extra that only appears after you've gone through most of the airfare selection routine, and many passengers don't realize fuel surcharges are not consistent across all carriers.

Virgin offers one of the best trans-Atlantic flying experiences out there (see my reviews of their Premium Economy and Upper Classes) and now have lowered their fuel surcharges too, giving you an abundance of reasons to choose them for your next flight to Britain.

Virgin is currently marking its 21st birthday.  It is interesting to reflect on some of the improvements to air travel they have pioneered.  Virgin was the first airline to introduce amenity kits for all cabins, including special ones for children, in 1984.  They were the first to introduce seatback individual entertainment systems for all passengers, in 1989.

And if you fly in other than coach class, they were the first airline to introduce a 'mid grade' cabin, half way between coach and business class, in 1992.  They were also the first airline to introduce an onboard bar (in their Upper Class) in 1984, the first to offer free limo transfers both to and from the airport for Upper Class passengers (also 1984), the first to offer drive-through checkin (does any other airline offer this, I wonder), in 1996, and the first to offer in-flight beauty treatments (1990) and now to have a full spa and jacuzzi facility within an airport lounge (2005).

Very impressive for a small and privately owned airline.  Let's hope the next 21 years bring lots more goodies, as it almost certainly will when they deploy their A380s, including perhaps the long promised double bed sleeper seats.

I wrote last week about Boeing numbering its planes to give them lucky numbers in Chinese.  Reader Kent wrote in to say

I kind of think it's silly that both Airbus and Boeing are creating model numbers, so that Chinese buyers will feel that the plane is lucky, particularly with the number 8. I'd like to think that as China becomes more western in its economy, that airline executives make purchase decisions based on sale prices and operating cost data, and not which plane has the most 8s in the model and series identifiers.

On the other hand, I handled a real estate closing several years ago, and the purchasers were a couple who were of Chinese heritage. The wife had brought her father along, and about a half hour into the closing, she had the look that said she had made a mistake. Her father kept telling them to not close, unless I gave more and more credits.

Their attorney finally took me aside and told me that her father was from China, and that he was trying to get as many 8s in the final sale price, for luck.

I called my clients and explained the situation. I got authorization to get the price to $xxx,888.88. Once I played around with the numbers, the closing went like clockwork.

It just amazed me that someone was willing to walk away from a deal, and the potential for litigation, because of the lack of 8s in a sale price.

I guess old customs do die hard. I'm just used to people avoiding numbers, like 13. I had another closing, where price end in 13 cents. The buyers said that we should decrease a credit by a penny, so that the price ended in 12 cents.

Then there are my friends who have to wear jersey numbers of famous athletes.

I shared this with Adlina Hamid, the massively talented Chinese/Malaysian lady who designs my websites, and she confessed to having recently bought a property in Calgary and making sure that the final closing price on the house had 68 cents on the end (this means 'continuous wealth' per the table of meanings she helped me prepare last week).

Suggestion to retailers :  Instead of pricing items at $x.99 or $x.95, why not consider pricing them at $x.86 (wealth continuous) or $x.68 (continuous wealth).  I've noticed Magellan's typically price products at $x.85 - bad move, John :  This means 'wealth no'!

The steady march towards a Qantas/Singapore Airlines merger continues.  Qantas chairwoman Margaret Jackson this week complained about the 49% cap on foreign ownership of Qantas, claiming this is costing Qantas billions of dollars in extra costs for capital.

She also made the observation, in response to criticisms about Qantas' virtual monopoly on flights across the Pacific between Australia and the US, that any US carrier could choose to start service, but none have done so (except for United's scaled back operations, which it inherited about 20 years ago from Pan Am).  Maybe Qantas isn't profiteering on the route after all.

Boeing has been enjoying a very successful week with new sales being announced at the Dubai airshow, largest of which was a huge order for 42 777 planes from Emirates.  Emirates seems to be unstoppably growing, ordering more and more planes from both Boeing and Airbus, and with these extra 42 777s, it will have 93, making it the world's biggest operator of 777 planes.  Boeing has a major lead over Airbus for new plane orders so far this year, with only one possible 'surprise', to occur in the next couple of weeks, when/if Qantas announces a possible large order for new planes.

As I've repeatedly said before, the count of new orders taken each year is a misleading measure of the relative success of both manufacturers.  It can give a pointer to future manufacturing volumes, but many orders are changed or cancelled between their first announcement and the final plane delivery.  The most relevant measure is planes delivered each year.

In January 2005 Boeing was estimating it would deliver 320 planes this year.  Currently, it is expected Boeing will deliver 290.  This is five more than last year, but a lot less than it had earlier projected - their machinists strike certainly didn't help.  Comparatively, Airbus is expected to deliver 370 planes this year, a large increase on the 320 delivered last year, and its best year ever.

While Boeing is enjoying unusual success, Airbus is bogged down with difficulties. Its delayed A380 may now be running afoul of regulations to protect other planes from its wake turbulence.  The International Civil Aviation Organization is considering doubling the separation distance between an A380 and any other plane when landing, and tripling the distance when planes are cruising behind each other, due to the increased turbulence this huge plane causes.

This increase, from five to ten miles for planes following behind an A380 when landing, might not seem significant, but it actually strikes at the very heart of the claimed advantage of the A380.  The A380 is designed to offer best benefits at congested airports such as Heathrow where there are not enough 'slots' for planes to take-off and land.  In such a case, operating the biggest plane possible gives airlines a way to increase the number of people they can process through the airport.

But if there needs to be a longer delay between an A380 taking off/landing and the next plane behind it, this means fewer planes can land/take-off, so the net increase in passenger throughput is reduced, and possibly eliminated entirely.

The ICAO proposed rules are considered to be very conservative, and so may be watered down before being enacted.  But some increase in separation may be mandated, although Airbus had earlier claimed there would be no need to make any changes at all.

Last Christmas SAS offered an excellent series of daily discounts to various destinations it serves, modeled on the concept of an Advent Calendar.  They are repeating it again this year, and if you live in or near an SAS gateway (Chicago, New York, DC and Seattle) you might want to register to get their daily offers.  The offers are presented in a fun way, and are sometimes very good value.

This Week's Security Horror Story :  A politician spoke the truth, and so outraged fellow politicians that they immediately called for her resignation.  Australia's Immigration Minister, Amanda Vanstone, is facing calls to resign after she dared to criticize some air security measures.  She said

I don't know if you travel that much, and have the pleasure of trying to cut soggy toast with a plastic knife.  We have this, of course, because we're worried about terrorists getting on planes, grabbing knives and doing bad things with them.

But has it ever occurred to you that you just smash your wine glass and jump at someone, grab the top of their head, put it to their carotid artery and ask anything?

This was an example, she said, of the many anti-terrorism tools that were only aimed at making people feel better (instead of adding true security).

But rather than remaining quiet, or even agreeing (as he should have) Opposition homeland security spokesman Arch Bevis described Senator Vanstone's comments as silly and called on her to resign, saying

Senator Amanda Vanstone's extraordinary outburst that airport security was a sham to make the public feel good, has made a mockery of the Howard government's credibility in this important area of counter-terrorism.  Amanda Vanstone's cavalier approach to border security and the protection of the travelling public makes her unfit to remain as a minister.

She should apologise to the Australian public for her flippant comments and tender her resignation.

Resign?  Heck no, she should run for Prime Minister!

Cigarette smoking is a terrible addiction to be saddled with.  Sometimes the urge gets so powerful, you just have to have a cigarette, even if you're on a plane that doesn't allow smoking.  So, what to do?  If you're French, apparently the sensible thing to do is go out onto the wing to have a cigarette there, without bothering your fellow passengers.  Unfortunately, this particular Frenchwoman failed to appreciate that the plane was airborne at the time.

Some people have other addictions they also need to satisfy.  Didn't this passenger listen to the stern warning at the start of the flight about the presence of smoke detectors in the lavatories?

I wrote last week about the continued vulnerability posed by commercial cargo being carried on US passenger planes.  This week The Times in Britain reports similar vulnerabilities exist in Britain, where 63% of commercial cargo is transported on passenger planes.  Only a tiny proportion is ever checked to ensure it is 'safe'.  To become an approved freight forwarder in Britain, you simply pay a 400 fee and submit to a check which takes just two hours to complete.

I have often worried about the dangers to our health posed by mobile phonesThis article has good news and bad news.  The good news - a claim that mobile phones are safe.  The bad news - it tells us that television transmissions are dangerous.

And this article confirms what I've long said.  If you're planning on buying a cell phone, don't buy it direct from the wireless company.  Third party retailers such as Walmart and Amazon will offer you very much better deals than you'll get direct from the wireless companies.

Lastly this week, one of the unavoidable negatives of winter are the shorter days and longer nights.  Or - wait - maybe this isn't unavoidable at all.

Until next week, please enjoy safe travels.

              David M Rowell aka The Travel Insider

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