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3 February, 2006 

Good morning

Our Danube Christmas Markets Cruise is meeting with a tremendous level of interest, and we now have eighteen people participating in what promises to be a wonderful experience for us all.

Although E category cabins are completely sold out, and C cabins are getting tight, there's still room on the ship for Travel Insider readers.  Please visit the information about this cruise, and do choose to come join us.

As I have said before (but it bears repeating) our 2004 Christmas Markets Tour was one of the finest travel experiences I've ever enjoyed, and I'm eagerly looking forward to repeating the experience again in December, on a better boat, and with a better itinerary.  Please consider joining us.

Not everyone is familiar with river cruising, or understands why I'm so enthusiastic about this form of vacation.  So, here is :

This Week's Feature Column :  European River Cruising :  All you ever wanted to know about European river cruising, including tips on how to choose the best cruise line, cruise ship, and cabin type.

Dinosaur watching :  Let's all welcome United back to the real world.  United exited bankruptcy on Wednesday this week, ending with a final grand gesture in the form of announcing a fourth quarter 2005 loss of $17 billion.

Yes, that is not a mistake.  In a single three month period, United managed to create a $17 billion loss.

Why so huge?  Nearly all of this loss comprised special one-off items to do with their re-organization; in other words, they are trying to clear out as many financial problems as possible, prior to their Chapter 11 'get out of jail free' status expiring.

Their loss for the first three quarters of 2005 was 'only' $6 billion more - making a total of $23 billion for the year.  An impressive feat - a long bankrupt airline loses $23 billion dollars and then immediately afterwards exits bankruptcy.

Where did the $23 billion come from?

In the usual jingoistic manner of too-highly paid CEOs, UA's Chairman, CEO and President (remarkably, all the same person), Glenn Tilton said, in comments to mark the airline's emergence from Chapter 11

Today, we have the business platform we need to compete with the strongest carriers and a clear strategy of offering the right service to the right customer at the right price.

Such a bold statement would seem to offer little opportunity to subsequently make excuses if United fails to generate positive results from here forward.

Joe Brancatelli's powerful condemnation of the new United can now be read on the USA Today website.  Time will tell who is correct - Joe or Glenn.  My money is on Joe.

United proudly told us earlier this week that it had come up with a 'resource optimization program' to get better use out of its planes.  One of the apparent consequences of the generally yawn-inducing ideas jolted me awake - a new requirement for passengers to be at the gate 30 minutes prior to departure.

Do you remember the 'good old days' when one would arrive at the airport 20 minutes prior to departure, walk through security unimpeded, go straight to the gate with the boarding pass the travel agent had given you, on to the plane, and still have time to wait impatiently for the plane to leave?  While flight times, as shown in timetables, remain similar to the good old days (well, actually, slightly longer in many cases), actual travel times for us as passengers have lengthened terribly.

If we need to be at the gate 30 minutes prior to departure, when do we need to be walking into the terminal building?  The random unpredictability of delays to check in and go through security mean we all have to adopt a moderately worst-case plan for such things, and instead of arriving at the airport 20 minutes prior, many of us (including me) now choose to be at the airport much more than an hour prior.

And if you want to travel with a Swiss Army Knife, that bag you used to carry-on into the cabin with you now needs to be checked, thereby adding to the delays upon arrival while waiting for luggage, too.

For most of us, a plane journey today takes at least an hour longer than it did five years ago.  This is progress?

But, back to the United 30 minute requirement.  What is this for?  Surely, it absolutely isn't for our convenience!  And what possible benefit does it serve United, either?  Gate areas are always congested and never have enough space for all passengers, particularly with the very high loads on all flights these days.  United is trying to speed up the turnaround time on its planes, and for sure there's no way they can plan for a fast turnaround if they wish to start boarding the plane 30 minutes prior to departure.

Southwest can do a complete turnaround - open the jetway, arriving passengers deplane, clean and reprovision the plane, departing passengers board, and close the jetway, all in less than 30 minutes.

This requirement shows United's careless callousness when it comes to passenger convenience.  I'd like to see Mr Tilton reconcile this new requirement with his empty claim about 'a clear strategy of offering the right service to the right customer at the right price'.

Mr Tilton's proud claims would seem to already be a sham, almost before he finished uttering them.

The new United?  It promises to be worse than the old one.

United is showing a new advertisement in major US markets during the Superbowl this weekend.  It is ten years since United last had a Superbowl ad.

What does the advertisement feature?  Does it talk about low fares, good service, convenient schedules, and a wonderful frequent flier program?  Ummm - not much.  To see a part of this bizarre but very expensive advertisement, click the link from this story.  Then decide how many extra flights on United you'll be likely to take as a result of the ad.

For the last word - this week - on United, here's a must read piece from the NY Times, wondering if United's recent history is 'creative destruction' or simple looting (by management).

Another bankrupt airline is getting close to following UA out of bankruptcy.  ATA has had its reorganization plan approved and expects to be out of Chapter 11 by April.

Startling news from JetBlue.  They announced a loss for their fourth quarter, so much so that their entire 2005 became a loss, and they are further projecting another loss for 2006.

JetBlue lost $42.4 million in the fourth quarter, including a one time charge of $6.1 million for 'development costs related to a maintenance and inventory tracking system that will not be implemented'.  Looks like someone wasted $6.1 million dollars on a useless system that was so bad it never even made it to release.

The $42.4 million loss wiped out their profit in the first three quarters, and left the company with a $20.3 million loss for the year, compared to a profit of $46.2 million the previous year.

For 2006, the company says it expects net losses both for the first quarter and the entire year.

There's an interesting issue with JetBlue's disappointing performance and projected continued poor performance through 2006.  Back on 19 October, JetBlue made the innocent seeming announcement that it was accelerating the vesting of all unvested stock options.  Instead of vesting them over five or seven years as they had been typically doing, the company allowed all outstanding options to become fully vested on 9 December.

As it turned out, three quarters of all such stock options that came eligible were duly exercised in December, resulting in a cost to the company of $6.9 million dollars.

Between 9 and 31 December, JetBlue's stock traded in a range roughly between $12.50 and $15.75, and closed the year at about $15.40.  Since 1 January, the share price resumed its steady move downwards, and dropped as low as $11.10 on Wednesday this week (after the company's bad financial news).

What a happy stroke of random luck for the JetBlue employees who were able to unexpectedly cash in their shares at the high prices of December (the highest they'd been for all 2005).  I wonder how many of those people promptly sold their newly vested shares?

JetBlue's problem can be ascribed to several different causes, but the simple bottom line is that they did a poor job of cost control (not just fuel but everything) and didn't charge enough per ticket to meet their costs.

Perhaps in recognition of that fact, JetBlue introduced some small fare increases last week.  Will these increases - about 5% - be enough to bring it back into the black?  I don't know how their costs will inflate during 2006, but this single 5% increase, by itself, doesn't seem sufficient.

JetBlue raised its fares by $5, and needs to raise them further.  Southwest also raised its fares this week by $1 or $2.  And what does US Airways do?

With a brave face and a lot of bravado intended to imply they were happy to be doing this, US Airways dropped their fares out of Charlotte by up to 54% this week.

Is it just a coincidence that AirTran started operating some services from Charlotte last year, and Southwest's Chairman said he considers Charlotte a very desirable city to serve?

Being forced to drop fares in one of the markets that had been high-yielding won't do any good for US Airways' profitability.

I wrote last year about the hidden value of airline frequent flier programs, and - based on the realized sale price of a slice of Air Canada's program - estimated United's Mileage Plus program to be worth as much as $15 billion.  This week a Reuters article estimates American's Aadvantage program at $5 billion.  While this is a lower value than I'd put, it is still in the ball park and confirms my basic premise.

What do the airlines say about this?  Kurt Stache, president of Aadvantage Marketing Programs, told Reuters AA did not rule out a sale of their Aadvantage program in the future.  'We're always looking at potential opportunities for the program,' he said. 'The precedent has been set [Air Canada's sale] and it's certainly something that could be done.'

Ken Feldman, vice president of Loyalty and e-commerce for United, said in a Reuters interview that his company was 'watching to see what kind of benefits are ultimately derived' from the spinoff by Air Canada.

So now the airlines are agreeing their frequent flier programs have a value (in my article I point out how United's only balance sheet recognition of its Mileage Plus program was to show it as a $840 million liability), and they could be sold, one has to wonder why it is United didn't sell its Mileage Plus program, in whole or in part, and whether for $5 billion, $15 billion, or any number inbetween, and distribute the cash among its short changed creditors?

More to the point, one also has to wonder why United wasn't forced to do that?

Talking about frequent flier miles, on 15 Feb, US Airways is going to close any Dividend Miles accounts that have been inactive for the last three years.  If you have an inactive Dividend Miles account and stand to lose the miles you've accumulated in it, here's a thought - why not donate the miles to either the Make a Wish Foundation or the Hurricane Katrina Fund.  Log in to your Dividend Miles account and select the option to donate your miles.  But do it before 15 Feb.

Still talking about frequent flier miles, how many miles do you lose each year?  When I flew to New Zealand in Oct/Nov, I entered my Alaska Airlines frequent flier number when making the booking, and then I checked it was in the record before making the two international flights on Qantas, and again for the domestic flight within New Zealand.

None of the three flights ended up being credited to my Alaska Airlines account.  Alaska's automatic flight credit request process doesn't work for its mileage partners, only for its own flights, and regrettably, I no longer have the necessary paper trail to prove my entitlement.

I often lose partner airline credits.  What's the problem here?  What else can a person reasonably do to ensure their miles are credited, other than giving the frequent flier number at the time of booking, and then giving it a second time when checking in for the flight?  And how can the checkin agent say 'yes, your number is in the system' when clearly it isn't?

One last comment about miles.  Last week I downplayed the value of Aadvantage miles.  Several readers wrote in to tell me they've found it easy to redeem their AA miles for free travel.  I don't have an Aadvantage account and based my comments on earlier emails from readers complaining about problems redeeming their Aadvantage (and other airline) miles, and on current 'conventional wisdom' which is the combination of fewer empty seats on planes and more frequent flier miles being issued than ever before, means awards are getting harder to obtain.  Obviously, and for at least some readers and some itineraries, awards can still be obtained with only moderate degrees of difficulty.

Canadian airplane manufacturer Bombardier cancelled its project to develop a new 110 - 130 passenger jet.  It said this was due to poor market conditions.

Remembering that 2005 saw both Airbus and Boeing posting record new airplane orders, and with bullish sales projections for 2006, one wonders what is necessary for Bombardier to view the market as positive rather than poor.

On the other hand, a hint came out of Russia, suggesting maybe Bombardier will instead partner with a Russian company that is also seeking to develop a similar type of passenger jet.

But if that were to be the case, the market would truly have to be exceedingly positive for any success to be enjoyed.  A couple of days ago, Aeroflot's board decided to withdraw all its Soviet era planes by 2010 and will be replacing these planes with western planes.

If Aeroflot - still largely owned by the Russian government - won't buy Russian planes, who will?

While Bombardier is cutting back, European based Airbus is expanding its operations - by opening another engineering center, but this time not in France or anywhere else in Europe.  Rather akin to the way Japanese car manufacturers opened plants in the US, Airbus' new office is in Mobile, AL.  It will grow to 150 engineers and may also expand to manufacturing operations in the future.

Putting a perfectly bad ending on a perfectly mishandled situation, Cunard insisted on having the last word after problems last week with its Queen Mary 2 voyage.

Showing remarkably bad grace, and refusing to admit it was initially mean minded, a Cunard spokesman said 'While we believe that our original offer would have been fair compensation, we have decided to make an additional gesture' (by increasing the compensation from a 50% discount to a full reimbursement).

The spokesman neglected to mention that their decision to make this additional gesture only happened after a class action law suit had been filed against the company by the aggrieved passengers.

Why can't companies admit their mistakes and apologize?

Thanks to reader David who sent in an invaluable computer tip.  If you have Windows XP, and use an LCD screen, this applies to you.  Windows XP has a built in technology called ClearType that enhances the display of text on your screen, making jagged characters look brilliantly smooth and sharp.

But.  It seems ClearType is either switched off by default, or not properly set.  So you need to go in and turn the software on and calibrate it.  Both these steps are very easy and make a huge difference to the clarity of text on your screen.  This link tells you more about what ClearType is, and this link turns the software on and walks you through the calibration.

Do this.  You'll be amazed and delighted at the improvement.

The end of an era.  Western Union's telegram service will.  Stop.

And the dawning of a new era.  Dublin Tourism are releasing a series of podcast or 'iWalks' - audio guides that can be downloaded from www.visitdublin.com and played on an iPod or other MP3 player.  This is a great new way to take sightseeing guides with you on your travels, and there are other commercial type walking guides also coming out in these formats.

This Week's Security Horror Story :  For the last four years, we've been reading of stupid unnecessary problems caused by the TSA's semi-arbitrary seizure of generally harmless objects, and many of us have risked instant fines or worse by inadvertently leaving things like small pairs of scissors in our carry-on bags.

In December, the TSA finally saw reason and slightly liberalized its list of banned carry-on items.  Sure, you still can't have small bladed pocket knives, but you can now take on short blunt ended scissors.

Is this a welcome development and a return to something closer to common sense?  I think so.  But flight attendants disagree, and are seeking to get scissors and screwdrivers returned to the banned list once more.

Presumably, if the flight attendants had their way, all carry-on items would be banned, and passengers would only be allowed on in restraints, and naked other than for that.

Something else we regularly read about is a passenger going through security who perhaps makes a nervous joke about a bomb, or a passenger talking to another passenger and who is (mis)overhead apparently talking about bombs.  In both cases, the usual scenario is for a zero tolerance zero sense approach, arresting the person in question and charging them with all manner of serious federal felonies.

And now, a wonderfully sensible ruling in a Washington State Supreme Court case.  The Court, ruling on a case involving a Washington state statute rather than a federal offense, and involving a passenger taken off a flight who then threatened to return to the airport 'with a Ryder truck and some nitro diesel fuel' said the offense of making a bomb threat only applies in situations where the threat was likely to be carried out.  The Court added 'a true threat is a serious threat, not one said in jest, idle talk, or political argument'.  Details here.

Security might not be getting any better, and the lines at the screening stations might not be getting any shorter, but in another example of reverse economy of scale, even though passenger numbers are at all time highs, the government wants to double the airline security fee.  Currently we are charged $2.50 per flight segment - a bit unfair because typically you and your bags only go through security at the start of your travels, and don't repeat the process at every connection.  This $2.50 per segment fee is capped at $10 per journey.

The government wants to double this to $5 per segment, although mercifully still leaving the cap at $10 per journey.

It is unclear what extra we'll get for this doubled fee.

A British Don at Oxford became the first person to win a court claim for compensation under the new EU rules for airline passengers.  He was awarded 840 (almost $1500) in compensation for a cancelled flight in a landmark judgment that could benefit thousands of travelers who endure long delays.  Thomas Cook Airlines argued the flight that was 24 hours late in departing was only delayed and by special circumstances.  If a flight is delayed the airline has to provide meals and hotel accommodation but no compensation.

The flight was to originate at Stansted but passengers were told their flight was cancelled and they would be bussed to Manchester to catch a flight the next day.  That flight had the same flight number as the cancelled one, apparently a frequent practice.  The airline said there was a fault with one of the engines but it turned out that wasn't the truth and it was another flight with an engine problem.  Naughty Thomas Cook Airlines.

A Dutch security company says that chip-based passports are insecure, not secure as promised.  They showed it is possible to eavesdrop on a passport reader and decode the data being sent from a passport to the reader.  The company used the proposed Dutch biometric passport as its test case.

A director at the security firm said that directional antennas are able to intercept the signal between an authorized passport reader and a passport chip from distances of up to 100 feet and that the communications can be deciphered to reveal the sensitive data inside.  Swiss and German passports are also vulnerable.

The US plans to introduce passports with similar technology, but assures us the passports will be secure.

Do you find you often catch a cold after a long flight?  I certainly do.  This article reports on a study that finds airline passengers are up to 113 times more likely to catch a cold than if they hadn't flown.

What will they think of next, part 1 :  Reader Mark reports on a new gadget, ideal for finding your way to the bathroom late at night in an unfamiliar hotel room - lighted slippers.

What will they think of next, part 2 :  A mobile phone for dogs, appropriately in the shape of a dog bone.

Lastly this week, something to be glad they thought of - spending a penny in Paris will no longer cost 0.40 (about 50).  Paris has converted more than 200 self-sanitizing public toilets to now be free.  And that's a big relief for us all.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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