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Donate Here] 8 September, 2006 Good morning With the traditional end of summer - Labor Day weekend - now behind us, and the equinox due in little more than a week, it is, alas, all 'downhill' from here through the end of the year, with shorter days and colder weather. Which perhaps provides a rough segue into the topic of our two river cruises, both of which are still accepting bookings : the Christmas Markets cruise from Budapest to Nuremberg (and optionally on to Prague) along the Danube this December, and the Russian River cruise from Moscow to St Petersburg next July. We've got great groups of Travel Insider readers coming along for both cruises already, but for sure there's room for another couple or two - so if you'd like to meet your fellow readers (and me), plus have a wonderful time doing something out of the ordinary, please consider joining us. Continuing the international vacation theme, I've finally published a column I've been wanting to write for several years, detailing one of my favorite ways of sightseeing around England. In the happy event there may be some fall airfare specials to Britain again this year, or for whenever you next travel to Britain, you might want to consider this style of touring as well : This Week's Feature Column : Day Tours by Train from London : Much of England is less than two hours by train from London. For best convenience and flexibility, base yourself in London and take a series of day tours to other places. Here's how to plan such touring, and the best way to buy the train tickets. We have a request for help from a journalist and long time Travel Insider supporter who is writing an article about scuba divers and any problems they are now experiencing when flying with their gear. Have the reduced weight allowances made things difficult? Any new security issues? Do you have any ideas or work-arounds? If you can help, either on the record or off the record, please let me know and I'll pass your details on to the journalist. Many thanks. Dinosaur watching : The judge is still thinking about whether to let Northwest's flight attendants go on strike. He's been thinking about this for a week and a half already, so obviously his thoughts can be expected to rival those of Einstein in terms of profundity when finally offered to his anxious audience. The US Supreme Court can rule on a Presidential election in less time than this judge takes to think about Northwest and its labor problems. Meanwhile, Northwest continues to operate using its arbitrarily imposed new pay scale and benefit cuts with its flight attendants. On the basis of the estimated $195 million cost saving these represent, clearly each extra day of delay is of massive benefit to Northwest and massive cost to its flight attendants. But far be it from me to be as crass as to put a dollar figure on the delays while waiting for the judge to do what he is paid to do - issue judgments. Oh, and talking about $195 million, that is also almost exactly the profit Northwest made in June and July alone. If an airline making $200 million profit in two months is in Chapter 11, one wonders just how much profit it has to make before it is deemed not to be bankrupt and required to trade normally without the 'get out of jail free' magic of Chapter 11. Northwest needs more flight attendants, although only at bottom dollar. The airline is recalling all the flight attendants it earlier furloughed - 1,131 in total. Although the law of supply and demand would normally suggest that a shortage of labor results in higher wages, in the topsy-turvy world of the airlines, it seems the opposite applies (if Northwest gets its way). But while Northwest is enjoying the sedate pace of 'justice' in its flight attendant dispute, Delta seeks a speedier ride through the courts. On 5 September, it obtained permission from its bankruptcy court judge to terminate its defined benefit pension plan with its pilots. When will this termination take effect? Delta says it wants this to start on 2 September (three days prior), but still needs the Pension Benefit Guaranty Corp's approval. Although Delta has up to seventeen years to make good on the deficit it allowed to accumulate in this plan, the airline says the plan is simply unaffordable. Question - the plan may indeed be unaffordable for Delta today, but what happens when/if Delta starts to trade profitably again in the future? Why not then re-start the airline's liability for the promises it earlier made to current and retired employees? Why is Delta's 'get out of jail free' good for ever? August traffic data is coming out, and it is another good month for most airlines. Southwest reported a 10% increase on the same month last year, up to 6.2 billion revenue passenger miles (rpms). AirTran had a massive 26.2% increase, up to 1.3 billion rpms. Embattled Frontier had an 18.9% increase. Even some dinosaurs did well. Continental had an 8.9% increase to 8.4 billion rpms (this includes international as well as domestic, whereas Southwest only operates domestic services). Other airlines faired not quite so well. United reported a 1.5% increase, and American had a 1.4% decrease in traffic. I wrote a while ago about American Airlines suing a man, Wilfredo Torres, who was repeatedly calling their CEO, Gerard Arpey in a desperate attempt to get anyone to listen to his complaint. Arpey refused to speak to Torres, and Torres kept calling back. Here's an interesting letter from an AA employee to Mr Arpey that builds on this point and provides another perspective on the airline employee/passenger interaction :
Good news for the airlines. The international airline association, IATA, has revised its earnings forecast for this year, reducing the projected loss from $3 billion as earlier predicted to 'only' $1.7 billion now. European airlines will collectively earn $1.8 billion; Asian airlines will earn $1.7 billion, but American airlines will lose $4.5 billion.
As can be seen, although oil prices have indeed steadily tracked upwards, industry losses are generally reducing. Looking at this data, one could even say that higher oil prices help the airlines to make more money - perhaps this is a nonsensical interpretation, but it is no less stupid than the airlines' claiming their massive losses are the result of high fuel prices. Indeed, with the amount of profiteering that goes on when airlines over-recover their increased fuel prices through so-called fuel surcharges, the suggestion that higher fuel prices lead to higher profits rings more true than false. But the airlines are never willing to let go of a convenient scapegoat. One current example is CanJet Airlines, a small airline based in Halifax, NS, with service to 14 Canadian and US destinations. CanJet distinguished itself, in these current airline boom times, by abruptly ceasing all scheduled operations. Why is it doing this? Canjet said it can't trade profitably due to fuel costs, rising landing fees, and stiff competition. No mention of inept management.... According to many observers (and regular drivers) the US interstate highway system and federal roading projects in general are in close to crisis mode, with vast numbers of bridges and other infrastructure items nearing the end of their lives, and unalleviated congestion in urban choke points. So who better to be nominated for the position of US Transportation Secretary than the woman who was, until recently, overseeing this disaster - Mary Peters. Road crisis notwithstanding, she has shown herself to have a fine handle on ethics - after serving as head of the Federal Highway Administration during the first Bush administration, she then accepted a position at a transportation engineering company, HDR - apparently without any conflicts of interest. Bravo. And showing she has a fine sensitivity to her achievements to date, she said in a statement
It wasn't clear if she was making this quote as a commentary on her former position, or lobbying in support of her present employer, or if she was looking forward to her probable new position as Secretary of Transportation. Among her achievements as Federal Highway Administrator, Ms. Peters helped push through a highway authorization bill that allows public highways to be turned over to private companies for maintenance and toll collection. She has also advocated time-of-day pricing at tollbooths and - surprise - construction of roads by private firms. Other highlights of her career to date include running a daycare service in her home, preparing taxes for farmers, and butchering cows in a slaughterhouse. Conde Nast Traveller magazine announced its annual 'top tourist destination' winners. Italy scored as most desired destination, New Zealand came second, and Australia came third. Is it just my own NZ origins that causes me to marvel at how such a small country (4 million people) in a very remote part of the world proves to be so popular? Well done, NZ. Thirty thousand readers voted in the awards. The top ten was rounded out by India, South Africa, France, Thailand, Spain, Brazil and Switzerland. The US scored 15th. If you're buying an international ticket on Travelocity, you now stand to enjoy a high value new benefit. Longtime Travel Insider supporter Telestial has started offering heavily discounted packages combining an unlocked international GSM cell phone and international phone service to Travelocity customers. There are links to the Telestial offer when buying international tickets, and mentioned in the booking confirmation email you receive as well. Talking about cell phones, here's a piece of useless but fascinating information : Verizon did a study of the average number of calls per subscriber, sorted by city. There was a surprisingly wide variation in results, with Miami residents being the most talkative, with 298 calls (incoming and outgoing, combined) per subscriber per month. Los Angeles came second (260) and Detroit was third (252). My home town of Seattle scored an undisclosed number below 200. Details here. In other cell phone news, UK discount carrier Ryanair says it will shortly begin outfitting the first 50 of its 200 Boeing 737s with an onboard communications system that will allow passengers to make and receive cellphone calls in flight. The technology will work with GSM phones and Ryanair says the cost will be similar to international roaming charges. In other words, expensive. Airbus continues to move ahead, albeit slowly, with its A380 test program, and this week saw it doing a series of long flights with full passenger loads. Flights lasting seven, ten, twelve and fifteen hours are being conducted, each with 474 passengers on board. The flights don't actually go anywhere - they depart from Toulouse and return straight back again. The purpose is to test all the systems on board in a real flight scenario. Meanwhile, possible bad news for both Airbus and Boeing. The seemingly inevitable is moving a step closer to reality. A Japanese consortium, headed by Mitsubishi Heavy Industries Ltd, is moving closer to committing to building passenger jets, with plans being to offer a plane in 72 and 92 seat versions. Funding includes up to 30% in the form of government subsidies, and a final decision will be made in 2008. Of course, these small sized planes don't threaten either the Airbus or Boeing model ranges, but do you want to guess if this is merely the start of Japan's interest in airplane building, rather than the totality of it? Remember when Japanese cars were thought to be restricted only to generic low priced low quality models? Now they also make sports cars, luxury cars, SUVs and trucks.... Quick reminder : January 8, 2007, is the day anyone entering the US by air or sea must have a passport, including US citizens (even if traveling from Canada or Mexico or the Caribbean). Although this date has been repeatedly pushed back, it seems that it may not be deferred any longer. Expect a last minute rush of passport applications and a lengthening of the current six weeks it takes to get or renew your passport. This will also apply to children as well as adults, of course. We've discussed before what happens when a cruise line changes its promised itinerary. Here's a very pleasing outcome after Royal Caribbean Line substituted a promised visit to Bermuda with, instead, visits to St John and Halifax in Canada. This Week's Security Horror Story : I provided generic information last week about how an iPod in a United Airlines airplane toilet caused a massive security scare. But for the real horror of the over-reaction, consider the in-person account of the passenger who lost the iPod. (Note the webserver with this narrative is currently being overloaded by people keen to read the full story, and you might have to retry a few times to get through.) The latest security paranoid over-reaction - an Orthodox Jew was removed from an Air Canada Jazz flight purportedly because some fellow passengers were nervous at seeing him praying. Details here. Some interesting cost data is coming to light about last month's security lunacy in Britain. British Airways said it lost £40 million (about US$75 million) as a result of lost revenue and extra costs due to the security scare. It had to cancel 1280 flights. BA was probably the hardest hit airline, but just about all airlines felt the impact to some degree. US carrier Continental Airlines is the first US airline to publicly comment on the events, and said it estimated that security issues reduced its August income by about 1.5%. Analysts had been projecting about a 0.5% impact, so this was three times greater. I estimate Continental's 1.5% reduction to be about $20 million. Presumably similar types of costs were incurred by other airlines. So, noting the costs of last month's issue; here's a challenge to the airlines : Five years ago, on 9/11/01, a security event occurred which cost the industry billions of dollars in lost profits. Now, five years later, in August 2006, a lesser event probably ended up causing an industry wide $1 billion loss of profit. Take perhaps a quarter of this - $250 million, and make this an annual contribution by yourselves to managing your own destiny - the security and related customer service issues. Create an industry-wide 'rapid deployment force' of customer service professionals who can be deployed wherever they're needed the most. Invest in new technologies to improve on security screening - for surely it is becoming plainly apparent that relying on government organizations and airports to do this for you is not proving successful. Use this money to create a more positive customer environment from arrival at the airport to departure (complete with bags promptly delivered to the carousel) from the destination airport. Use the existing structure of your international trade group, IATA, or do it competitively within your airline alliance groups, but in some way, stop complaining and passively suffering the consequences, and instead take control. As support to my tangential comment about not relying on government organizations, here's some very sad reading about the TSA's stumbling lack of progress in developing new security screening technologies. One of the small luxuries in return for paying a big surcharge when flying first class is the privilege to get jumped to the top of lines at airports. You don't have to wait in the regular line to check in or to board your plane, and you usually get priority lane access to be processed through security. But the cost accountants at British Airways have come up with what they undoubtedly consider to be a clever idea. Rather than pay, themselves, the costs for maintaining priority lanes to the security screening in New York, they are instead going to sell memberships in the Clear registered traveler program. This means that instead of getting free priority access to security, BA's fliers will now have to pay $80/year. That's a great benefit, isn't it! Being of a slightly cynical mind, I wonder if BA is getting a commission from Clear on each $80 membership it sells. This would of course thrill the cost accountants, but for passengers who've already paid some thousands of dollars extra for a premium class ticket, this might be thought to be a slightly less positive development. Question to BA : Why not give away memberships to your frequent fliers who regularly purchase business or first class tickets? We all know there are risks associated with flying, but one of the less frequently considered risks is being poisoned by an off-duty airline pilot on the same flight, lacing your drink with arsenic. This is exactly what happened to a human rights activist in Indonesia, traveling business class on a Garuda flight in 2004. His family is now suing the airline. Mexico has a tourist attraction where you will hear such things as "Run! They're on our tails" and a voice sounding like the US Border Patrol booming out "Don't cross the river. Go back to Mexico where you belong." EcoAlberto Park is a quirky tourist attraction that has been open for about seven years. Visitors pay the equivalent of US$16 to hike across fields and through treacherous ravines, to duplicate the experience of an illegal journey across the US Mexican border. The park is located in central Mexico and is dedicated to all of those who have gone in search of the American Dream, and is funded partly by the Mexican government. It compares crossing the border to an "extreme sport" and tells participants that they too, can "trick the migra," slang for the Border Patrol. Don't try this at home - or, more to the point, at your local airport. And perhaps best not to try this in the car, even if 25% of Russians do (thank you, Sarah). Until next week, please enjoy safe travels and drive carefully |
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Improved
results? Even with increased oil prices? As readers know,
I've never accepted the excuse that
airline losses were due to increased fuel costs, and here's an
interesting chart that tracks industry losses with oil prices.
David
M Rowell aka The Travel Insider