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Friday 8 June, 2007  

Good morning

The first week of our fourth annual fundraising drive greatly exceeded expectations.  Indeed, I was quite overwhelmed by the outpouring of kind support, with 205 readers sending in contributions, ranging up to some quite ridiculously generous sums (yes, this means you, John, Marty and Terry).  Thank you, everyone who was responded.

I'm sure the total would have been considerably higher, but for almost two hours in the peak of Friday morning, the Paypal service stopped working and no-one was able to contribute.  Hopefully that won't happen again today!

Last year, the first week had 152 readers participating, and the two years before that had 94 and 86 readers.  This year's goal of 680 readers seems achievable after this strong start.

One reader contributed twice, sending in this lovely note with her second contribution

Well I contributed from the first line of the newsletter because I was so tardy last year. But then when I read the rest of the note, I felt I should send more...

If you missed it last week, here's the background on the fundraising drive and why your help is needed.  But, to briefly recap, this newsletter and matching website - my full time job - is all completely free; and relies on the PBS model of voluntary reader contributions.  Once every year, you are asked to help out, and this year your help is needed even more than in the past.

Please go to the support page and help as best you can.  No-one should ever feel obliged to help, and neither should anyone ever give more than what they can conveniently spare.  But please help to keep us up and going and growing.

One reader wrote in after reading last week's article about Leavenworth saying that to her Leavenworth will always be associated with a prison.  But for sure, no-one needs any bars or locks to keep them in Leavenworth, WA, a truly lovely little Bavarian style alpen village.  Here's some more about this gem :

This Week's Feature Column :  Where to Stay and Eat in Leavenworth :  Lederhosen are optional, and so too is a liking for sausages.  You're sure to find some good food and a nice place to stay when you visit this lovely town.

Dinosaur watching :  More good news for some airlines, more bad news for others.  May traffic results are coming out, and AirTran is reporting record May traffic, with revenue passenger miles (RPMs) up 22% over the previous year, and a 76.4% load factor.  United on the other hand reported a 0.5% decrease in domestic RPMs, with a much greater 3.4% decrease in capacity, making for an average 86% load factor.

Continental reported a massive 8.9% increase in domestic RPMs, with an 84.4% load factor, but American had a 2.5% drop in its domestic RPMs and an 84.2% load factor.

Confirming the generally rosy future for airlines at present, IATA this week boosted its 2007 profit target by 34% from its former target set only three months earlier, and 53% up on the target set six months ago.  Clearly at least some international airlines are growing profits faster than they can keep up with.

Northwest's shares are now on open trading status.  After having reached almost $26.50 on Friday last week, they have steadily dropped away and closed on Thursday this week at $23.29, emulating Delta's inability to sustain its pre-Chapter 11 exit valuation/share price projections.

Recently ousted JetBlue former CEO David Neeleman sold 2.5 million of his shares in the airline (he had just over 10 million to start with) last week, getting $10.87 a share.  The share price has steadily dropped since word of his sale reached the general market, and it closed at $10.06 on Thursday.  Maybe other investors are slightly discomforted to see Neeleman selling off almost a quarter of his holding, but there may be innocent reasons - this is the first time Neeleman has sold any of his stock and he is probably keen to cash in some of his paper wealth.

Certainly, JetBlue's stock price is disappointing when you consider that two and a half years ago it was valued almost exactly three times more than it is today.

Another mildly disappointing airline stock of late has been Southwest, with some observers wondering if Southwest has somewhat lost direction.  In its latest announcement, the airline said it would consider slowing its expansion if its profits continue to be weaker than targeted.  Southwest typically grows its flying capacity by 8% a year, but perhaps this has meant some investments in less profitable routes simply to keep its forward growth momentum surging.

This focus on growth has been an important part of Southwest's share price, which currently has a P/E multiple of 21.7  This compares with CO at 9.1, US Airways at 9.2 and AA at 16.9.  Clearly if Southwest was to be revalued in line with more stable carriers, its stock price could tumble.

Oh - and JetBlue?  While P/E ratios become a bit meaningless with marginally profitable airlines, it is currently showing a 197.3 P/E ratio.  You don't want to think what would happen to JetBlue's share price if its P/E multiple was pulled back to a more realistic number.

There's an interesting development with premium service across the Atlantic.  After the apparently successful startup and consolidation of airlines such as Maxjet and Eos, offering all business class or all first class flights between Britain and the US, both British Airways and Virgin Atlantic are now saying they're considering establishing such flights, too.

But - will this work for them the same way it does for their competitors?  First of all, won't any extra flights they add with all premium class seating steal business from their existing flights?  In most cases, they can't cancel other flights because they need the coach class seating, and so if they're just shifting existing passengers, they're not actually creating any new revenue while creating substantial new costs.

Secondly, it has been relatively easy for the established carriers to ignore these new airlines, and - more to the point - ignore their pricing, too.  You'll still pay two or four or more times more for a full price premium seat on BA or VS compared to what you might pay on Maxjet or Eos.  But if BA and VS are to start offering flights similar to the Maxjet and Eos flights, will they also choose to adopt similar pricing?  If they do this, they've scored two 'own goals' instead of just one - not only have they simply shifted their current passenger traffic around, but they've lowered the fare they get from these people too.

Good news for people who'd like to fly on excellent Emirates.  They will be starting new service three times a week from Toronto to Dubai from 29 October, and will be adding new service from Houston in December, too.  This can make sense not just for people flying to Dubai but also for people flying on to other places in the east beyond Dubai.

Here's an interesting, albeit largely self-serving article on the current parlous state of air traffic control in the US.  It appeared in Northwest's inflight magazine.  As you can see from the article, Northwest and the other major carriers are seeking to have 'general aviation' - ie, private and corporate planes - pay a larger share of the costs of the nation's air traffic control.

The association of general aviation operators of course objects, and says the real problem in the system today is not congestion caused by too many planes but instead is weather, quoting a USA Today story that blamed weather for 40% of delays and didn't mention general aviation as a factor at all.

But this is a specious argument.  To blame 'weather' for delays includes recognizing that these delays become more serious in congested air space.  Take out a certain number of planes, and the system, impeded by weather constraints somewhere, can better handle the remaining traffic; just like losing a lane on a six lane freeway is less serious than losing a lane on a two lane freeway.  General aviation is an undeniable factor in current airspace congestion.

Travel agents continue to enjoy a resurgence in popularity.  Here's yet another article on why travel agents are good - probably written by a reporter who breathlessly was advocating internet travel services just a few years before, and sadly concluding with some 2003 statistics about how travel is booked.  There have been such changes in the last four years as to make 2003 data almost irrelevant.

Cell phones are getting more and more clever.  We've seen them add music players, video players, cameras and camcorders, removable memory cards, and now GPS locators too.

So perhaps it is inevitable that someone would want to require cell phones to also have biological, chemical and radioactivity sensors built into them, so as to make us all participants in monitoring the environment for any terrorist weapon of mass destruction.  Details here.

Talking about cell phones, readers know I worry about the possible dangers of cell phone radiation.  So you can perhaps guess how unenthusiastic I am to read about this latest new invention - wirelessly transmitted electricity, which uses a different form of energy 'radiation'; oneabout  which even less is known, other than the throwaway comment at the end of the article

The researchers believe there is little to worry about on safety grounds, saying that magnetic fields interact weakly with living organisms and are unlikely to have any serious side effects.

Are you reassured?  I'm sure not!

Confirming what we already know about how the more expensive the hotel, the less that you get included in the room tariff is this Consumers Report hotel survey.  Among other findings - only 10% of budget hotels charge for internet access, but 60% of high end hotels do.

Here's another reason to like Boeing's new 787 - it will have better automatic ride smoothing than current jets.  Most modern jets provide some sort of automatic stability controls to smooth out turbulence, but - as this article details - the new 787 will have a more capable better acting system.

Meanwhile, competitor Airbus has announced a new corporate restructuring, designed to eliminate some of the duplications, tensions, and confusions of the past.  Previously Airbus had a great deal of duplication between its German and French operations, and now the company says it will be ignoring national issues and instead will be creating one single efficient structure.

Airbus is just over 35 years old, so this is a development that has been a long time coming.

This Week's Security Horror Story :  A visitor entering the US was asked what his purpose was in visiting the US. His answer was 'I'm here to shoot a pilot', and that alarmed the immigration officer.  It took the visitor five hours to explain that he is a movie director, and what he meant was he was going to be directing and filing (ie shooting) the first test episode for a new television series (ie a pilot).

One can understand the confusion, but not how it took five hours to resolve.  Details here.

After years of planning, earlier this year finally saw the introduction of new travel rules requiring everyone to have a passport when traveling to Canada, Mexico and the Caribbean (other than by foot or car).  Unsurprisingly, there has been a rush with many more people needing to get passports.  And sadly, despite occasional claims to the contrary, the State Dept has been unable to keep up with issuing passports.

So, the solution?  Simple.  Abandon the requirement for passports, at least until such time as the passport issuing backlog is caught up.

And - the catch?  Only people who can provide a receipt from the State Dept showing that their passport application is being processed will qualify for the exemption.  Question - if the State Dept can't issue a passport in a reasonable amount of time, why does anyone think they'll be able to create a special receipt/certificate document and send those out promptly?

Authorities in Brazil, a country in which 73.6% of people claim to be of the Roman Catholic faith, have fined Alitalia for allowing Pope Benedict and members of his entourage to board a flight for Brazil without passports.

The Pope and his entourage recently arrived in Brazil for an official visit and did not have the required travel documents with them.  Brazil reportedly fined the airline an undetermined amount.

The Pope is a head of state.  I wonder if Mr Bush travels with a passport?  Does he have to apply for visas like the rest of us?

How'd you feel if you spent $800,000 to develop a new corporate logo, and the final result was so shocking that, in animated form, it caused some people to develop epileptic seizures?  This is what happened in Britain with their ugly new logo for the 2012 Olympics, to be hosted in London.

There is now a public petition to withdraw the logo, and this article features some quite good logos prepared, for free, by its readers.  It sure is hard to get much for your $800,000 these days, isn't it.

Lastly this week, I'm sure you wouldn't be asking any of these questions while in Prague, would you?

Until next week, please enjoy safe travels - and if you haven't yet done so, please consider sending a contribution this way.  It truly is needed.

              David M Rowell aka The Travel Insider

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