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Friday 9 November, 2007  

Good morning

Hopefully you - and your computers - coped with the daylight saving change last Sunday, and are now settling into the dreary routine of early darkness.  It certainly makes me think of running away to somewhere sunnier, and with that thought in mind, guess what?

Yes, as promised last week, I now have a lovely new river cruise to offer you for 2008, with even more options than originally hoped for.  So, and to celebrate France's welcome shift back to becoming a US ally once more :

This Week's Feature Column :  South of France Rhône River Cruise : Join me and a group of fellow Travel Insiders for a lovely cruise along France's Rhône river this coming May, with optional extensions before and after the cruise to Barcelona, the French Riviera, and/or Paris.

Please remember also our 'No Surcharge for Singles' (and discount for couples) cruise through Holland and Germany in March 2008.

And if neither of these suit, I'll give you a 5% discount on any and all Amadeus cruises in 2008.

I hope to come up with a 2007 Christmas Gadget Gift Giving Guide in a few weeks - a collection of gadgets to make life easier and/or more fun on the road and at home.  I've got some ideas already, of course, but if you've come across something you think worthy of inclusion, please let me know.

Dinosaur watching :  Airline profits are up, so - perhaps on the basis of 'make hay while the sun shines' - the airlines are mercilessly pushing through airfare increases.

The excellent FareCompare.com website offered this commentary in their newsletter on Thursday in response to United instigating an eighth round of fare increases since Labor Day weekend :

Within a short 70 day time span this fall, we have seen more “sticky” increases than the whole of last year (2006).

The timeline of the eight (8) increases is noted below (All increases where matched by all legacy airlines and sustained with more than 50% “stickiness”) :

1) 31-Aug Southwest Initiates $10 and $20 (long haul) roundtrip increase over labor day weekend
2) 6-Sep Delta Initiates $10 roundtrip increase
3) 14-Sep United Initiates a $6 roundtrip increase
4) 12–Oct American initiates $10 roundtrip increase
5) 17–Oct United initiates $10 and $20 (long haul) roundtrip increase
6) 26-Oct Continental initiates $10 roundtrip increase
7) 31-Oct American initiates $20 roundtrip increase (short and long haul)
8) 8-Nov United initiates $10 roundtrip increase

This eighth increase means that many passengers are now paying up to $60 or more roundtrip than they did the week before Labor Day.

Talking about United, and further to my comments last week about US airlines keeping old planes longer and longer, this article quotes their CFO/EVP as saying United currently has the fleet they want for next year.

Add another year to the average age of UA planes, it would seem, although their planes aren't too old, with the oldest being some 18 year old 737s.

And talking about UA's 737s, a news item on Wednesday quoted the same United CFO as saying that it is asking Boeing and Airbus to develop a new 737-replacement for them.  Currently the Boeing 737 and its Airbus competitor, the A320, are the two best selling planes out there - Boeing has delivered over 5500 737s and Airbus over 3000 A320s.

The very success of the 737 has Boeing in a difficult situation.  Currently the 737 is what a marketeer would call a 'cash cow' - a product in the decline of its life cycle, no longer worthy of substantial new investment, but one which the seller likes to keep on selling for as long as possible, because all its costs are recovered, making each extra sale richly imbued with profit.

Fortunately, Airbus is in no position to consider an A320 replacement just yet - its hands are full with the tail end of the A380 development project and the new A350 project (and may feel the same way at extending the life of its A320 as Boeing does with the 737), but sooner or later, one or the other manufacturer needs to come up with a new design plane.

The 737 design is based on the 707 fuselage, dating back to the mid 1950s, and the first 737 flew 40 years ago, carrying under 100 passengers, with a range barely over 2000 miles.  For sure, today's latest 737s, carrying up to twice as many passengers, and up to almost twice as far (at a slightly slower speed) are very much different in key areas than the first 737 was in 1967, but the underlying design is an accumulation of enhancements onto an original 40+ year old concept.  A new plane, probably with slightly wider fuselage, and made out of lighter carbon fiber materials, and with new engine technology, would greatly improve comfort (from a passenger's perspective) and efficiency (from an airline's perspective).

Neither company projects coming out with a replacement plane for at least five years.

If it ain't broke, don't fix it - unless, of course, we're talking about Southwest Airlines.  The evolution of Southwest Airlines from a distinctively different, and definitely profitable low cost airline, to something that increasingly looks more and more like a dinosaur, continues at a bewildering pace.  One of Southwest's key points of differentiation has always been its simple fare structure, and its one-class evenhanded approach to passengers.

Until now.

Speaking proudly in corporate doublespeak that could have been lifted straight from the briefing book of a dinosaur executive, Southwest's CEO announced on Wednesday 'Today, we are announcing additional product changes that transition Southwest from a one-size-fits-all airline to the airline that fits your life. We are offering our Customers exciting improvements to their overall Southwest experience and saving them what they value most -- whether it's money, time, or both.'

Hmmm.  'The airline that fits your life'.  What an empty statement that is.  It signifies nothing and means even less.

So what are these changes?  Oh, a new series of 'Business Select' fares - which is doublespeak for 'more expensive' fares.  The airline says it has now 'streamlined' the process of booking by categorizing its fares into three classifications on its website - 'Business Select', 'Business', and 'Wanna Get Away'.  Formerly it showed up to six different fares.

Southwest's Business and Business Select fares can be impressively expensive - I quickly looked for their fares from Seattle to Los Angeles, a month out.  The lowest roundtrip fare on the random dates I looked at was $198, while the Business fare was $476 and the Business Select fare $516 (plus surcharges to total $543.60), for flights with at least one stop enroute.  By comparison, Alaska Airlines, with nonstop service, had a choice of flights, all with seats for $218 plus tax, as did United (also nonstop) - only slightly more than the lowest Southwest fare and way below half of Southwest's premium fares.  US Airways offered a lower fare than Southwest ($174 plus taxes).

To my mind, this latest move is stupid on Southwest's part.  They are not and can not be a preferred airline for business travelers, because they have a very limited frequent flier program and don't have a first class cabin.  They're now attempting to address their refusal to pre-assign seats by allowing Business Select fare payers to board the plane as part of the first group of passengers allowed on, which is a reasonable partial solution, but that then means it is harder for all the rest of us to get good seats and the uncertainty and possibility of getting stuck in a middle seat increases.

Southwest is continuing to lose sight of the formula that gave it the success that has brought it to the position it is in, and seems desperately trying to fix something that is not yet broken.

More airline profit data has been announced, with international airlines also enjoying great results.  For example, Japan Airlines reported a better than fivefold increase in their net income for the first half of their financial year, with a $63.7 million profit.

CSA Czech Airlines reversed a $17.3 million loss in the first nine months of its financial year last year, and this year are reporting a $30.2 million profit for the same period.

British Airways reported net income of $1.01 billion for its first six months this year, compared to $830 million last year, with its operating profit margin (12.5%) now the highest it has been in a decade.

Emirates announced another record performance, with profits for its first half doubling to $643 million compared to the same period last year.  Its extraordinary growth continues, with revenue up 26%, passenger numbers up 23% and capacity up 17%.

And maverick low cost airline Ryanair announced a $390 million profit for its second quarter, a 26% increase on the previous year.  Passenger numbers increased 20% during the period.

Not one to shirk from making enemies, Ryanair CEO Michael O'Leary described travel agents as 'the greatest deadwood' and highest cost component of the travel industry.

This is a surprising comment, even for Mr O'Leary, particularly seeing as how many agents these days receive zero commission for the sales they make.  Some observers might opine that far from making them the highest cost component, it makes them the lowest cost component, costing much less than, oh, say, for example, Mr O'Leary's income....

In making these comments, O'Leary is joining other people such as former CEO of American Airlines, Bob Crandall, who once memorably described travel agencies as being like cockroaches - you keep treading on them but you can never get rid of them.

Meanwhile, surveys show an increasing number of travelers are returning back to travel agencies to arrange their travel.

Oil prices got within $1.38 of $100 a barrel this week, but apart from some places in California where gas prices have exceeded $5/gallon, pump prices seem blissfully insulated from these increases.

Interestingly, the increase in the price of oil is not being felt as much in other countries.  Because oil prices are still in US dollars, the weakening US dollar helps soften the blow of increasing costs per barrel in most other countries.  On the other hand, increasing interest by the oil producing nations in switching the base currency from dollars to something else would add a double blow to us in the future - increasing prices made worse by a weakening dollar.

For now, enjoy the 'cheap gas' costing little more than $3/gallon, and get ready for the gas stations to break out the $4 and possibly even $5 price decals in the weeks and months that follow.

As an aside, I can't help noticing in my travels that the dollar is no longer the world's preferred currency.  Sure, most of the time I'm traveling around the edges of Europe, which perhaps gives the Euro a bit of a home court advantage, but countries which formerly would accept their own local currency or US dollars now are as likely to refuse dollars but accept Euros.  This is a shame for us Americans, and points to a continuing loss of confidence, at all levels of economies and nations, in our currency.

Has the dollar dropped as far as it will?  Some analysts are predicting it has bottomed out for now and will weakly rally for a while.  I'm less optimistic; my feeling is that the life has gone out of the dollar and passed to the Euro.

The best investment I've made in the last year was not cashing in surplus Euros after my various last visits to Europe.  They've gone up in value over 10% in a year or less, just while sitting in a desk drawer in my office.

Cruise lines are now aping the airlines by adding fuel surcharges.  Regent SevenSeas is adding $7.50 per person per day, and Carnival is adding $5 per person per day on all their brands (Carnival, Costa, Cunard, Holland America, Princess and The Yachts of Seaborn).  Carnival says their fuel costs have increased 50% in the last seven months.

Talking of cruise ships, there's renewed hope the Delta Queen may be allowed to continue sailing.  Interfering do-gooders have decided that the 81 year old ship is no longer safe, but instead is a fire hazard (even though it has survived 81 years) because it contravenes a rule prohibiting wooden structures on boats carrying more than 50 passengers on overnight trips.  Details here.

Good news for Amtrak.  The Senate approved a bill (70-22) to provide $11.4 billion to Amtrak over the next six years.  But showing that nonsense dreaming remains alive and well whenever Amtrak is considered, the bill anticipated reducing Amtrak's need for taxpayer funding, with a goal of cutting operating costs by 40% over the next six years.

Similar goals have been offered in the past, and - self evidently - never sufficiently met.

Where are the most popular international destinations for Americans?  Unsurprisingly, Mexico and Canada come top, with 19.7 million and 13.9 million visitors from the US respectively in 2006.  Next comes the UK (3.3 million), France (2.2 million, and Italy (also 2.2 million).  Rounding out the top ten are Germany, Jamaica, Bahamas, Japan and China.  Here's a longer list and more details.

But perhaps Italy's 4= place might be under threat.  This article advises that the Leaning Tower of Pisa has been out-leaned by a church steeple in Germany, so perhaps the crowds might start going to Suurhusen rather than Pisa.

This Week's Security Horror Story :  Among the more surprising names on the government's Do Not Fly list is a retired commercial airline pilot.  His retirement privileges allow him to ride in the jump seat up in the cockpit, but the Do Not Fly list doesn't allow him on the plane in the first place.

This ridiculous situation is highlighted in the first part of a truly depressing multipart series on what Colorado's 9News.com station and site is terming the No Fly Fiasco.  Read as much as you feel able to here.

Who will watch the watchers?  The TSA is caught cheating at its own testing, yet again, yet again.  And, as always, it says that it isn't worried.  Details here.

Six men were taken off an American Airlines flight from San Diego to Chicago on 28 August.  The reason?  A fellow passenger expressed concerns because she heard the men speaking in Arabic.  Apparently, speaking in Arabic is enough of a crime to cause your removal from a flight.  In this case, the plane had already started taxiing to takeoff and returned back to the gate, and due to the timings, the flight had to be cancelled and all 100+ passengers put up overnight before they could be flown to Chicago the next morning.

Ironically enough, the six suspects were returning home to Detroit after a tour of duty training Marines at Camp Pendleton on Iraqi culture.  They are now suing AA, saying that employees detailed and publicly humiliated them.

For the second time in five weeks, Eugene Airport TSA screeners triggered a terminal evacuation due to a suspected bomb being sighted on an X-ray machine.  This time the alert lasted an hour, and ended when the suspicious device was identified as a piece of soil testing equipment.

The airport manager, Tim Doll was unapologetic at the ridiculousness of closing the airport due to the paranoid imaginings of a TSA screener.  Instead, he said 'The system worked just like it was designed to work' and he weakly tried to pass blame onto the passenger, saying 'it probably didn't come to their mind that it would look like an explosive device in the bag.  Most people don't think of that when they're putting things in bags.'

Perhaps, if Mr Doll had his way, airline passengers would not be allowed to take any luggage with them at all?

Sleepy pilots.

It was my birthday just recently, and I treated myself to a nice dinner out.  But, alas, my budget - even augmented by the most generous of Travel Insider reader donors - did not allow me to consider a dessert such as this one.  Maybe next year.

And lastly this week, I'm proud to see my home country of New Zealand prominently featured in this article showcasing 'the most amazing public bathrooms in the world'.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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