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Friday 28 March, 2008  

Good morning

I wrote last week about having a small fire at home.  Like ripples spreading out from a small stone dropped in a still pond, the impacts of this fire continue to magnify and mount up.  As is often the case, the clean-up seems, at least at present, to be making things much worse rather than any better.  This too shall pass, of course, and it just requires patience and stoicism in the meantime.

It does however underscore the essential desirability of fire prevention and containment whenever possible; because there's no way that even the best insurance company and most helpful contractors will make such an experience a pleasing and positive one.  You'll inevitably be out of pocket and, if nothing else, have massive inconveniences and time costs, neither of which you'll be compensated for.

I nearly had another fire this weekend (bad things occur in threes - what will be number three, I fearfully wonder?).  My young daughter was excitedly running around, and knocked over a free standing heater.  She continued happily on her way, chasing the poor dog around the house, but the heater was now lying, face down on the carpet, with its heating coils close to the carpet, and its fan motor, stressed by the blockage, was simultaneously blowing hot air onto the carpet and overheating.  Fascinated, I watched for a short while before righting it - although I was certain the heater was described as having an 'automatic switch off' feature for cases like this, it didn't turn itself off.  A burning smell was already starting to emanate from the carpet, and I wondered if I'd just prevented a second fire.  Truly, we walk a very thin and precarious line between safety and danger.

My seven recommendations about fire safety last week drew a great deal of very well informed commentary, from professional firefighters, paramedics, fire inspectors, loss adjusters, and others both in the field and not, reminding me again of what a tremendous 'brain pool' we have among our 22,000+ readers.  A lot of other readers wrote in to comment, as well - maybe the topic is not directly related to travel and technology, but it is clearly important and appreciated.

I've taken the best of your advice and updated/extended my material from last week.  Some of the brief comments I offered last week had some embodied assumptions in them that are perhaps better spelled out in full, and so rather than hurried and incomplete comments, I'm planning to now offer this as a full feature two part article.

The 950 words I wrote on the topic last week have grown to over 5000 words; and rather than release it half this week and half the next, I'll release both parts simultaneously so you can read it all at once.  But because this has transitioned from some quick scribbled comments to a more formally resourced piece, would you mind if I delayed publishing it until next week.  I'd like the time to carefully review and research the complete piece, so as to make it more definitive and helpful, and would prefer to hold the story back a week than give you something not completely authoritative this week.

In the meantime, if you're looking for something to read, how about considering our May South of France cruise or our June China tour and cruise?

Dinosaur watchingAloha Airlines, not long out of its last Chapter 11 bankruptcy, returned back to Chapter 11 at the end of last week.

Hawaii is a difficult market at present.  Both the two major historical players - Aloha and Hawaiian - were in bankruptcy recently, with Hawaiian (HA) emerging in June 2005 and Aloha (AQ) in February 2006, after 14 months in Chapter 11.

The primary stated reason for Aloha's return to Chapter 11 is the cost of competing with well-funded startup Go (or, as it stupidly prefers to display its name, go!), a subsidiary of Phoenix based Mesa Air Group.  Go started service in late 2006, and in its first 16 months of operation through the end of 2007, it reported a $20 million operating loss (and who knows how much of a net loss after factoring in all overhead costs).  During the same time frame, the two established carriers (HA and AQ) lost a combined $65 million.

Aloha made no bones about its difficulties competing with Go.  Their CEO, David Banmiller, said

It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control [he is referring to - guess what - the cost of jet fuel] have forced us to take this action.

It is certainly an interesting reversal of the usual situation where the established carriers starve out a new entrant, and clever (but not good!) of Go to do this.  Unlike the typical scenario where a new startup competes against a major dinosaur in just a small portion of the dinosaur's routes, in this case, Go is able to switch the tables, because it is competing across the entire Hawaiian Island route system.  If Go sells flights below cost, it loses less money through the action - due to having a smaller market share - than do HA and AQ when they match.

The average fare for travel between the islands has almost halved since Go's appearance, and is now about $49, self evidently a level that none of the three airlines can exist on.  Sometimes oneway fares have dropped as low as $19.

In the last year, Hawaiian Airlines has won an $80 million judgment against Go due to Go misusing proprietary data belonging to HA (Go is currently appealing), and AQ is bringing a similar action.

Aloha lost $81 million last year, and another $11 million in January of 2008.  The airline says it hopes to continue flying, and is seeking bankruptcy court approval of a financing arrangement with GMAC.

While airfares might have dropped for travel around the Hawaiian islands, fares sure haven't dropped within the continental US.

So far this year there have been ten attempts by the airlines to increase fares (the year is barely twelve weeks gone), with the most recent, a $10 increase, being initiated on Thursday this week.  Six of the past nine have succeeded, and we won't know if the latest one succeeds until perhaps Monday or Tuesday next week.

Farecompare.com lists the increases to date as being :

  • January 3rd, initiated by United, $10 roundtrip, successful

  • January 11th, initiated by United, $30 roundtrip, unsuccessful

  • January 17th, initiated by American, $20 roundtrip, unsuccessful

  • January 24th, initiated by Continental, $20 roundtrip, successful

  • February 22nd, initiated by United, $10 roundtrip, successful

  • February 28th, initiated by Delta, $10 roundtrip, successful

  • March 7th, initiated by United, $10 roundtrip, successful

  • March 14th, initiated by United, $4-$50 roundtrip, successful

  • March 19th, initiated by Delta, $10 roundtrip, unsuccessful

  • March 27th, initiated by Delta, $10 roundtrip, pending

The net result is that airfares have increased by up to $100 so far this year.  You'd think this would more than compensate the airlines for their increased cost of jet fuel.  Indeed, if you think that, you'd be correct - let's run the numbers.

Depending on the airline, a generous rule of thumb is that fuel represent perhaps a third of its costs.  Now, let's say an average airfare sells for about $275.

This would suggest that fuel costs are about $90.  In the last year, fuel costs have risen by about 65%, so the underlying fuel cost portion of the average fare has increased by $58.50.  But, as you can see from the above table, airfares have increased by way more than $58.50, in just the first 12 weeks of this year alone.

Using this very approximate data, one thing is abundantly clear.  The airfare increases so far this year have significantly exceeded the increased fuel costs being experienced by the airlines.

You'll remember two weeks ago I observed that Southwest's stock price seemed to have some upside potential.  At that time it was at $11.70, it closed last Thursday at $12.26, and this Thursday closed slightly softer, at $12.19, but still representing a 4.2% increase for the two weeks.

The major fare increase that took place immediately after the Thursday close at $11.70 will take a while to flow through to Southwest's bottom line, and if this latest Delta increase also succeeds, it too will help Southwest, while continued high fuel costs impact disproportionately on the other carriers.  My pick is there's plenty of upside remaining to the share price.

Talking about high fuel prices, one of the less well known features of the flood of regional jets that have been cropping up everywhere is that they are less fuel efficient than the turbo-prop planes that in many cases they have replaced.

For a while it seemed as though turbo-prop planes were disappearing, with the quieter, faster, higher-flying and smoother regional jets offering an overwhelmingly better choice for airlines and passengers alike.  But the greater fuel efficiency of turboprop planes, compared to equivalent capacity regional jets, is becoming increasingly a major consideration.  Turboprop planes use 25% - 33% less fuel than regional jets.

The two remaining producers of turboprop planes are scrambling to meet renewed demand.  In 2002, Canada's Bombardier and France's ATR produced 26 planes.  Last year, they delivered 100, and this year they plan to deliver 140, and they took in 210 orders for new planes in 2007.

The most notable example of the revival of interest in turboprop planes is SAS.  Last year, after several problems with the nosegear of its Bombardier Q-400s, SAS decided to discontinue the use of its entire fleet of Q-400s.  But, after quietly rethinking its position, it not only is continuing to operate the planes, but has ordered another 27, with options on 24 more above that.

And, closer to home, Alaska Air's Horizon Air subsidiary recently ordered 15 more Q-400s, with options for 20 more.

An airline in trouble?  And how quickly people are forgotten.  Bill Diffenderffer, founding CEO of Skybus, the somewhat strange airline based in Columbus OH that claims to model itself after European no-frills carriers such as Ryanair, resigned on Monday, effective immediately, so as to spend more time with his family.  Actually, no, he managed a slightly more original excuse than this very common statement.  His reason is that he wishes to return to writing books.

Check the Skybus site - there's no mention of him anywhere now.  A bit like Southwest's founding CEO, Lamar Muse, Bill Diffenderffer has ceased to exist at Skybus.

Skybus is cutting routes and scaling back its expansion plans.  But it is still adding some new routes, including typically bizarre city pairs such as between Chicopee, MA and Punta Gorda, FL.

The airline started service on 22 May, 2007, and is believed to have lost $16.2 million in its first full quarter of operations (Q3 2007).  With $160 million in capitalization, there's probably still money in the bank, which it might well need to fund its Chicopee/Punta Gorda flights.

Congratulations, yet again, to travel agents.  Every year an airfare analysis company (Topaz International) tests to see if airfares actually purchased and paid are lower when bought through travel agents or through public internet sites.

And every year, it shows that the travel agent sourced fares are appreciably lower.  Details of their 2007 survey have just been released here.

The new Terminal 5 at London's Heathrow Airport finally opened on Thursday this week.  It has cost an incredible $8.6 billion to develop, and has been over 20 years in the making.  The first flight was a BA flight from Hong Kong, and propitiously arrived a few minutes ahead of schedule, a rare occurrence for flights into Heathrow.

In remarks clearly prepared prior to the terminal's opening, BA CEO Willie Walsh said

This is an historic day for British Airways and for UK aviation.  Everyone involved in the project should be extremely proud of their achievements in creating this fantastic facility.  The new terminal gives British Airways a great opportunity to offer the highest levels of service and put Heathrow back on the global travel map.  I know that our customers will love the space, comfort and convenience that Terminal 5 offers and I believe that people can look forward to a much calmer and more enjoyable way of travelling in the months ahead.

And so how did things go?  Ummm, not so well, unfortunately.  Notwithstanding months of testing, the sophisticated new luggage handling system grossly malfunctioned, as did some computer systems, resulting in delays of up to four hours for luggage to be delivered, both incoming and outgoing flights being cancelled, and other flights restricting passengers to hand carry-ons only.

Highest levels of service?  But hopefully Walsh was 100% correct when he said 'people can look forward to a much calmer and more enjoyable way of travelling in the months ahead'.  It can only get better, surely.

This Week's Security Horror Story :  If you've traveled in the last few weeks, you've probably noticed a new part of the security screening process.  A TSA agent is now minutely examining your ID before allowing you to continue shuffling in line to the metal detector and X-ray machine.  This is an 'upgrade' of the previous arrangement where outside contractors had been hired to give your ID the most cursory of glances before waving you on by.

Now you might think this is a sensible and appropriate enhancement to the overall security screening process, and if it catches some people traveling with fake ID, surely that is a good thing?  Yes?

Actually, alas, no.  The most ridiculous thing about these new checks is that there is no online matching of IDs to boarding passes so as to confirm the boarding pass actually matches a ticketed passenger.

As has several times been publicly discussed, there's a massive loophole that allows for terrorists to book a flight in a 'safe' name (ie John Doe) then print two boarding passes, one each in John Doe's name and their real name.  When checking in for their flight, the automated computer based screening system checks for any alerts against the John Doe alias, and allows their travel to continue unhindered.  If they're traveling without checked baggage, they can go straight to security.

Then, to go through security, they showing the fake boarding pass and their real ID, but because the TSA person does not check that the boarding pass matches a booked passenger, doesn't enter their name into a screening computer, and doesn't verify the boarding pass is genuine, no alert is created there.

Then, to board the plane, they present their John Doe boarding pass again, which matches the airline's reservation.

Creating fake boarding passes is simple - anyone can do it with a picture editing program on their computer.  There was even a website for a while that offered to print fake boarding passes - you entered your choice of flights, etc, and it printed a realistic boarding pass for you.

Sure, the TSA marks boarding passes to show they've been checked - sometimes with a felt tip marker and squiggle, sometimes with a little stamp, but terrorists could easily duplicate either of these to make the real boarding pass they travel with look as if it has been approved by the TSA screening.

So why are the TSA placing so much scrutiny on matching IDs to unvalidated boarding passes?  It does nothing at all.  And, at the same time, the TSA is saying it can't screen airport employees because it has too few staff, all of whom are too busy screening passengers.

Memo to TSA :  Redeploy your ID checkers and have them screen airport employees instead.

One of the tensest times for a pilot used to be when coming in to land, although these days it is not nearly as stressful as in the 'good old days', with the autopilots either taking a plane down to a mere few hundred feet above the landing, or sometimes completely landing the plane automatically.  Indeed, the main duty of a pilot on an Airbus plane is to monitor the plane's actions rather than to fly it himself.

Maybe at such times, these days, some pilots get a bit bored?  I'm reaching around, trying to come up with an explanation for what happened on an Airbus A319 belonging to US Airways on Saturday.  As the plane was coming in to land in Charlotte, the armed pilot's pistol - ooops - went off.  Bang!  A bullet passed harmlessly through the side of the fuselage, but doubtless gave the two pilots a bit of a surprise.

Some pilots these days are approved for carrying pistols into the cockpits with them as a last ditch line of defense against terrorists intent on seizing control of the plane.  This is an excellent idea, and I'd have liked to see all pilots immediately issued with weapons on 9/12 (or, better yet, to have already had them on 9/11).  Instead, they have to go through an enormously complex and time consuming training and testing program before they're trusted with a firearm, which is always an H&K USP .40 caliber semi-automatic pistol.  These are lovely weapons - accurate, reliable, and deadly.

Pilots are required to transport their pistols with the safety on, and there is absolutely no way the pistol can accidentally go off, either with the safety on or off.  It will only fire when someone takes the safety off and pulls the trigger.  Pilots are only allowed to take the pistol out of its 'locking device' when in their cockpit with the door locked behind them.

So how did the gun have what is politely referred to as an 'accidental discharge' at a time when both pilots should have been concentrating on landing their plane?  That is an interesting question, with a bunch of federal agencies all investigating at present.

Probably the answer can be found from a very direct source - the cockpit voice recorder.  One can currently only guess at what it may have recorded, but what is the chance that it picked up a conversation like the following :

I'm bored.

Me too.  Wanna see my gun?

Gosh yes, please, that would be fun.

Here it is - be careful, its loaded.

Oh, my, isn't it lovely.  What does this little lever thing on the bottom of it do? <Bang>  Ooops.  Sorry about that.  It's very loud, isn't it.

No problems.  Do you think anyone will notice?

Here's a sad story of a woman terrorized by the TSA when - gosh, how can I say this without triggering your spam filter - some, ahem, 'personal jewelry' triggered the metal detector.

Here's an interesting insight into some of the things we never really know about or think about

And here's a sad insight into security gone crazy.  When the charter fishing season begins next month on Lake Erie, fishermen will need to carry either their passport or two pieces of ID if they plan on fishing in Canadian waters.  Many charter boats fish the Canadian half of Lake Eire because that's where the deeper and colder water is, with better fishing to be had.

The Homeland Security Department intends to strictly enforce new border security rules on fishermen.  When fishing charters return they have to contact Customs and Immigration officers via a videophone to be cleared back into the US.  If the boats go into Canadian waters the charter operators have to fax the passengers' personal information, name, date of birth, and government ID number to the local Customs and Border Protection office an hour before leaving shore so the names can be run against terrorist watch lists. Officers will be watching and doing spot checks.

What makes this a colossal waste of manpower and money is that the boats never land in Canada - they merely go somewhat over the invisible border in the middle of the lake during their fishing.

Readers know of my fascination with Russia, as expressed occasionally in Travel Insider river cruises between Moscow and St Petersburg.

Now here's an ultimate Russian experience - travel by nuclear powered icebreaker from Murmansk all the way to the North Pole and back.  Alas, with per passenger fares starting at $22,000, I'll not be going any time soon, but it certainly is one of the ultimate travel experiences any of us could ever hope for.

Lastly this week, as a New Zealander, and now more amused as an observer than being part of the rivalry between NZers and Australians, I'm really not too sure what to make of this article.  For those puzzled by the reference to wombats, a wombat is a small Australian marsupial.

Until next week, please enjoy safe travels

David M Rowell aka The Travel Insider

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