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Friday 11 April, 2008  

Good morning

STOP PRESS :  Frontier Airlines has just filed for Chapter 11, but says it will continue flying its full schedule of flights.  It says it needed to do this when its credit card processing company increased the amount of payments that it 'holds back' from the airline, messing up the carrier's tightly stretched cash-flow.

It was a terrible feeling of Déjà vu on Wednesday evening.  I was at a meeting in a small commercial building, when suddenly the fire alarm went off!  We dutifully all trooped out of the building and waited impatiently for the Fire Department to come and reset the alarm - it was, mercifully, a false alarm, so I didn't need to put any of my new found fire safety and fighting skills to the test.

It was interesting to see how long it took the Fire Department to respond, and also to observe how they traveled to the building.  It took just over 4 minutes, and two firemen in casual dress turned up, clutching nothing other than walkie talkies, having walked over from the Fire Department.  The Fire Station was the building directly in front of us, and one of the two men bemusedly commented 'This is the first time I've ever walked to a call'.

I couldn't help thinking the least he could have done was jog.

I've noticed a strange thing when I send out the weekly newsletter - there's been a trend towards more emails bouncing back due to people having full email boxes that won't accept more email.  These days, there's no reason to ever suffer a full email box, because the free services all offer huge email storage capacity.  Hotmail offers a 5GB mail box, Gmail offers an ever-expanding mail box, currently 6.6GB, and Yahoo - if I'm understanding correctly - offers unlimited email storage.

Of course, it isn't the end of the world if you miss a weekly newsletter from me, but the next email you miss might be much more important - from a customer, a prospect, or a vital personal email from a friend or family member.  If your current email service gives you a very limited amount of email storage, and if you're sometimes filling it up, perhaps it is time to make a move to Gmail (my favorite) or Yahoo.

One more comment about email.  It is usually not a good idea to use an email service provided by your ISP.  Much better to use a service independent from your ISP - that way, if you move, or for some other reason change ISPs, you don't have to change email addresses, too.  With the excellent free email available from Yahoo or Gmail, most people would have no need of any extra mail services from their ISP.

Third time is a charm?  I surely hope so.  At the beginning of this year, I bought a device that promised unlimited phone calling in North America for a flat annual fee of $20.  I had no end of problems getting it to work and gave up, with a review half written but not completed.

At the mobile phone and other telephony/gadgetry show last week, I met the inventor of the product, and he assured me all the problems of earlier in the year had been resolved, and gave me a newest version of the product, that I was assured would work perfectly.  So I spent much of the last week testing the unit, and - alas - while the unit was much improved on the earlier model, it still has some notable problems and limitations.

I had a review already to offer you on Thursday evening, with a rather ambiguous conclusion as to if you should buy one of these units or not.  But earlier on Thursday, the inventor got back to me with a series of assurances that all the problems I'd uncovered would be resolved in a new version of the software, plus new extra features would also be released at the same time - all due to occur next week.

It seemed unfair to him, and unhelpful to you, to review a product that was about to become obsolete, and so I'm shelving this second review, too, in the hope of being able to give a more definitive review, with a more certain recommendation at the end, either next week or the following week.

This is of course a long winded excuse (dare I say, 'reason') for not offering you a feature column this week.  Instead, can I ask you to consider two of the Travel Insider tour opportunities this year.

I'm at the point of almost needing to stop accepting new applications for the China Tour and Cruise in June, so please hurry if you'd like to join us.

No matter what you've read and think about recent controversies to do with the Olympics and Tibet, these issues are transitory compared to the thousands of years of history and culture we'll be experiencing, and we'll be in Beijing well before any of the Olympic mess starts to pile up, but in time to see the Olympic Village in a nearly completed state.  And, of course, there's a chance to marvel at Beijing's new air terminal, which opened with no fuss, unlike London Heathrow's Terminal 5, which was still limping along on Thursday, not yet fully functional, and bags still strewn to the four corners of the globe.

The China tour and cruise is a wonderful combination of a great tour in the major parts of China plus a great cruise (for a full week, not one of the rushed too short half week things) along the Yangtze River.  We're a small group, and would be pleased to have you join us for this lovely experience.

The other tour to start thinking of is our annual Christmas Markets cruise along the Danube.  Yes, even though summer is just starting, and last Christmas is still a recent memory, it is time to think ahead to early December this year and consider coming on this perennial Travel Insider favorite.  With prices that were fixed a year ago, and just about everything included in the cruise so as to to reduce your in-Europe expenditures down to discretionary things only, you're beating the skyrocketing Euro denominated costs and locking in this tour at a tremendous value.

If you've not done a Christmas Markets cruise before, you owe it to yourself to come find what is so special about these tours.

And, if you have - isn't it about time you come again (or consider perhaps our different itinerary Nov/Dec pre-cruise Christmas cruise this year on the Rhine).

I hope to see you in China, on the Rhine, on the Danube, or somewhere else (South of France in May being the remaining opportunity this year) sometime else.

Dinosaur watching :  Yet another airline bites the dust.  This time it wasn't an airline beginning with the letter A (unlike Aloha and ATA the previous week); it was Skybus, the airline that never seemed to have a future.

I'd most recently written about them, posing the question 'an airline in trouble?' on 28 March.  Apparently, yes, they were in trouble - much bigger trouble than anyone guessed because they still had quite a lot of cash when they stopped flying on Saturday.

Which will be the next airline to stop flying?  That is anyone's guess, but to modify the question and instead ask 'which airline will temporarily almost stop flying?' the answer is American Airlines.

I don't understand the lunacy that has surrounded American's massive cancellations of flights so far this week (conservative estimates suggest over a quarter million people have had their travel plans messed up).  The rhetorical question I have - indeed, it is a real question I'd like to see answered, relates to the sudden urgency of a formerly non-urgent matter.

The problem that caused all the cancellations relates to an FAA directive issued back in 2006 that gave airlines 18 months to inspect and, if necessary, enhance some wiring in the wheel wells of MD-80 planes.  Now - here's the key thing.  The matter was deemed so routine and unimportant that the FAA in effect said to the airlines 'take your time, guys, but some time in the next year and a half, when you think of it, go check this out and change it if necessary'.

Flash forward 18 months.  Some ambiguities in the inspection/correction process came to light, and so the airlines with MD-80s reinspected and, as may have been needed, corrected any remaining issues in view of what may have been an evolving definition of what needed to be done to the wiring.  But instead of asking the FAA 'hey, can we have a few more weeks to do this without disrupting our passengers?' the airlines (and possibly the FAA too) pushed the panic button and without any care for passenger inconvenience, cancelled all MD-80 flights as if this was a mission-critical safety issue that might cause planes to start exploding in mid-air.  Needless to say, no planes have indeed exploded in mid-air, and no-one is admitting to have found any dangerously damaged wiring.

That was a week or so back.

And now, this week, it appears that AA may have misunderstood (or perhaps the FAA further clarified/refined) part of what was needed to be done in the rewiring process.  And so, again, instead of asking for a week or two (or even a month or two - what is another month or two to redo an already done procedure after being given 18 months to start with) to do this in an orderly manner, AA again pushes the panic button, disrupting, so far, a quarter million passengers.

Does AA deserve kudos for being supremely safety conscious?  Or should it (and possibly the FAA too) be condemned for gross stupidity and insensitivity?  Their actions are costing itself millions of (maybe even close to a billion) dollars, generating enormous ill-will with AA's passengers, and all for largely no valid reason.

Let's be adult about this - when the FAA says 'do this within 18 months' there is nothing magic about the number 18.  It is simply a round number that was semi-arbitrarily chosen by some bureaucrat.  Sometimes the FAA gives airlines two or three or more years to institute a new directive, and sometimes it mandates actions to be done in a very short timeframe or almost immediately.  An 18 month time period is just another marker on a continuum of time frames.  Planes don't switch from being acceptably safe at 17 months 29 days to becoming dangerously unsafe at 18 months and 1 day.

If AA had any care or concern for itself and for its passengers, it would have had a dialog with the FAA requesting a reasonable amount of time to do this work.  One can only guess at why this wasn't agreed to.

The stupidity gets even worse, however.  You might think that perhaps the airline could try and spin their massive mess-up by boasting about their zero tolerance to any sort of safety issue, no matter how small and remote.  But - get this - when an AA spokesman was questioned on television about the safety issue aspects of the grounding of their MD-80 fleet, guess what he does?

Now, before you guess, keep in mind that this is a trained professional spinmeister, an official airline spokesman.  And, if he is even halfway competent, he would have done a role play before the interview where a colleague would have rehearsed him by asking him the types of questions that the media were likely to ask him, and he'd have prepared the best soundbite responses to these questions.  That's what such people do - I know, because I've been involved in such things myself, helping people with talking points, roleplay rehearsal, etc.

So, what do you guess he did?  Give a polished but meaningless answer?  Quote some facts and figures to support the actions AA was taking?  Present a colorful chart with some sort of information on it?

Actually, he did none of those things.  Instead, he walked off camera, muttering as he did so that he wasn't prepared to talk about safety things (and forgetting that his microphone was still live!).  You can see the interview (such as it was) here.

It is true that all airlines have a love/hate relationship with the safety topic.  While all claim safety is their number one priority, none of them really want to publically say such a thing too loudly, for fear of opening them up to liability (and embarrassment) if/when an inevitable accident eventually occurs.  Just think of the Concorde - BA and Air France boasted loud and long about its perfect safety record and their impeccable maintenance standards.  And then, all of a sudden, with the loss of an AF Concorde, the myth was shattered, and the loss of face and confidence was part of the reason that caused its demise a short while later.

I'm not sure if it is incompetence or arrogance that has a spokesman just walk off-camera when confronted with a question he can't readily answer.  Imagine, if in your job, whatever it is, anytime you get a difficult task, you just walk away and refuse to do the job you're paid to do.

One last comment about all of this.  'If it ain't broke, don't fix it'.  We've an enviable aviation safety record in this country at present; we're not in crisis mode, or suffering from a series of crashes as a result of some systemic failure of the maintenance and oversight system already in place.  While vested interests are making various noises about the alleged dangers of non-union labor (and non-US labor), when was the last time we had a maintenance related crash?

So why the sudden panic mode approach to these non-critical wiring maintenance issues now?

Maybe AA's spokesman was a bit spooked at the question and worried about the consequences of answering it honestly.  John Conley, the air-transport division director at the Transport Workers Union, representing ground workers for AA, was placed on administrative leave on Tuesday.  His sin?  He told a reporter that the rapidly increasing costs of jet fuel might make it difficult to negotiate a substantially more favorable contract with the airline.  A sort of 'if the airline isn't making money, we can't really ask for much more ourselves' concept that many people might consider to be reasonable and realistic.  Conley added, in a different venue, that this year 'could be an opportunity to consider not being as intractable as folks have been in the past'.

His fair minded understanding of the real world constraints of labor negotiations, and his public admissions of same, did not win many friends among his union members.  A petition quickly began circulating to have him fired; the petition reads, in part, 'His defeatist comments are inexcusable, and we have no confidence in his ability to bring us back a fair deal'.

Which just goes to show that the word 'fair' is capable of many different meanings.  There is 'fair' as in a fair deal for the union members, and then there is 'fair' as in the treatment of Mr Conley.  To say nothing of what might be fair for AA, its shareholders, other employees, and passengers.

I'll allow Michael Derchin, an airline analyst with FTN Midwest Securities, to have the last word on this issue.  In a recent report, he wrote 'It is unrealistic, in our opinion, to believe that a high-labor-cost carrier will negotiate to become an even higher-cost one'.  Transport Workers Union members, take note and count your blessings.  At least you're working for an airline that hasn't gone through a Chapter 11, and which is still flying today.

One good thing about AA - but who knows how long this will last.  They are now the only major dinosaur not to charge for checking a second bag.  Thank you, AA.

Talking about 'A' letter airlines that are no longer flying, we know that nature abhors a vacuum, and similarly, airlines rush in to fill perceived opportunities, or to replace carriers that have gone out of business.  And, when they do so, adding new routes to their system, and extra flights on existing routes, they silently contradict two of the angst laden complaints that appear any time an airline folds or threatens to fold - that cities will lose their air services, and that (pick a number) of thousands of people will lose their jobs.

Sure, some cities may have fewer flights, but no city has a right to expect more than a market-sustainable level of air service.  And, sure, some people will lose jobs, and not everyone who loses their job working for (former) Airline A will get an identical replacement job with Airline B, but surely no person has the right to lifetime employment at an above-market wage.

The latest example of this is with the recent cessation of services by both Aloha and ATA between Oakland and Hawaii.  As partial replacement, Hawaiian Airlines has already announced plans to start daily service from Oakland to Honolulu, to commence on 1 May.

You might wonder why Southwest doesn't simply replace its code share partner ATA on flights to Hawaii.  There are two main reasons - the first is that Southwest doesn't have any planes certified for the extended over-the-water flying that is required to get to Hawaii.  The second is that Southwest doesn't have spare planes lying around unused.  And it couldn't just buy up the planes formerly owned by ATA, because they are a different type of 737 to those owned by Southwest, and even if they were the same, the over-the-water certification wouldn't automaticaly come with the planes.

Talking about Southwest, it is time for the weekly update on my 14 March observation that the airline's share price seemed low, with some upside potential.  The share price closed on 13 March at $11.70, and closed Thursday 10 April, four weeks later, at $12.94.  Yes, that's a 10.6% increase in a month - not bad for an airline stock.  And, while I could be wrong, my sense is there's still some upside potential as yet unrealized for the stock.

Part of the upside potential for Southwest is the increasing cost of oil and how other airlines respond to it (remember that Southwest has most of its fuel already hedged and fixed in price for this year - the more fuel goes up, the greater its advantage over the other carriers).  Which leads to this next item.

Economists and marketeers are familiar with the concept of a relationship between price and volume of sales.  To a greater or lesser extent (measured by 'the elasticity of demand') when prices increase, unit sales drop, and when prices decrease, unit sales increase.  There's usually a sweet spot which represents the best balance between per unit price/profit and volume sales/profit.

So, armed with this knowledge, what would you do if you've been pushing aggressive price increases in your product, and demand is starting to fall off?  Would you increase prices again, or would you see if there was a way to rework your product and drop the price?  Indeed, let's be specific.  If you were an airline, and if you'd increased your prices six times already this year, and if your passenger numbers for March were down 2.7%, and with a generally mixed economy that doesn't seem able to support aggressive price increases anywhere, would you start to worry that you'd maxed out your price increases, or would you say to yourself 'I'm getting fewer passengers, so I have to charge those who continue to travel more, to make up for the ones who don't'?  Would you overlook the danger that further price increases might accelerate still further the reduction in passenger traffic, or would you decide that you can make up the loss of numbers by just pushing the pricing up as far as it needs to go for the remaining people still traveling?

If you work for United Airlines, clearly you'd ignore the weakening passenger numbers, and 'go for the gold' by pushing prices as far as they can go, and even a bit further.  And so United, which initiated the last two successful fare increases (an across the board $10 increase on 7 March, and then a varying increase of $4 - $50 a week later) is now attempting to push another increase to its fares, this time of between $4 - $30.  If other airlines match in the next few days, it will 'stick' and be 'successful' (there's a word with different meanings to different people!); if other airlines don't, UA will back off from the fare, probably by Tuesday next week.

There's another interesting element to this increase.  After United's last successful increase of $4-50 on 14 March, Delta attempted a $10 increase on 19 March which failed (ie the other airlines didn't match and so DL cancelled its own increase) and then re-attempted a $10 increase again on 27 March, which also failed.  Apparently the passing of another week and a half is deemed by UA to be enough to allow for not just another shot at a $10 increase, but a much more aggressive increase of up to $30.

If you look at the table of airfare increases so far this year that I showed last week, and add another $4 - $30 to these numbers, you'll see that some airfares have increased by as much as $150 this year.

While United - and many other dinosaurs - continue to shrink themselves from dinosaur size to lizard size, the incredible expanding airline continues to do exactly that - expand.  I'm referring, of course, to Emirates.  In the last little while they've announced the October launch of A380 service from New York to Dubai, they've added service from Houston, a month ago they announced new service to/from Los Angeles, and now they are announcing yet another US destination - San Francisco, with flights to start on 26 October.

The San Francisco flight (all flights are, of course, to/from Dubai) is slightly shorter than the Los Angeles flight, but still a lengthy almost 16 hours.  And I was gently reminded that in my comments about the extraordinary variety of things you can do with the inflight seatback entertainment on the 777-200s that will be flying these routes, you can also connect your digital camera to the seatback to look at all the holiday snaps you've taken.

And it is a good job that their first class 'suites' are so amazingly spacious, because the video screens are huge - they are 23" screens - sort of the size that we used to have to fill our living room with.  You get 17" screens in business class and a still large 10.6" screen in coach class.  All in all, and with the good service and food you're served, it is almost enough to make you enjoy a 16 hr flight.

What a shame they don't fly between San Francisco and New York.  If they did, they'd join the elite group of airlines who have (or had) complete round-the-world service.  There might be other airlines that have round-the-world service, but at present I can only think of one.  You'll be surprised to learn which airline it is.  Not United (they did for a while, but don't at present).  Not British Airways.  It is none other than my own home country airline, Air New Zealand.

Airbus said it booked 395 orders and delivered 123 planes in the first quarter of 2008.  Boeing said it booked 288 orders and delivered 115 commercial airplanes.

And, talking about airplane deliveries, on Wednesday Boeing finally gathered the courage to admit what we've all known for some time.  Get ready for another six or so month delay on the launch and delivery schedule for its new 787.  The first plane is now expected to be delivered in the third quarter of 2009.  Hopefully.

It seems Boeing's clever new method of sub-contracting out just about everything to do with building the plane has not been quite the success it was touted as being by its management some years back.  Fancy that.  Maybe some rocket scientist (of which Boeing of course literally has many) will figure out that Boeing's prime mission might be to actually build planes, the same way it used to do so well, rather than act as some sort of 'general contractor' and sub out the work to all manner of companies, all around the world, in a desperate attempt to find the absolutely lowest manufacturing costs, and to create as many political markers as possible for future politically driven issues such as airplane purchases often are.

Sometimes it is reassuring to think the plane you're flying on wasn't assembled from a series of lowest-cost manufactured sub-assemblies.  Go ahead, Boeing, and do like you used to do - over-engineer your planes with massive safety margins in them, and build them yourself.

Talking about new planes, the EU has now approved the use of cell phones on airplanes in Europe.  The impact on those of us not using our cell phones may not be as bad as people are worrying about at present - all the pink noise on a plane tends to drown out things like people talking.  Sure, if the person next to you is carrying on a phone conversation, you'll hear it clearly, but in the next row or two ahead, you mightn't even know it is happening.

I'd recommend a set of noise cancelling headphones as a defense against the noise of people talking, but these wonderful things actually make it easier to hear conversations.  They tend to filter out more of the background noise and less of the frequencies associated with human voices, making voices stand out more from the remaining background noise.

If you'd like a set of noise cancelling headphones, Travel Essentials is currently running a special deal on my favorite Solitude headphones.  Normally priced at $200 (compare to the Bose headphones at $300+), for a short time only they can be had for a mere $150.  Buy two for the same price as one set of Bose headphones!

Here's a review of the headphones, and here's a link to get the sale price.  Recommended.

And talking about cell phones, several readers asked me after the scary story about cell phone radiation danger last week whether it was better or worse or the same to use a Bluetooth headset with their cell phone.

The answer can be found in my article on Bluetooth here, and in quick summary, typical Bluetooth headsets transmit 100 - 300 times less power (ie radiation) than a regular cell phone, so they are very much better/safer.  Of course, a corded headset is better still, and an old fashioned landline phone (not a cordless phone which may use similar frequencies or even worse ones than cell phones) is the best choice of all.

Sometimes it pays to tell the truth (unless you're a union official - see above).  Apple described its latest laptop as showing millions of colors on its screen, figuring perhaps that the term was a figure of speech rather than a literal number.  But the term is indeed a literal term, and in computer parlance it means a screen that can show just over 16 million colors (what is termed 24 bit color), and the laptop only shows a mere quarter million colors (18 bit color).

Few people would notice the difference, but a sixteen fold overstatement is a naughty thing, and two owners forced Apple to settle just prior to their lawsuit being heard.  The blood in the water from Apple after the apparent success of these two owners is now attracting the legal sharks, and the fateful term 'class action lawsuit' is being muttered.

Serves Apple right.  Shame on them for not telling the truth.

This Week's Security Horror Story :  Reader John writes

I am retired from the U.S. Navy (as a Captain with 32+ years service) and usually use my Department of Defense "United States Uniformed Services" ID card for checking in for domestic flights and for passing through security.

For the first time, earlier this year the TSA security person would not pass me through because the "Expiration Date" is listed as "INDEFINITE". This is standard for retired military officers -- as we are subject to recall at any time -- and, as a result, there is no expiration date. This happened in Atlanta and they called over a supervisor who just happened to be a retired Army officer -- and he immediately let me pass.

However, this is one of those minor glitches that could be an increasing problem in the future. I do NOT want my military ID card to show an expiration date -- because it is truly INDEFINITE.

Why is this a horror story?  Two reasons.  First, the idiocy of the TSA screener demanding that a valid ID must show an expiry date.  And, secondly, the refusal of the screener to allow John to pass through without (valid) ID.

Because, you see - and contrary to the big myth that the airlines and TSA seek to foist upon us all, you don't need ID to travel domestically.  Don't believe me?  Then read this article.

Two closing thoughts for the week.  Firstly, noting our shared interest in matters lavatorial, here's an interesting innovation that might be coming soon to airplanes - male urinals, with the rationale being the airlines can take up less space with teensy urinals than with regular lavatories, possibly allowing it to squeeze extra seats onto flights (not so they could increase the total number of toilet facilities on board).

Secondly, here's an interesting 1.3MB video that shows a kite surfer (I think that is the term) getting a sudden surprise.  Watch it all the way through....

Until next week, please enjoy safe travels - and please do consider joining us on a Travel Insider tour.

David M Rowell aka The Travel Insider

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