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Friday 18 April, 2008  

Good morning

Not one but two Frontpage crashes tonight, each with loss of data, make this a somewhat later than normal newsletter.  Thank you, Microsoft (not).

But while I struggle with my software, hopefully you're enjoying the full beauty of spring wherever you are (unless you're on the other side of the equator, of course, as is the case for almost 5% of readers).

It has been another interesting week for the airlines, and more of that shortly.

The review of the phone service (unlimited North American calling for $20/yr) that I delayed at the last minute, last week, due to a new version of their software coming out this week, will now be delayed until early May.  The latest promise date for that software upgrade is now 1 May; I do have a slight sense that there's a feeling in the company 'We're giving you such a wonderful product at such a great price that you should gratefully accept anything we do for you, whenever we do it' rather than a more formal value attached to the importance of sticking to promised dates for releases.

So here's a different type of phone related gadget for this week - another Bluetooth headset.  I occasionally wonder if it is still necessary to write detailed reviews of individual Bluetooth headset models - with prices dropping down to as little as $25 for a reasonably good headset, and with mature technology that implies most headsets should work reliably most of the time, is it now possible to semi-randomly buy a headset with confidence that it will work well?

Alas, the situation remains that no Bluetooth headset works as well as it should, and all have limitations and challenges, particularly in the realm of sound quality.  I don't understand why a regular wired headset, costing $5 or less (and costing as little as $1 wholesale) can give reliably good consistent sound quality, but a state of the art Bluetooth headset, costing anywhere from $25 to $250, can not give the same quality.  What is the problem?  This week's headset review is interesting, because the unit emulates the design of a regular wired headset, which you'd think might eliminate any remaining weaknesses :

This Week's Feature Column :  Cardo S-640 Bluetooth Headset :  This headset copies the design of a regular corded headset, with a tiny earpiece that is connected, by wire, to a control box you clip to your shirt.  So, if it copies the design and placement of microphone and speaker, does that mean it can also copy the sound quality?  To answer that question, and see if you should buy one of these $35 headsets, you'll need to read the review.

China Tour Single Saving Opportunity :  As an often single traveler myself, I dislike single supplements as much as anyone else, and try and keep them as low as possible on Travel Insider tours.

Good news :  If you'd been thinking of traveling as a single on our China cruise and tour, I've managed to negotiate a special deal to help you with the single supplement.  Instead of a $1195 supplement (which is already very fair - usually you'd be paying $1400 - $2100) I managed to get this halved, and now it is only $595.  This is a great deal and makes traveling to China with us affordable.

Talking about affordable, the value of the tour has improved for couples, too.

It was originally costed out in January when the Chinese Yuan was worth about 7.30 to the dollar.  As you know, the dollar has been dropping steadily since then, but I've managed to hold the tour price with no increase.

For sure, if we repeat the tour next year, it will necessarily be more expensive, so, on the basis of a bird in the hand, come with us this year and lock in the old exchange rate.

If you're thinking of going for an Amadeus river cruise in 2009, hurry to book your cabin with me before the end of this month.  The 2009 early booking discount expires on 30 April.  If you book with me, you get a 5% Travel Insider discount, a 5% early booking discount, and potentially a $100 per person AARP discount and even another $100 per person past passenger discount.  That's a lot of savings, but you need to get your booking confirmed and deposited by 30 April to qualify.

One more special deal.  The Solitude best rated noise cancelling headphones are on sale at Travel Essentials, but only until Sunday.  Normally $200, you can get them on sale for $150.

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

Dinosaur watching :  When America West/US Air tried to buy Delta last year, Delta acted as negatively as it could, saying there was no value or sense in merging.

And when new CEO Richard Anderson took over the reins at Delta, he said he wasn't about to merge Delta with another airline but instead was confident of Delta's future as a standalone carrier.

The truth changes, of course, and never so dramatically or quickly as in the airline industry.  All of a sudden, earlier this year, the same Mr Anderson announced he was planning on buying/merging with another airline, maybe UA or (much more likely) NW.  This was, he told us, an essential and necessary thing to guarantee the future success of both DL and whatever airline he merged with.

But - ooops.  The deal was cancelled, because it was impossible to get the NW and DL pilots to agree on integrating their seniority systems, and without the pilots' support, so we were told, any merger would be impossible.

Except that, apparently, it is possible, because now both airlines have formally announced the details of their intended merger, notwithstanding not having obtained the agreement of their respective pilot groups.

Confused yet?  If not, consider also the wildly varying justifications for a merger.  It has been offered as an essential step to ensure the airlines' survival, as a necessary response to increased jetfuel prices, as a way of competing against rapacious foreign carriers, as a way of boosting shareholder value, and as a way of making a proud new American national flag carrier.

Oh, and that's not all - get this :  The DL/NW merger is also being offered as a way of protecting airline employees' jobs and paying them better.  Yes, even though the merger is being promised as in some vague way bringing cost savings and 'efficiencies', the two current CEOs went on record in a jointly signed article in the Wall St Journal as saying that no 'front line employees' would lose their jobs.  Here's their quote :

We will furlough no frontline employees as a result of this merger.

On the other hand, though, clearly someone is going to lose their job - the New York Times reports that the combined 89,000 employees currently working at NW/DL would reduce down to 75,000 in the new merged airline.  So, 16% of current employees will be losing their jobs.  Some protection, that.

Of course, if you're one of the lucky front line employees who keeps their job, then you've a lot to look forward to.  CEOs Anderson and Steenland promise

The merger will create a financially stronger airline, better positioned to protect jobs, compensation and benefits.

That the merged airline may better protect Messrs Anderson and Steenland's jobs, compensation and benefits, I have no doubt.  But in a situation where total employees are projected to reduce from 89,000 to 75,000, that's the sort of job protection many of the rest of us would rather do without.

And does anyone really believe in this new era of obsessive sensitivity to cost control in all forms, the new airline (which will be called Delta, dropping the Northwest name) will start handing out gratuitous increases in pay and benefit to those employees lucky enough to remain, just because they feel generous?  Perhaps only if the new bigger Delta finds itself in a less competitive environment and no longer needing to match the fares and underlying operating costs of other airlines, and of course the merger is absolutely not about killing the competition (unless they are nasty foreign airlines, which apparently don't count).

One more rhetorical question.  How does a merged airline better cope with high fuel costs?  Do the merged airline's planes burn less fuel?  Does the merged airline pay less for fuel because it buys more of it?  No and no are the two answers.  The cost of jet fuel has nothing to do with merging or not merging.

So what will the merger mean for us as airline travelers?  Well, Anderson and Steenland say 'we will keep all of our hubs open' so perhaps, in terms of getting from point A to point B, it won't mean much.  On the other hand, it will be interesting to see if all their hubs do remain open in a manner similar to at present.

My guess is there'll be some massive changes in their hubbing - surely there has to be to offer what they refer to as 'Building a stronger route network '.  What else can that mean, if not re-allocating resources in a way that reduces unnecessary duplication?

Does it really make sense to have a hub in both Atlanta (DL) and Memphis (NW)?  The two airports are a mere 340 miles apart.  Or how about Cincinatti (DL) and Detroit (NW) - even closer, with barely 235 miles between them?  Especially with MSP (NW) also nearby?  Of course it doesn't.

An interesting related bit of trivia - some 4,000 news items appeared about the merger, according to Google News, the first day the DL/NW merger was first announced.

After four weeks of seeing its share price increase, Southwest's share price dropped slightly in the last week, closing at $12.61 - still up on the $11.70 when I first commented on its price, 13 March, but down from $12.94 last week.

Southwest announced this week what has been described as a disappointing first quarter, with its profit being down from $93 million in Q1 2007 to $34 million this year.

But, if you exclude one time items, the actual profit from ongoing operations climbed from $33 million last year to $43 million this year, and gross revenue increased an impressive 15%.  Disappointing?  Hardly.

And whereas other airlines continue to cut back on their US services, Southwest says it will add 'no more than' 14 new planes to its fleet in 2009.  This is half its earlier announced level of growth, but still growth, nonetheless.

It is true that when other airlines increase their fares, Southwest doesn't always automatically match, but that is a win-win.  If it matches an increase, it gets an increase in profitability without any market share consequences.  If Southwest doesn't increase its fares, it stands to get an increase in market share, and due to the massive difference between fixed and variable costs on an airplane flight, the extra passengers lift Southwest's profits appreciably.

So, whether it matches increases or not, every fare increase by other airlines helps Southwest.  Farecompare.com researched which recent increases Southwest has matched, and elicited the following official statement from Southwest :

On April 10, we followed an increase by United with a very modest, mileage-based increase from $2 each way for short haul, $4 each way for medium haul, and $6 each way for long haul.

Last night [15 April], we instituted a fare increase that takes effect June 13 and it ranges from $3 - $5 one-way for short haul; $8 one-way for medium haul, and $10 one-way for long haul.

So Southwest's fares are increasing, albeit not at quite the same frenzied rate that the other airlines are adopting.

Longer term, as Southwest's hedging diminishes, it will have reduced opportunity to outperform the marketplace, particularly because (and many people don't appreciate this) it has some of the highest paid staff in the industry.  Yes, they are more productive, but that edge is diminishing, and there's an interesting danger that Southwest might end up as a high cost carrier.

Talking about fare increases, there's been another one.  Last week saw UA increase fares by $4 - $30 roundtrip (matched by all other carriers), this week sees another UA increase that has now been fully matched too; this one of $10 - $20 roundtrip.

These regular fare increases, usually justified by increases in jet fuel, make nonsense of the oft-stated claims that 'based on an increase of xx¢ a gallon in jetfuel, the airline industry stands to lose $x billion this year'.  Because, guess what - when the price of fuel goes up, so too do airfares, and as we can conclusively see at present, the airfare rates are going up at a rate massively greater than the underlying operational costs of jet fuel.

A better claim might be 'The airline industry can use an xx¢ a gallon increase in jetfuel costs as an excuse to raise fares and increase profits by $xx billion this year'.

Earlier this week, Aer Lingus found itself inadvertently selling €1,775 ($2825) business class seats for €5 (about $8).

The airline said the problem was linked to a special offer where customers who bought a business class seat were to be given a second ticket for free.  Approximately 100 seats were sold for the €5 euro fare.  Aer Lingus said it would not honor the fare and no money was collected for payment of the tickets.  The customers are claiming they have a legitimate contract with the airline and should be compensated.

What's happening at Heathrow?  Has BA finally got its act together at the new Terminal 5?  Apparently not.

Some British insurers have even stopped offering coverage for lost luggage or delayed flights to travelers going through Terminal 5 at Heathrow after the huge problems with flights and baggage.  Only those who bought coverage prior to the start of the problems will be able to make a claim. The insurers say the situation is under constant review and normal coverage will be restored as soon as Terminal 5 problems are solved.

Meanwhile, BA itself has conceded defeat of a sort and is delaying the transition of more of its flights (ie those to and from the US) from Terminal 4 over to Terminal 5.  BA said the flights, scheduled to move on 30 April, will now move sometime in June, but CEO Willie Walsh also said, earlier this week, that the move might be delayed further until October.

A word of warning - if you're booked on BA flights that will have you transiting from a flight arriving into T5 and over to T4 for your ongoing flight, allow plenty of time.  One ARTA source is recommending you should allow 3 hours for the connection - it took her 50 minutes merely to go through security at T4, and she says the 3 hours is also needed in the hope of your luggage also making the transfer in time.

British Airways has meanwhile acted decisively in responding to its high profile T5 problems.  It has fired two senior executives.  Now, you may recall that CEO Willie Walsh accepted responsibility for the messup.  So does that mean he was one of the two executives fired?  Of course not.  Instead, the airline's Directors of Operations and Customer Services got the chop.

Have you noticed the new corporate trend - CEOs will shamefacedly stand in front of the cameras and say 'I accept full responsibility' for whatever messup occurred, but then happily walk off stage with no further censure.  What is the meaning of accepting responsibility if you then turn around and fire someone else?  What sort of responsibility has no consequences associated with it?

But even if and when the T5 mess finally gets sorted out, Britain's air problems might not be over.  Indeed, quite the opposite.  Expanding Heathrow's capacity might make them worse, due to congestion not in the terminal, but in the airspace over Britain.

An article in The Times shows that the Civil Aviation Authority in the UK fears that congestion above the airports will take over from congestion on the ground.  The CAA is also suggesting that the company that owns most of the London airports (BAA) has been distorting some of the data it reports to conceal disastrous levels of customer service and failure to meet mandated targets.

For example, the requirement that people wait no more than 10 minutes in line for security screening is only being met, according to the CAA, because BAA is timing how long it takes people in the middle of the line to get through security, not how long it takes people at the end of the line to go all the way through.

And the CAA also wonders why it was that in 2006, BAA was saying that Heathrow was designed for 55 million passengers, but more recently, and in support of seeking permission for a third runway to be added, BAA is now saying that Heathrow was designed for 45 million passengers a year.

And in the claimed results of passenger surveys, BAA claims that passengers rate Heathrow as a 4 on a 1 - 5 scale (5 being excellent), whereas independent surveys all around the world consistently show Heathrow as being the worst or nearly the worst airport of anywhere.

There are, apparently, lies, damn lies, and statistics.

And talking about both statistics and customer service problems, in 2007 a grand total of 42.4 million bags were lost or delayed by airports and airlines, at a cost to the airlines of $3.8 billion (an average of almost $90 per lost/delayed bag).

It is interesting to see what caused the bags to go astray.  The most common problem was mishandling bags during transfers - 49% of bag problems happened then.  16% of bags never got on their first flight, 8% were mishandled by the airport they ultimately arrived at, and 5% were taken off due to planes being too heavy and needing to offload some luggage.

According to SITA (the company that tracks luggage globally for airlines), the industry could save $700 million a year if it adopted RFID tags on bags to allow for more accurate tracking.

A $700 million saving?  Seems like a no brainer, doesn't it.  So don't expect it any time soon.

But United has come up with a new way to save money that doesn't involve improving bag or any other service at all.  Quite the opposite, of course.

Starting next month, they are reducing their flight attendants from five down to four on 757 flights of under five hours.  Two will be in first class, and coach class will drop down from three to two attendants.

Here's a slightly alarmist item about another way the airlines are looking at saving money.  The underlying issue is far from new, and while some pilots are cited as raising bona fide seeming concerns, the bottom line has to be 'when did a plane last fall out of the sky due to running out of gas?'.  The most recent event I can think of - the 'Gimli Glider' in 1983, was not due to deliberately underloading fuel, but accidentally making a mistake as to the fuel required.

And some good news for a change.  The compensation levels for being bumped off a flight are to double, starting in May.  You now can get up to $400 for delays of less than two hours in getting to your final destination, and up to $800 for delays of over two hours.

It is also good that flights on planes with more than 30 seats are now liable to pay compensation; formerly it had been limited to flights on planes with more than 60 seats.

But this compensation only applies to the very rare times when the airline bumps people involuntarily.  If you volunteer for a later flight, you're still in a bargaining position the same as before in terms of what you might get, and although what the airline pays volunteers obviously now has a higher ceiling than before, if there are plenty of volunteers, the law of supply and demand means you'll still get the same sorts of offers at present.  Delays for weather related issues (or what the airline with a straight face claims to be weather related) and various other things remain exempted, of course.

It is nice to see the limits double, but the old limits have been in place, unchanged, for 30 years.  Inflation has eroded away the new levels to less than what the previous levels were when they were first announced.

This Week's Security Horror Story (being written for the third time, thanks to Microsoft's appalling software) :  Let me quickly type this before Frontpage crashes again.....  Actually, I can't bring myself to do it a third time, at 2.10am.  Just watch the video, it is good enough as is.

The EU's equivalent of our Supreme Court, the European Court of Justice, supported a compensation claim from an airline passenger who was prevented from taking his tennis rackets on the plane with him.  He was intercepted at the gate (after having taken them through security with no problems) and told they were forbidden items.

After he expressed surprise, he was told that, yes, the items were on a list of forbidden items that presented as potential security threats.  He asked to see the list, and was told the list was secret.

Yes, truly, in the EU you are not even allowed to know what you can't take on board a plane with you, because that information is secret!

The Court roundly castigated this as the nonsense that it truly is, and said having a secret list of forbidden items was so absurd as to be legally worthless.

In response to the Court's ruling, the European Commission has agreed to publish its secret list 'soon'.

Here are some scandalous claims by a former guide book writer, who says he never even visited the places he wrote about.  Sounds serious, and confirms what some of us have long suspected about much guide book material, which often seems to be recycled press releases and other out of date information from local tourist information bureaus rather than real meaningful information garnered by people seeing and doing the things they write about in person.

But here is a persuasive rebuttal by Lonely Planet.  And it is worth remembering that the author is making these claims in a self serving way of promoting his new book about his life as a guidebook writer.  I asked for a review copy, but there's been no response.

My closing video clip of the kite surfer last week drew quite a few reader requests for more information.  Where was it?  Was it real?

As to where it was, it looks to me like it was at St Maarten in the Caribbean, where the airport is famously right next to a beach, and due to the short runway (a mere 7150 ft) planes touch down right at the very beginning of the runway, barely missing the heads of sunbathers on the beach as they come in to land.  Here is a clip showing some still images of planes landing there.

But, is (was) the kite surfing video real?  Certainly it seems likely that planes would come in low enough to snag a surfer's kite.  But would a surfer be so stupid and unaware as not to know about the planes that come in low, and not to see/hear the plane in the video?  That seems less likely to me, but on the other hand, the video does look to be real.  There have been some very strong opinions offered about the video by people who all too often clearly didn't know anything about what they were talking about.

There is two versions of the video on Youtube that, at the end, cuts to frames of advertising for Sprite (different in each case) - for example, here.  But is this really a Sprite ad, or did some prankster stick the last bit on the end to trick us?

Snopes says the status of this is undetermined.  Maybe someone could contact the Coca-Cola Company for more information and share the answers with us and Snopes.

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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