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Friday 5 September, 2008  

Good morning

Wow - what an amazing transformation has swept across the nation in the last week.  Out of nowhere, the surprise - and inspired - appearance of Sarah Palin has probably made all of us appreciably more interested in this year's Presidential election, and she certainly promises to energize the debate and electrify her supporters.

I'd been sneering at a reference on the BBC to this being 'the US's most important election ever', and I'm still not sure if that was anything more than media hype, but whatever happens come November, the leadership of our country will be profoundly different than we've had in the past.

And now on to slightly less weighty matters.  People sometimes ask me how I come up with new ideas for new articles, week after week, and wonder if it is hard or easy.  So, if interested, I'll trace what happened this week.  I was working on a new article series about the beautiful Cotswolds area of Britain that I hope to publish for you soon, and realized that in addition to writing about hotels to stay at in the area, there would be value in adding a page about how to choose hotels in Britain in general, advising of some of the foibles and idiosyncrasies that can destroy an otherwise pleasant hotel stay there if you're not prepared for them.

And then, halfway through that article, I realized there would be good purpose in writing an article about how to negotiate the best rate for hotel rooms, not just for Britain but for everywhere.

And then, halfway through that article (are you still following this long chain?), I realized there was a lot more to the topic of getting the best rate for hotel rooms than would fit on a single web page, and so what was initially an afterthought to an afterthought to a main article is now to become an article series of its own.

Which is sort of the way the website has evolved over the almost seven years to date - one thing leads to another.  And, even with about 400 articles already online, so far there's not yet a reason to worry about running out of ideas for the future.  For example, coming up soon are some wonderful new GPS units I'm currently testing, with exciting new technologies to help you drive the best/quickest routes where you're going, and lots more besides.

Anyway, with that as fairly lengthy buildup, for you this week is :

This Week's Feature Column :  How to Get the Best Rate for Your Hotel Room :  In part one of this series, I discuss how sometimes even a very slight adjustment in the dates of your stay could make a massive change in the rate you pay.

By the way, some sharp eyed and curious readers have asked why I changed the weekly column link from appearing on the words 'This Week's Feature Column' to now appearing on the column title.  I've done that as a minor tweak for the benefit of search engines, and here's a free tip to all of you with websites.  Make the text of hyperlinks to pages on your site as meaningful as possible.

For example, don't have a paragraph of text which says 'If you want to know about some wonderful ways to (whatever), then good news.  I wrote a new page on my website about it.  If you'd like to know more about it, click here.'

Instead you should write 'Follow the link if you'd like to know about some wonderful ways to (whatever).  I've just added this new page to my website full of information about it.'

When a search engine spider reads the first example, it looks at the link word 'here', which tells it nothing, then it looks at the immediately surrounding words, which also tells it nothing.  But when it looks at the second example, the linked phrase tells it about the page, and this encourages the search engine to feel more confident about what your page is about (assuming that the content on the page matches the link description!) and may give you a higher position in their search results.

Talking about search engines and the internet, have you tried Google's new Chrome web browser yet (you can download it from their website)?  It currently only works for Vista and XP powered computers, and is handicapped by not supporting some of my favorite add-ins like Roboform and Alexa, which is a disappointment.  But hopefully support for some of these add-ins will come, and maybe the Apple users will eventually get a version too.

Everyone I've spoken to is impressed and pleased, and in the space of little more than 24 hours, the Chrome browser has become the fourth most popular web browser in the world (as measured by which browsers are downloading web pages all over the internet).  It does have a slightly different interface, of course, but it is quick and easy to master, indeed, I felt a bit unsettled at the lack of options and settings to have to puzzle through!

Isn't it astonishing to see Microsoft's primacy being so severely challenged, on numerous fronts, by Google at present.  Well, actually, no it probably is not astonishing, and Bill Gates himself has always worried about new challenges as yet unthought of to his empire.  But what is astonishing is that Microsoft have created the monster that is now snapping at their heels.  By attempting to marginalize Google by making their own Microsoft search engine the default in their then dominant Internet Explorer web browser, they motivated Google to create a competing web browser.

And while it might seem that corporate empires are neither made nor lost over who gives away the most free software used for browsing the internet, both Microsoft and Google know that in providing the gateway to your entire internet experience, there are both current and future opportunities for them to create profit opportunities in the middle, and to gently steer you to their other profit centers.

This struggle actually is a lot more than just who gives away the most free web browsers.  With Google now providing free internet based software that rivals Microsoft's expensive and overly complex Office suite, Microsoft is finding Google advancing on it not only in the realm of free browsers but also into one of its key areas of profitability - its Office product range.

Microsoft has other problems with Office, quite apart from the Google alternative.  To put Microsoft's challenges with Office into context, I was given a free complete copy of Office 2007 by a Microsoft employee and friend.  After struggling with it for a while, I gave up, and returned back to happily using Office 2003.  If Microsoft can't even get reasonably computer literate and early adopting people such as me to upgrade to Office 2007 for free, what hope is there for Microsoft's entire corporate business plan which is built on the concept of selling regular upgrades to their user base?

But all is not lost.  Microsoft has launched a new consumer advertising campaign, with ads running an unusually long (and very expensive) 90 seconds.  Does the ad you can see part way down this page make you want to rush out and buy a copy of Vista?

Microsoft shares dropped almost 6% this week - but Google has done no better, so maybe this is just general marketplace malaise.  It is certainly too soon to put Microsoft onto a dinosaur/death watch, but it seems unlikely that it will ever return to being the unstoppable growth stock that it once was.

Dinosaur watching :  And so, talking about dinosaur watching, at last we get to talk about some dinosaurs.  But let's be contrarian, and open with good news for a change.  With the ongoing service cutbacks, the skies and airports are getting less crowded, and airline performance actually improved in July 2008 compared to July last year.  Ontime arrival stats were up (an average of 76% ontime this year compared to 70% last year).  Best major carrier was Southwest with an 83% ontime rate; worst was JetBlue with a 65% ontime rate.

Baggage problems were down - 4.9 mishandled bags per thousand passengers this year compared to 8.0 last year.

Of course, one of the reasons that mishandled bags are so sharply down is that the average passenger is checking fewer bags than last year.  With nearly every airline charging for a second checked bag, and some airlines charging for a first checked bag, we're checking less bags (and trying to squeeze more into our carryons).

We're starting to see the August traffic numbers come out and already there is one clear winner for the month - AirTran reports a major 12.7% increase in revenue passenger miles, and with an offsetting capacity increase of 8.9% this meant that flights were more full - an incredible 87.3% load factor.

And, for every winner, there's an offsetting loser, with this month's biggest loser so far being American Eagle, with an extraordinary 13.6% drop in RPMs, and a smaller 4.5% reduction in capacity, meaning their load factors are also down to a mere 69.7%.  Ouch.

Southwest will be joining most other airlines in no longer accepting cash to pay for items purchased on its flights.  Only NW and UA still accept cash, all other airlines now require you to pay for meals, drinks, etc, with credit or debit cards.

Congratulations to Continental.  Continental was named North America's best airline in the Skytrax 2008 World Airline Awards.  The carrier also won an award for having North America's Best Cabin Staff.

The awards were selected in an independent passenger survey that included more than 1.5 million eligible survey interviews conducted worldwide between August 2007 and June 2008.

Oil prices are retreating again after the latest hurricane scare passed without causing measurable problems, and oil prices that peaked at $147 are now down at about $107, almost a 30% drop.  While some pundits are predicting the cost of oil to drop below $100/barrel, you can count me out of that prediction.

However, whatever the price, it is plain that airlines have been granted a major respite from high fuel prices.  So can we expect airlines to start dropping their fuel charges and fares, and start boosting their profits?

Well, apparently not.  Here's a good but gloomy article that points out that, notwithstanding a drop in the price of jet fuel from a high of $4.27 a gallon down to a current $3.32 last week (and perhaps less this week), the airlines' response to the drop in their largest single operating cost was to try and raise their air fares again last week.  The article's conclusion - don't go looking for lower airfares anytime soon.

And how much have airfares increased recently?  Because some people change their flying habits when airfares increase, the actual real world impact of an airfare increase is often less than the numbers would imply if people continued to travel exactly as before.

According to this article, the real impact of the many increases this year seems to be about a 10% increase in fares paid during Q2 this year compared either to Q1 this year or Q2 of last year.

Well, okay.  So if fuel costs are dropping, and airfares are staying high, surely that means that, if nothing else, the airlines will start to become massively profitable again?  This expectation is bolstered by the airlines' plans to aggressively cut less profitable flights, and the increased loads on flights.

But, again, apparently not.  The latest projection by IATA (the international airline association) is projecting a $4.1 billion loss - and that's not for this year, during which one could argue the airlines were trapped in an unprofitable game of catching up with fuel costs for much of the year.  That's the projection for next year.

Why is such a massive loss expected for next year?  This is a question which begs an answer, particularly when one reads the fine print and sees that this loss is based on an assumption that oil will average an unrealistically low $95/barrel for the full year 2009 - and is there a single reader here who believes that will be the case?

IATA says that weaker passenger demand will be the problem.  But - understand very carefully what they mean by 'weaker passenger demand'.  They don't mean that there will be a drop in passengers flying.  Oh no.  What they mean is that there will be a reduced growth in passenger numbers, and as proof of this, point gloomily to a growth of 'only' 1.9%, year on year, in July this year.

So here's an industry where their largest single cost - fuel - is going to massively reduce, and where they expect passenger numbers to increase, and where airfares have also increased, but, in spite of all these positive things, and in spite of their future best efforts in this three-way positive environment - they are saying 'we're going to lose, in total, $4.1 billion'!

That is bad management at a level that is impossible to comprehend.  It is even worse when you think that this $4.1 billion loss is presumably after allowing for profits from airlines like Emirates and Qantas, who could end up with the better part of $2 billion in profits between just these two airlines alone.  So the rest of the industry might lose $6 billion.

The two unanswered questions continue, as always - how can an industry as a whole lose so much money in what, in any other industry, would be an enormously positive business environment; and, secondly, how can some parts of the industry be extraordinarily profitable while their direct competitors with similar costs are so extraordinarily unprofitable.  Remember - most airlines use the same planes, buy the same fuel at the same prices, charge similar fares, and have not remarkably dissimilar other fundamental business basics.

Surely the answer to this isn't something as simple as bad to the point of grossly incompetent management?

Have you ever done an engine room tour, or a kitchen tour, or a bridge tour while on a cruise?  They are interesting and a fun way to spend some time on your cruise.  And they're also usually free.

Well, the good news is that Princess Cruises is coming out with a new ship's tour, which they are calling the 'Ultimate Ship Tour'.  This will take passengers to visit the engine control room, medical centre, print shop (hmm, a tour to a shop....), laundry, photo lab (almost another shop), bridge, galley and back stage at the theatre.

And the bad news?  For this tour, complete with 'shopping opportunities' I'm sure, you're asked to pay $150 per person.  The tour lasts a mere three hours, and you will be given themed mementos at some of the places on the tour.

But - please!  $150 for a three hour ship tour of such compelling places as the laundry, photo lab and print shop?  Most off-ship tours, even at the outrageous prices cruise ships sell them for, cost less than $150 for a full day tour, including coach travel, possibly a guide and interpreter, and admissions to places visited.

How can Princess justify $150 for a three hour ship tour?

Some more mouth-watering train travel innovation, with what will be the world's fastest high speed long distance trains to be introduced in 2012 for services between Beijing and Shanghai, slicing the 820 mile journey which currently takes about ten hours down to four hours.  The trains will have a maximum speed of 380 km/hr or 236 mph.  China started building an entirely new set of track for the trains earlier this year, and while this article has some fascinating details, it is silent about the cost of this huge project.

China plans to have 7500 miles of high speed train track operating by 2020.  It currently has one single short line between Beijing and Tianjin, some 200 miles in length.  The US has zero miles of high speed train track, and barring something extraordinary, will still have zero miles in 2020.

This Week's Security Horror Story :  Yawn.  We've escalated our national threat level for all flights to High or Orange.  This is the second highest of the five levels, and is described as implying 'a high risk of terrorist attacks'.  For most of the period since 9/11, we have been at an 'Elevated' or Yellow level, which is one level down from Orange, and which represents a significant risk of terrorist attack.

Well, the good news is that eight years of 'significant risk of terrorist attack' have resulted in no successful attacks.  But what caused the threat level to be notched up from a level that some people think was already way too high and now set at one level less than the highest Red level?

The Homeland Security Department says

There is no credible, specific intelligence suggesting an imminent threat to the homeland at this time. Still, we are closely assessing potential threats and response planning leading into and following the electoral process in 2008 to 2009. Heightened coordination and planning among intelligence community and law enforcement partners is being undertaken solely out of an abundance of caution, and focuses on preventive and preparedness measures for the transition period between administrations.

Hmmm - there is no credible specific intelligence suggesting an imminent threat, but you still notch security up to one level below maximum?  This is sensible?  Someone should tell them the story of the boy who cried wolf.

If your flight is delayed or cancelled, or you miss a connection, you might end up having to spend a night at an airport somewhere, which is truly one of the most unpleasant experiences known to mankind.  Here's a fun website that gives you some helpful information if you need to sleep in an airport.

Lastly this week, airport 'service' and self checkin hasn't yet got quite this bad, but perhaps it is only a matter of time.

Until next week, please enjoy safe travels

David M Rowell aka The Travel Insider

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