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Friday, 27 March, 2009
Good morning
Are you enjoying our spring? Not if
you're flooded out, for sure, and here in WA there's only the slightest
of hints that winter may be behind us. The thought of travel to
warmer climes continues to tempt, and with that in mind, I am eagerly
counting down the months, weeks, and days until our
June/July European river
cruise.
Twenty one of your fellow Travel Insider
readers, from places as far away as the UAE, have already chosen to
join me and participate on this cruise, and there's still some A, B, D
and E cabins available, so if you'd
like to perhaps celebrate the Dow breaking through 8000 again, as it
currently seems it may do today,
please do come join our happy
group and share in this lovely cruise/tour through some of the most
scenic parts of Germany.
Extending the thought of spring, I've been
doing a bit of spring cleaning on the website this last week, in the
form of updating articles that need to be kept current. So we now
have revised versions of the truth for the three pages on
domestic airline carry on policies,
domestic airline checked bag policies, and
international airline
carry on policies, plus updated pricing data for the
London Underground
and London Pass pages.
Needless to say, most of the changes to
airline bag policies were for the worst, and it is now more common than
not to find airlines charging for a first piece of luggage.
On a more positive note, it was interesting to see that
even after adding the small fare increases to the London Underground
ticket prices, the massive rise in the dollar over the last year has
resulted in big net reductions in those costs. Not that anyone
could sensibly call a £4 one way fare a good value, no matter what the
exchange rate, but if you follow my
advice, you'll be paying no more than £1 per journey (in the central
fare zone) and sometimes even
traveling for free.
Talking about travel in Britain, I've
been promising for a while to write about the five different airports in
London, and to compare and contrast them to provide an understanding of
which might be the best and worst choices for your travel. At
last, I've now got the first two pages of this project completed, with a
possibly interesting overview of the London airport situation as it has
been, as it is, and as it may become in the future, plus some comparison
tables showing some of the differences between the airports.
I also attempt to choose a best and worst
airport, and consider if it even really matters which is best and worst.
And so :
This Week's Feature Column :
All About London's Five Airports : Which is the best and worst of
London's five airports, and why? Should you even care? For a
comprehensive set of comparisons, and the answers to these questions,
visit this two part article.
One further comment about these two new pages. If you can think of
other comparisons and data tables that would be interesting or helpful,
please let me know, and I'll see about adding such information to the
pages for the benefit of everyone into the future.
Dinosaur watching : February
was not a good month for the US airlines. Passenger revenue
dropped by 19% compared to Feb 08, being a combination of 12% fewer
passengers and a drop in the average value of fare of 8%. The Air
Transport Association predicted further airline schedule shrinkage as a
result, which continues to beg the chicken and egg question I posed in
my January article on
why airlines are
shrinking. (The question is - are the airline capacity
reductions the result of fewer people flying, or are fewer people flying
because of fewer flights to take?)
Many airline executives may be feeling the
truth of a saying attributed to Sir Adam Thomson, the founder of British
Caledonian, an airline subsequently purchased by BA in 1987. He
said
A recession is when you have to tighten
your belt. Depression is when you have no belt to tighten.
When you've lost your trousers - you're in the airline business.
The airlines, of course, love to plead
poverty almost as much as they enjoy blaming other people for their
problems. IATA has this week updated its 2009 forecast, and is now
saying that the world's airlines will lose, in total, about $4.7
billion this year (their last estimate, in December, projected a
$2.5 billion loss).
But all is not gloom and doom, at least for
our US airlines. IATA projects a net overall industry profit for
the US carriers, albeit only of $100 million, and such a small number
means there'll be a few profitable carriers, earning more than $100
million between them, and then a number of other loss making carriers
dragging the total back down to the $100 million. It doesn't mean
all airlines will be profitable.
It is very hard to see how US carriers
can not be profitable when one looks at the growing impact of their
nickel and diming fees that they hit us with for every possible thing
that was formerly free (and with the updating of the baggage fee tables
mentioned above fresh in my mind, some of those 'nickel and dime' fees
can be way the other side of $100).
This
story quotes US Airways' President Scott Kirby, who says that his
airline expects to earn an extra $400 - $500 million in revenue from
such fees for this year. Being as how these fees are almost all
for things that were formerly provided for free, that revenue flows
straight through to the bottom line. In other words, and in round
figures, that is half a billion dollars in extra profit.
Coming back to IATA's 'the sky is falling'
prediction of a massive industry loss this year, there's one interesting
voice of dissent, at least in the medium term rather than for this
current year. Boeing. They are predicting an acceleration of
growth in the airline industry.
Their figures show a compounding annual 4.8%
growth in passenger numbers over the last 20 years, which they say
occurred even with the negative impacts of two major world recessions,
9/11 and assorted other terrorist acts, the Asian financial crisis of
1997, the severe acute respiratory syndrome (SARS) outbreak in 2003 and
two Gulf wars. For the next 20 years, they are now predicting a
compounding annual growth rate of 5%.
The airline industry has quadrupled in size
over the last 30 years, driven by several factors - general worldwide
economic growth, of course, but also the below-inflation gradual rise in
airfares, making air travel increasingly more affordable in inflation
adjusted real terms. And why have air fares been dropping in real
terms? Between 1978 and 2004, air fares dropped by an
extraordinary 45% in inflation adjusted terms.
Part of the reason is bigger and more
efficient planes with lower costs per passenger mile. But the
biggest reason (and the reason why the industry has been so aggressively
seeking more efficient airplanes) is the growth of deregulation of
the aviation industry.
A 1997 study suggested annual passenger
savings of $19.4 billion a year due to airline deregulation.
That number is presumably massively larger now.
Few of us remember back to the way things
were prior to deregulation, which occurred back in 1978 - almost exactly
30 years ago. Back then, the airlines were protected
semi-monopolies, a bit like utility companies. There was little
competition between airlines, and airfares were approved by the
government much the way electricity prices are - the airlines would get
annual approval to set fare levels based on their operating costs and
their need to make a 'fair rate of return' or profit on their business.
The airlines were essentially guaranteed an annual profit by the
government, and were simultaneously spared the worry of having to
compete, either with each other or with new airlines.
Make no mistake. Deregulation was
and still is the very best thing that ever happened to us, the flying
public. As imperfect as thing are for us as passengers at
present, who among us would wish to return back to a regulated
environment, with the associated massive leap in airfares that would
occur?
Well, we as passengers are generally
delighted with the impacts of deregulation, but would it surprise you to
learn that airline personnel are less sanguine. Here's a
disgustingly gushy article which seems to show that if you pour a
reporter a cup of coffee, that reporter will then appreciatively and
uncritically drink in not only your coffee but also any line of bs you
wish to drop on them. In this case, the reporter is shocked -
shocked! - that a former CEO of Continental would 'not be opposed' to
the government re-regulating the airline industry.
Of course this ex-airline exec, and all
other airline execs, would love to see their industry re-regulated,
because they'd be returning back to the cozy arrangement that many of
them still lovingly remember, where their annual profits were all but
guaranteed.
It isn't only airline executives that would
love to see a return to regulation. He might be good at water
landings, but he is now showing himself to be short sighted and self
centered about other aviation matters. I'm referring to the
nation's favorite hero pilot and instant celebrity, 'Sully', pilot
of the plane that successfully landed in the Hudson.
He is now suggesting in Congressional
testimony about the safety lessons that can be learned from his water
landing that severe pay cuts are forcing experienced pilots and crew out
of the cockpits and into other non-aviation jobs. His implication
is that future water landings by less dedicated pilots than himself
may be less successful.
As an aside, it sure beats the heck out of
me to know what type of non-aviation job that pays something way high of
$100,000 a year for working half a month or less a pilot with no other
employment history could actually get? Does such a job exist -
and, if it does, do you think I could get one, too, Sully? Best of
all, would it have the same free travel privileges as an airline
captain?
Sully further offered the opinion that the
industry's problems all date back to de-regulation.
Sure, of course he too would love to see
re-regulation occur, and he even gives us the reason why.
Sully told Congress that his pay has been cut 40% over the last few
years and his pension terminated.
But does that mean he flies 40% less safely?
Of course it doesn't! When facing certain death, no pilot thinks
'heck, the airline doesn't pay me well enough' and just passively allows
his plane to crash. Instead, the pilot's first thought is not
about his pay, nor even of the passengers behind him on the plane, but
of himself. He'll do whatever it takes to save himself, and being
as how he doesn't have a parachute to simply and jump out the window
with, saving himself happily means saving his passengers too.
If you want to know how it is that pilots
ended up earning such ridiculously high salaries prior to the cuts of
the last few years, look no further than the period of regulation.
No-one really cared, in a 'cost plus' situation, what pilots were paid,
and with airlines often run by former pilots, pay rates went up and up
and up. Sully, along with many others in the industry, would
obviously love to see a return to those 'good old days' and an ability
to claw back the unrealistic pay rates of yester-year.
Don't be fooled, folks.
Re-regulating the airline industry would mean the end of cheap airfares
for us all. And if you think airline service is bad now, if
re-regulation were permitted, the last remaining shreds of competitive
pressure would be removed, and this would surely not cause the airlines
to voluntarily improve their service.
Talking about improving airline service,
I've suggested that one of the reasons for the disproportionate drop in
business and first class travel is due to the airlines having cheapened
their product too much, removing much of the reason why people would
otherwise choose to pay considerably more for J/P (or C/F if you prefer)
travel. And so it is with considerable interest that I now pass on
to you an announcement by AA that they are improving the wine they serve
in first class on their 777 and 767-200 flights. This will be most
noticeable in the form of larger wine glasses (and hopefully more wine
in the larger glasses); these larger glasses are said to 'allow
customers to more easily swirl the wine and enjoy its aromas'.
It is a shame that one's taste buds are
somewhat depressed at altitude, but AA is nonetheless to be encouraged
for a first baby-step back in the direction of enhancing rather than
cheapening their first class product. Well done, AA.
Talking about pilots, should we feel pity
for the poor United Airlines pilot who discovered hidden (oh dear,
what euphemism can I use here to avoid tripping stupid anti-spam
filters...) ummm, graphic pictures of people without clothes and perhaps
engaging in adult activities in the cockpits of planes she was flying?
I'm a bit curious myself about how it was she went looking for such
hidden photographic material, but maybe that's beside the point.
Although expected to remain cool calm and
collected, no matter what sort of stressful flying situation she might
encounter, this pilot developed a severe mental condition that
required her to take medication and eventually ground herself as a
result. A simpler solution might have been to stop searching
for hidden things.
Happily though, everything has now been
resolved, with the pilot apparently now being considerably the wealthier
in a confidential out of court settlement with United. Details
here - including some fascinating revelations about the pilot
herself.
I wonder what Sully would think about this -
would paying this pilot more money mean she wouldn't lose her ability
to fly upon encountering some material that, according to United,
she already had some personal familiarity with and even used to sell?
And talking about airline lawsuits, here's a
story of a type we see once every year or two. A CO frequent
flier is suing the airline for having raised the number of miles needed
to earn a free trip, and for charging him a $75 fee to book the
flight.
He is alleging CO levied an illegal penalty
(the $75 fee for booking a flight within three weeks of travel date - in
these days of electronic reservations and ticketing, this is an
impossible to justify fee), breach of contract (when he joined the
OnePass program he only needed 25,000 miles for a free ticket, now he
needed to use 50,000 miles), and unjust enrichment.
He is seeking to have the case given
class-action status. But I'd rate his chances of success as
very low - the airlines have generally learned from their past
mistakes, and now have their frequent flier program terms and conditions
full of legalese giving them the right to change the rules and
requirements any which way they choose, any which time they wish.
What do Alitalia and Czech Airlines have in
common? Both have been the target of buy-out offers by Aeroflot.
The Czech government is selling a 91.5% stake in the airline, and one of
the bidders is Aeroflot. Another is believed to be Air France/KLM.
Here's an
interesting article that looks at some of the less obvious cost
implications of arranging your own travel, rather than paying a
generally negligible sum to have a travel agent do it for you.
How'd you like to travel between central
London and the heart of Amsterdam in four hours.
Impossible, you say? Well, actually,
it is barely possible, even now, if you fly from lovely London City
Airport to AMS. I've done it, with the flight being on a
stomach-churning crampled little Fokker twin-propeller powered plane
that bounced its way unhappily through rather than above the weather;
not something I'd wish to repeat any time soon.
Soon there'll be a new and vastly improved
way to do this, later in the year when high speed train service
commences, making use of a new piece of high speed rail line to be
opened between Brussels and Amsterdam.
This article lists an amazing list of new high speed rail
developments in Europe. The really extraordinary figure is
that by the end of this year, there'll be 3,700 miles of high speed
track in Europe, and in the 11 years that follow through to 2020,
another 5,300 miles will be added to this.
And what of the US? Current miles of
high speed track? Maybe a paltry few hundred on the Acela's East
coast corridor. Anticipated miles of high speed track by 2020?
Probably no more. Best case scenario - perhaps we add 500 miles of
extra track in California, and a few patches extra on the Acela East
coast corridor.
If we were to match Europe mile
for mile of new high speed rail track, by 2020 we'd have a line up
and down both the east and west coasts, plus spurs into other high
population corridors in the East, the Texas 'triangle', and with enough
spare to double track the highest traffic stretches. But we'll
have none of that.
Track development costs are probably higher
in Europe than they are in the US. We've no excuse for being
left so far behind by Europe and by China. It was the massive
investment in the federal interstate highway system after WW2 that
underpinned the economic advantage and boom of the US for the decades
that followed. Our lack of resolve to once again invest in our
infrastructure is harming our competitive abilities in a world that is
becoming increasingly globally competitive.
While the airlines are currently blaming
global economic conditions for their collapses in passenger numbers and
revenue, the cruise lines are quietly smiling to themselves.
While the airlines are cutting back their schedules, the cruise lines
continue to buy more and bigger ships.
Most recently, Carnival reported a 10% boost
in its first quarter profit compared to the same period last year.
The company earned a net profit of $260 million on revenue of $2.9
billion, a brilliant 9% net profit margin. In comparison, last
year saw a $236 million profit on $3.2 billion in revenue, a 7.4% net
profit.
This Week's Security Horror Story :
Still talking about cruising, here's an interesting, albeit somewhat
painful and facile list of the world's best cruises from
Forbes magazine. I see they describe Norwegian Cruise Line as
having the 'best overall vibe' - whatever that means.
Maybe 'best overall vibe' means 'safest
place to commit assault'? Here's an
extraordinary story about NCL's refusal to help a passenger, who was
violently assaulted during a cruise, to identify and bring charges
against his three assailants.
One has to wonder - who is NCL protecting
here, and why?
You probably know of the several companies
that offer priority lines at the airport screening areas.
And, of course, first class passengers and elite frequent fliers often
have a priority line, too. So what's not to like about
this concept where anyone can access the priority line by simply
paying a fee. Seems fair and sensible to me.
I wrote last week about the apparent duality
of standard at Southwest as between the conservative clothing they
insist their passengers wear inside their planes but their willingness
to adorn the outside of their planes with a ten times life-size picture
of this year's Sports Illustrated cover swimsuit girl. For my
part, I didn't find the picture offensive, but I was amused by their
double standard.
However, others did seem to genuinely find
the illustration offensive - I guess they don't go to the beach much in
summer - and while Southwest claimed that the vast preponderance of
public opinion was strongly in favor, the interesting fact is that the
image has quietly disappeared off the plane again.
Here's a list of
bizarre holiday grievances and also of stupid tourist questions, and
here's a
silly video about Prague's Franz Kafka Airport. Thanks, Mark,
for both links.
Until next week, please enjoy safe travels |