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Friday, 31 July, 2009

Good morning

While our stock market has posted encouraging gains over the last few months, the same is, alas, not true of the US dollar, which, as reported in this article, is falling to its lowest levels of the year against our six major trading partner currencies.  The Euro, which was as low as $1.25 earlier this year, is now up more than 12% at over $1.40, and the pound, which dropped as low as $1.37 is now back up around $1.65.

This reinforces the values inherent in the special deal discounts for river cruises we have (which expire today).  This truly may be the very best year ever for river cruising values in Europe.  We have cruises that were good values to start with, and which haven't increased in cost with the change in exchange rate, and which are now being discounted by $500 - $1500 per person.  Because river cruising covers just about all your costs, you're locking in the vast bulk of your total travel cost to this one single US dollar based payment.

The twin events that made up for the deep discounts this year are less likely to reoccur in the future.  The unexpected closing of Peter Deilmann Cruises will result in eight boats being taken out of Europe next year, which will act to diminish or destroy the over-capacity that was present this year, and the sluggish but apparently steady return to better economic conditions will encourage people to return to their higher levels of leisure travel.  This year's combination of too many ships to start with, and then compounded by too few people traveling, has seen these amazing values appear, but don't look for them again next year.

Anyway, you still have today to choose any of the approximately 50 different discount cruises operating between now and the end of the year.

And you have two more weeks to take advantage of the $500 discount on our 2009 Travel Insider Christmas Markets Cruise.  The lowest price E cabins are now all sold out, but there are still D, C and B cabins all available for under $2000 per person, and even the best A category cabins are only $2098.

We've ten people coming on this lovely cruise already, and would love to have you join us.

Oh - and if you're not able to come cruising, but want to get best value for your travel dollar any other way, here's an interesting article from Forbes listing what they refer to as Fifteen Cheap Countries to See in the Recession.  I'm not sure I want to visit all the 15 countries featured, and I don't entirely agree with their methodology, which seems to be primarily focused on the US/local currency exchange and nothing else.

But some are definitely great ideas, such as The Czech Republic, Hungary, Poland and Romania, and for those of us in the Seattle area with recently introduced air service by Icelandair, the recommendation of Iceland (and Norway and Sweden too) is also appropriate.  But the suggestion that Russia is a cheap country is way removed from reality - it might be better value than last year, but it still remains a very expensive destination.

It has been an intensely hot week here in the Seattle area.  On Wednesday the temperature in Redmond reached 105° (twenty degrees above the normal high for this time of year), and much/most of the week has seen temperatures above 90°, all of which is way too hot for me.  I'm living testimony to the accuracy of research that suggests productivity drops by about 5% per each 2° rise in temperature about 70°, and so have no feature article to offer you this week.  I do have several articles almost completed, but they are all variously waiting on inputs from other people before they can be completed, so expect something good next week.

One of the articles I have under preparation is on travel scams - both scams to trick you out of your money by selling you worthless things, and scams to trick you out of your money when you're traveling away from home.

If you have any experiences or suggestions about scams to be on the alert for, please do share them and let me know.

Just as your comments helped make the eight part series on being bumped off flights more comprehensive, anything you can add on the subject of scams and tricks and traps to do with travel would help ensure another comprehensive coverage.

Dinosaur Watching :  Frontier Airlines posted a small profit in its second quarter - $12.6 million, and said it would have enjoyed a $27.6 million profit if it were not for reorganization expenses.

The airline is currently in Chapter 11, and its future will be decided at a bankruptcy court managed auction on or about 10 August.  One airline - Republic Airways - filed a $108.8 million bid on 22 June, and then on Thursday this week Southwest Airlines surprised most industry watchers by making a conditional bid of $113.6 million.

Southwest's bid is seen as a way to quickly grow its presence in Denver.  By taking over Frontier, it would get in total about a 33% share of Denver traffic, with market leader United having a 50% share.

The benefits to Southwest however would not be fully realized so quickly.  Integrating Frontier Airlines - its planes, its people, and its systems - would take some time, most notably because Frontier flies a fleet of 51 nearly new Airbus jets - mainly A319s plus a few A318s and three A320s, with an average age of two years.  Southwest (WN) on the other hand has always entirely and exclusively flown Boeing 737s and has, to date, strenuously resisted the introduction of any other aircraft type to its fleet, saying that having a single airplane type gives it better cost efficiencies - this is contrary to conventional airline wisdom, but it seems to have worked well for them until now.

So, does the $113.6 million bid on Frontier represent the easiest best way for Southwest to boost its presence in Denver?  When one considers that WN has been conspicuously not growing during the last little while, it seems strange they would now suddenly seek to buy Frontier's complete route system in a single transaction, especially when one considers that almost every one of the Frontier routes duplicate routes already operated by Southwest, with the notable exception of Mexico - Southwest has yet to fly into Mexico itself.

Wouldn't Southwest have been better advised to simply grow organically?  Or is WN paying top dollar just to buy out/buy off what would become a reinvigorated competitor if Frontier were to be sold to Republic?

No questions asked refunds are a hallmark of many leading and successful businesses, and even those businesses that don't have a 100% liberal policy for returns are generally fair about exchanges - for example, if you bought a dress the wrong size and wished to exchange it for the same dress in the correct size, few retailers will hit you with a change fee.

But, of course, the airlines play by different rules.  The Department of Transportation is now keeping more detailed records on airline fee income - to match the growing prominence of airline fees, and they report that in the first quarter of this year, we paid some $528 million in change fees and cancellation penalties, almost the same as the amount paid for baggage fees.

Yes, the airlines are taking $2 billion from us every year merely for allowing us to change our tickets.  And another $2 billion for allowing us to take our luggage with us.

Some good news from Delta.  They are adding a new feature to their frequent flier program - a type of 'rollover miles'.  Essentially, if you get enough miles to qualify for one of their Medallion elite frequent flier levels, plus you earn some more miles beyond that, but not enough to qualify for a higher level of status, you can apply those miles towards your next year's qualification.

This is a major added benefit, because most of us have some miles left over after reaching whatever qualifying level we achieve each year, and indeed some of us will even 'time shift' flights either into one year or the other based on where the miles will do the most benefit.  Now we can roll over the extra miles and get a head start on the next year's qualifying.

Delta is also adding a fourth level of elite status - in addition to regular frequent fliers, and then the Silver, Gold and Platinum elite levels, they are now adding another level - Diamond, and there are rumors of a fifth semi-secret 'by invitation only' level to be added also.  I'll not hold my breath expecting my own gilt edged invitation to appear in the mail any time soon.

Lots of disappointing news about British Airways this week.

As I've been anticipating pretty much from their commencement of operations, and as has been looking increasingly inevitable, with the only question being when rather than if, BA is abandoning their OpenSkies subsidiary.  BA is putting the airline up for sale, and meantime, with barely three weeks notice, is cancelling its flights between New York and Amsterdam, leaving only its Paris/New York service remaining.

I wrote about OpenSkies here.  They offered a good experience at a great price, but have clearly failed to turn the profit corner, due to what I guess to be a combination of too-low fares and too-few passengers.  It is a shame that the airline launched shortly before the 'perfect storm' of high fuel costs followed by tough economic times and decline in business travel numbers.

After this latest of several failures to create an all-business class trans-Atlantic service, one has to wonder as to the future success of BA's soon to be launched new all-business class service between London City Airport and New York.

BA is also cutting back on its other flights between the US and UK.  JFK loses one of its seven daily flights, and both Newark and Chicago reduce from three to two.  Alas, Seattle is also affected, with its 10 flights a week going down to seven.

More BA cutting back - this time on food and drink service on its shorter flights within Europe.  No great surprise there, and not too much hardship either.

But BA is also cutting back on the food served in first and business class on its flights to/from the US.  No more after dinner chocolates, and no more pre-dinner canapés.  While one might say that the loss of an after dinner chocolate (or, on one notable BA flight, I was given the entire box and allowed to eat as many of them as I wished) is hardly a deal breaker, it is another regrettable step that cheapens the first or business class experience and makes it harder for a passenger to justify the sometimes $10,000+ premium as between first/business class and coach or premium economy class.

You'd really think that when an airline charges $10,000 more than a base coach class fare, it could afford to spend $1 for a chocolate or two, and another $1 or $2 for a canapé or two.

And while no-one will probably book down a class based on the omission of these two items, it is a further step down the slippery slope of making business and first class less premium and more ordinary, and just helps to accelerate the trend for passengers to fly in coach class.

BA is suffering enormously due to passengers deserting its first and business class cabins - people who no longer see the value or sense in these overpriced and under-featured offerings; people now choosing to pay very much less money to fly coach class.  BA's best response should be not to cheapen its first and business class products, but rather to spend a few dollars more and make them more appealing.

Instead of taking away the canapés and chocolates, why not double the quantity being offered and the regularity with which they are being offered?  Why not add one or two additional hot towel services?  Why not upgrade the lounges?  Why not provide chauffeur transfers to/from the airports?  And so on and so on.

Is the best their highly paid marketing and product and brand managers and consultants can do is to come up with suggestions to save a couple of dollars per remaining passenger by cutting down still more on the amenities that the passenger has paid a $10,000 premium for?  Any fool can say 'cut the cost', but only an intelligent sensible person can come up with new ways to appeal to passengers and encourage them back to the premium cabins.

Here's a cost-cutting measure that BA has mercifully yet to introduce, however.  Reducing the size of the cutlery on board so as to save weight.  This is what Japan Airlines did, trimming a fraction of an inch off their cutlery, and saving several pounds of weight per typical 747 flight as a result.

One would think that reducing the weight of a 747, which can weight up to almost 900,000lbs, by perhaps 5lbs per flight would be so trivial as not to be worth considering.

There are changes afoot at Aeroflot too, not the least of which is that its flight attendants will now be 'very striking, very eye-catching girls' who will not exceed a US 12 dress size.  Presumably this is also to save weight?  Their new CEO offered a new maxim for his airline - 'The passenger is always right'.  Perhaps he might care to teach this concept to some western airlines, too - but only after he has completed the training of his Aeroflot staff!

Aeroflot is also discontinuing the use of its fleet of older Soviet built airplanes, replacing them with more modern Airbus and Boeing planes.  Although some commentators have snidely suggested this may be due to safety issues, that is not correct.  The main driving reason is that the newer Airbus and Boeing planes (and in particular the western engines on them) are vastly more fuel efficient and economical to operate.  More details here.

Government interference can be a good thing.  Sometimes, when an industry falls outside the guidelines of free market forces, government interference can be a positive factor, and the airline industry is consistently showing that it can't be relied upon to police itself and treat its passengers fairly and decently.  Although our own government continues to wink and look the other way, the EU is taking more aggressive action.  This is already apparent if you read the impressive list of passenger rights the EU created and which are referenced in my recent article about your rights in Europe if overbooked.

Not content to rest on their laurels, the EU is now proposing that each member country set up an agency to monitor bags that the airlines lose or damage, and to enforce rules for passenger compensation in such cases.  It is also mooting the possibility of increasing the level of compensation airlines much pay for lost/damaged bags.

Suggestion to the EU - don't just increase the level of compensation, but also remove the exceptions the airlines in the US all gleefully cite - basically the airlines currently refuse to be liable for anything valuable in your luggage, creating a Catch-22 where anything of value will not be reimbursed to you.

A slowly unfolding tragedy in Britain?  Traditional British pubs are closing at an ever increasing rate - in 2004, pubs were shutting at a rate of 8 a week.  This increased to 27 a week in 2007, went up to 38 a week in 2008, and for the first six months of this year, they've been closing at a rate of 52 a week, at least according to statistics released by the British Beer & Pub Association.

Recognizing this alarming trend, two MPs tabled a motion in the House of Commons urging their colleagues to 'support their local pubs' (whatever that might mean).  They said the pub industry was 'hugely important to the British tourist trade'.

This of course begs the question - if Britain is losing 52 pubs a week, how long before it has no pubs remaining at all?  Well, there are still 57,500 pubs (that is about one per thousand population), so it will be about 21 years before the pubs have all gone (to be replaced by appalling 'trendy' bars).

Meanwhile, in France the French government is practicing 'tough love'.  It has warned its citizens that they could be asked to pay back the cost of rescuing them under a bill unveiled this week.  The bill targets French nationals who travel without a valid reason, to dangerous areas, despite travel warnings.

The state wants them to pay all or part of the costs incurred from rescue operations, according to a government statement.  The government wants travelers to take out better insurance to cover such costs, seeking to avoid repeats of, for example, the hundreds of thousands of Euros the government spent to repatriate French tourists from Thailand during last year's riots.

Under a 1985 law, French citizens already have to reimburse the state for mountain rescue operations if they are found to have caused an accident by taking excessive risks.

Sounds like a very fair idea.  I'm sure I'm not the only one irked by a sometimes hundreds of thousands of dollars rescue effort to save people who acted very foolishly and unpreparedly.

Bad news for Boeing :  Their new 787 plane, repeatedly delayed already, is now experiencing open ended further delays that will probably add at least six more months to the two years of delay so far accumulated.  A 'stress test' of the wings showed cracking occurred well below the forces necessary for safe operation and for FAA certification.  This is requiring changes to the design of the area where the wings join the body of the plane.  Unfortunately, Boeing already has ten 787s completed and another 30 in various stages of completion, most of which will need to have 'after the fact' fixes applied to them.

It is hard to know how to feel about this.  Perhaps Boeing placed too much reliance on computer modeling and did not do enough real world testing earlier in the development cycle - particularly because it was building the plane in large part from new composite materials which it has little relevant prior experience with, and perhaps the company's outshopping of the airframe construction to different sub-contractors, all around the world, further delayed a chance to discover problems until the pieces were finally assembled.  And was Boeing over-confident by proceeding with building many more planes before the first one had been tested and approved?

But, whatever the underlying causes, the bottom line is stark - analysts estimate that the development process is now going to be about $11 billion over budget (an estimate increased by about $5 billion for the implications of this latest problem).  In addition, and with airplane deliveries looking to be at least 2.5 years after initial promised dates, the 'window of opportunity' that Boeing initially exploited so successfully - the period of time when it was selling the 787 and while Airbus had no appropriate competing airplane - is closing still further.

The good news is that Boeing has managed to secure orders for a staggering 850 787s so far, but the bad news is that the Airbus alternate, the A350, is proceeding apace and currently is thought to take to the skies in 2013.  An airline wishing to order either a 787 or an A350 today is now as likely to be able to get an earlier delivery on an A350 than a 787.

Having now spoken out in favor of the iPhone as being the best 'smart phone' for most people, I'm now a bit sensitive to all issues to do with iPhones.

Here's a really scary story of a security bug - worse still, a bug that Apple has known about for more than a month, but done nothing about.

And while one has to admire the 25,000+ applications available for the iPhone, one also feels some concern about the monopolistic and controlling nature of Apple, which rigorously sets and enforces rules and policies for which applications it will or will not allow to be distributed.  I encountered that myself last week when I thought I'd found the perfect way to call internationally for next to nothing - I'd use the Skype application on my iPhone.  But when I tried to do that, a blocking message came up saying that Apple/AT&T would not allow Skype to make calls over AT&T's 3G data network, eliminating my ability to call out via Skype until such time as I found a Wi-Fi hotspot.  The only reason for this restriction seems to be to force people to pay over the odds for international calling direct with AT&T.

Sure, there are plenty of Wi-Fi hotspots, but I was in my car at the time, and no Wi-Fi hotspots work when you're driving down the highway (due to their very limited range).

Another example is the growing suite of Google Voice applications, which Apple has banned entirely - details here.  Again, it 'protects' other Apple partner revenue sources, but at the cost of not allowing Apple's customers to freely choose whichever call management program they wish.

Talking about Wi-Fi, Barnes and Noble have announced this week that the Wi-Fi hotspots at all their stores will now be free for everyone to use.

And talking about AT&T's 3G network, here's an amusing story of the ongoing battle between AT&T and Verizon as to which carrier has the better network, and how they may fairly describe their networks in advertising.

This Week's Security Horror Story :  When you cross the land border that Canada has with the country to the south of it, what country do you enter?

The answer to that question is, of course, the United States, as almost everyone in the world knows.  But the US Customs and Border Protection agency wish to keep this a secret.  They are removing the large letters that spelled out 'United States' on the building that houses the immigration and customs services at the border crossing at Massena, NY.  Says a spokeswoman for the CBP, 'There were security concerns.  The sign could be a huge target and attract undue attention.  Anything that would place our officers at risk we need to avoid.'

Excuse me, but writing the name 'United States' on the border patrol's building at a Canadian border crossing is an unacceptable security risk?  Have we become completely terrified of our own shadow?  The terrorists have won - game, set and match - if we are now too frightened to show the name of our country on a federal border building.

Details here.  What will be next?  A prohibition on flag flying?  Taking the name of our country off our stamps and currency?  There's no limit to such lunacy.

Talking about unlimited lunacy in the name of security (as we seem to do every week), how about forbidding a child from taking a very unrealistic plastic replica toy sword or toy plastic flintlock pistol onto a plane?  In this article, we read about an eight year old boy who bought these two articles from the Pirates of the Caribbean ride at Disneyworld, but had them seized when flying home again.  This makes us safer?

Still, it could be worse for the eight year old.  He could have been sent to prison.  The United States has both the highest incarceration rate (prison population as a percentage of adults) in the world and also the highest absolute number of prisoners.  We have about 2.3 million adult prisoners, and with about 230 million adults in the country, that means 1 in every 100 adults is currently in prison.

Interestingly, after having an incarceration rate that remained moderately level for a long time, in the 30 years between 1978 and 2008, rates have skyrocketed sevenfold, pushing us from somewhere in the middle range of national incarceration rates to now being the clear world leader.

Why does the US have such a high rate of incarceration?  Are we unusually dishonest?  Or is our society unusually vengeful?  Or is there some other reason?  What has happened over the last 30 years that has caused a seven-fold increase in the rate we are imprisoning people?  And - most to the point - is it a good or a bad thing that we are locking up so many of our population?

I don't know the answers, but I think the questions are important.  A society that willingly (and/or necessarily) incarcerates high proportions of its citizens is not a healthy society.  Some quick thoughts on these points.

Most importantly, please read this appalling story of a man who ended up being prosecuted by federal agents twice for the 'crime' of failing to put a warning safety label on a package he sent via UPS that contained some sodium in it.  No-one was harmed and no problems occurred during the package's shipment and delivery, but an out-of-control enforcement system ended up with the man spending two years in prison, all because he forgot to (or didn't know he must) put a warning sticker on a package that was sent harmlessly through the UPS system.

How many other people find themselves caught up in the legal system for such victimless non-crimes, and end up having spend tens or hundreds of thousands of dollars defending themselves in court, and possibly losing and ending up in prison?  And how many billions of taxpayer dollars are we spending to chase after such people, to prosecute them, and then to incarcerate them?

To answer just the third part of that question - on average states are spending 6.8% of their total annual budgets on corrections.  California spends the most in dollar terms - $8.8 billion a year, and Oregon the most as a percentage - 10.9%.  Add to that the extra costs of the legal system and the police and other enforcement and regulatory agencies, and the complete costs are enormous.

In the twenty years 1987 - 2007, states have increased their spending on prisons at a rate six times greater than they have increased their spending on higher education.  Is this the best way to spend money on our people?  The answer to that question is resoundingly 'No!'.  One study in 2002 suggested that every dollar spent on pre-kindergarten education resulted in a $16 saving in subsequent costs of welfare, incarceration, etc.

Here's an interesting piece that rebuts five myths about US imprisonment policies.  In quick summary, the article says the growth in prison population is not caused by longer sentences - the average prisoner spends only about two years behind bars.  Low level drug offenders are not driving the growth in prison numbers either - only about 20% of inmates are there for drug offenses (compared to 50% for violent crimes and 20% for property offenses).  And the article suggests there's at best only a very weak correlation between locking more people up and crime rates declining (or freeing more people and the crime rate increasing).

There's something terribly wrong with our society - a society that was built on the tenets of a respect for freedom and justice - if it takes away the freedom of so many of our fellow citizens, and in some cases where clearly no serious crime was ever committed.

There's also an interesting example of unintended consequences.  The 'three strikes' laws that have proved popular over the last decade or two as a way of perhaps taking career criminals off the streets don't always work the way they should.  Rather than making a criminal who has had two convictions already become extremely law abiding and honest, they can instead make such people become more extremely criminal, because they know they'll be facing life in prison, whether their third crime be for something moderately petty or for first degree mass murder.  There have been suggestions that this actually encourages more extreme criminality in such people.

More fascinating data on US incarceration rates, and comparisons with other countries, can be seen in this excellent presentation here.

One last comment, semi-related.  You all know how difficult it is to cause a policeman to lose his job.  I've written myself, regularly, about egregious violations of citizen's rights and due process by police, and the result is often nothing or perhaps merely an admonition to the guilty officer.  There are even cases involving dubious use of deadly force that have brought no sanction against the involved officers.

But if an officer should write an email to a friend in which he exercises his right to free expression, albeit in an unfortunate manner, about a person or thing that is a politically incorrect statement, and if that email should fall into the hands of his superiors, then - notwithstanding a previously faultless record, he can be immediately suspended, and scheduled for a termination hearing within a week.

The whole concept of the First Amendment is to protect distasteful speech that we disapprove of - because if we don't allow distasteful speech we disapprove of, pretty soon we find the need to pass a 'speech we approve of' test becomes increasingly difficult and constraining.  Details here.

Finally, what do you think Prof Gates was shouting at the top of his voice when this picture was taken?  My guess - something vastly more insulting, and direct to the arresting officers, than the private email from Officer Barrett to some friends.  But whereas Officer Barrett stands to lose his job, Prof Gates gets invited to have a beer with his long time friend in the White House.

Talking about getting police officers fired, an even harder feat is to get a TSA employee fired.  But apparently they don't feel they have enough job security already, and are looking to join a union, and seek to give the union power to collectively negotiate on their behalf.

As a former union official myself, I'm fully understanding and supportive of the need for unions, and the value they can add, but primarily in situations where the employees don't already have the upper hand.  Surely TSA employees would be near the top of anyone's list of employees who do not need unionization - they are a group of people already with job security and fair to generous pay and conditions.  Adding another layer of job protection merely adds another layer of non-accountability to these people and the jobs they do.  Details here.

I opened by talking about inexpensive destinations, and would like to close with one more suggested inexpensive destination.  If you're a fan of The Office television series, why not take advantage of an Office themed tour of Scranton, PA.

Lastly, thanks to reader Mark who thought we'd enjoy this presentation of the strangest items left in hotel rooms.

Until next week please enjoy safe travels

David M Rowell aka The Travel Insider

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