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Black Friday, 13 November, 2009
Good morning
My weekly happy-making celebration first :
another 15 readers became Travel Insider supporters
last week, including three more extravagantly generous 'Platinum Elite'
members - Gary P from
PorterCase, Lary J, and Brad
C from Travelrest.
We now have 892 current supporters for 2009.
If 108 more of you choose to support The
Travel Insider, we'll make 1000 for the year.
Today is a 'Black Friday' (ie a Friday that
is the 13th of the month) - traditionally an unlucky day, and
particularly for traveling. I'm currently in Britain and,
contrarian that I am, I'm to spend my Black Friday driving 360 miles from the Cotswolds up to Glasgow, and then from there on to a lovely castle hotel
a short distance north.
I'm actually looking forward to the drive
enormously, because I've a really wonderful rental car (thank you,
Hertz). It is a VW Scirocco GT, a car that has won 'car of the
year' awards from several sources. It is extraordinarily powerful
- its turbocharged engine will spin the wheels in both first and second
gears, and reaches 100 mph embarrassingly quickly (with a six speed
close ratio manual transmission, I several times, when overtaking, got
the engine well into the red line zone in third gear just because it got
there so quickly before I even had a chance to think about changing
gear), and it surges enthusiastically on to a speed limited maximum of
149 mph (not that I've personally got up to those speeds).
A good suite of electronics, enormous power,
and (perhaps just as well) great braking and traction, plus a clean
crisp suspension make this a really fun car to tootle along the country
roads in, and it sure is a great deal different to the very bland
experience I was anticipating in the Ford Mondeo (a bit like a Taurus in
the US) I'd reserved. Perhaps it is just as well that the two GPS
units I'm traveling with both have speed camera data bases in them to
give me warning of upcoming speed traps.
It truly is amazing the types of cars that
Hertz sometimes makes available. I'm still not sure if I liked the
MINI I had from them earlier in the year, and I've also driven a lovely
turbo-charged Saab and even a Volvo.
I'm in Britain primarily for two reasons.
The first is as an unavoidable outcome of trialing the new British
Airways service between JFK and London's tiny little, centrally located
London City airport (LCY); the second being to attend the World Travel
Market trade show.
My BA flight on Sunday evening was an
interesting experience, and slightly reminiscent of earlier flights
on BA's now sadly largely moribund subsidiary,
Openskies (which flies a
757 with two business class cabins totaling 64 seats). However,
BA's new service is constrained by the short runway and steep approach
required
into LCY and so can only operate the 'baby' of Airbus' A320 series, the
A318. An A318 normally can hold 117 coach class passengers, or a
mix of 8 first and 99 coach class passengers. But BA have fitted
out their new A318s into an all-business class cabin,
containing a mere eight rows of seats, each row having two seats on
either side of the aisle - 32 seats in total.
This is a flight I desperately wanted to like for all possible reasons,
but, alas, about the kindest thing that can be said about the flight
over is that it was generally better than coach class on a regular BA
flight. I'll spare you the gory details however until after my
return flight, so as to have a more balanced experience of two flights
to base my opinions on.
However, I can already indicate
that some things won't change, no matter how often I fly these planes -
the seats which are too short to stretch out in (I'm a far from
unusually tall 6'), the lack of any decent hot food on the flight over
(naturally, justified as 'being for your convenience') and the
way out of date approach to in-flight entertainment (stand alone video
players with a slow and clunky interface and no moving map type flight
info display), as well as the disappointment at finding what I'd
misunderstood to be on-board Wi-Fi was actually nothing of the sort.
It was instead very slow GPRS data for GSM
type cell phones only, and with nondisclosed rates for using the
service.Actually, the rates are not very relevant, because it seems that
neither of the two US GSM carriers - T-Mobile and AT&T - will allow
their phones to connect through BA's onboard phone service, making it
totally useless for all US travelers.
The overall BA business class travel experience continues to be subtly
cheapened - for example, you no longer get any serving of peanuts or
anything at all with your drink, and the amenities kit continues to
shrink and shrink, no longer being the eagerly awaited and treasured
goody-bags of stuff they once were.
Now, we all know why this is. BA continues to lose a huge amount
of money - last week I mentioned Ryanair's great half year profit, this
week BA announced a record half year loss of £292 million, with revenue
down 13.7% compared to last year. So it seems they feel the need
to economize wherever they can, whether they should or not.
And - stop press - BA have just
announced their intention to merge with Iberia (the Spanish
airline). Apparently their hope is that if you take two airlines,
both of which are losing ridiculous amounts of money, you won't end up
with an even bigger airline that in total loses even more money, but
instead you'll end up with an airline that magically becomes profitable.
The new merged carrier would be 55% owned by
BA and 45% owned by IB. That seems to place a massive premium on
the IB side of the equation. Details
here.
There are two different types of losses that any company can make on
selling its products, and in cheapening its business class product, BA
is confusing the two types. The obvious type of loss is when you
sell a product for $10 but it costs you $20 in direct costs to provide
the product that you then sell for $10. Clearly, in such a case,
you have no choice but to either reduce your $20 cost price or increase
your $10 selling price.
The other type of loss is where you sell a product for $10, and which
only costs you $1 to start with, but you make a loss because of all your
overhead and indirect expenses. What do you do in such a case?
Sure, you could try and cut back the $1 cost, and/or increase the $10
selling price. But if the overhead costs are consuming more than
$9 per sale, what are the chances of getting to profit by cutting back
on the single $1 of direct product cost? In such situations, companies
need to look at their overhead costs, not their product costs.
In the case of any airline operating trans-Atlantic services, it
probably could be argued that they have perhaps $300, perhaps even $500
of direct product costs. So if they sell a ticket for $250,
they'll be losing money just by subtracting the $300-$500 of direct
product costs from the $250 of revenue generated. In such a case -
that is, with coach class fares - they need to either reduce their
direct product costs or increase the selling price of the ticket.
That's a very simple scenario that we can all understand.
But what about the business class traveler? He is paying somewhere
between $5,000 and $10,000 for his ticket. An airline's product
cost for a business class passenger are almost identical to those of a
coach class passenger, with the largest direct cost being the jet fuel
to transport the weight of the passenger and his bags. The extra
food, drink, etc represents a very small amount only. But let's
give the airlines the benefit of the doubt and say that an airline's
direct costs of flying a business class passenger are $400-$600.
But if the airline is selling the ticket to that passenger for somewhere
between $5,000 and $10,000, and if it claims to be losing money on the
transaction, then what the airline is telling us is that it has an
overhead cost that is ten to twenty times greater than its direct costs.
With overhead costs of say $5,000 - $10,000 per ticket, what do you
think the rational response is - should you start cutting back on the
lettuce leafs on the salad (and save a penny per passenger?) or should
you do something about your out-of-control overhead costs that are
costing you so many thousands of dollars per passenger.
The airlines clearly misunderstood the wisdom of the saying 'look after
the pennies and the pounds will take care of themselves'. By
focusing on reducing the direct costs of flying a business or first
class passenger, all they're doing is discouraging people from paying
the massive premiums to fly business or first class. And with
fewer and fewer premium cabin passengers, the remaining passengers have
to absorb still more of the enormous corporate overhead per
passenger. BA - and all the other airlines - need to stop trimming
services in their premium cabins. They need to start returning
services to those cabins, so as to get returning passengers into those
cabins.
My other reason for visiting was to attend the
annual World Travel
Market trade show in London. This is an enormous show, and each
year massively over-taxes the inadequate capabilities of the ExCel
Convention Center in London, but as long as you don't want to eat,
drink, travel to or from the convention center, or use the washrooms or
cloakrooms during each full day there, you'll be just fine.
I went almost directly from the plane to the show, stopping only for a
shower and to get changed at a hotel close to LCY where BA has an
arrangement for its passengers to use their facilities (this was a very
bad experience, unfortunately), and so with the memories of BA's new
premium business class service fresh in my mind, found myself
stopping in stunned awe alongside a mockup of a business class 'seat'
(more like a suite) offered by a relatively new airline, Oman Air.
Their business class seat and amenities was so stunningly better than
BA's First Class - a huge big video screen and integrated
entertainment system, lots of comfort aids, extravagant amenities kits,
and (I'm told) brilliant food and drink. Unfortunately the airline
has no current plans to fly to the US, but it is another indicator that
the dinosaur approach of ever cheapening their premium cabin products is
not the only way of doing business.
If there was an overarching theme to the WTM
show this year, it had to be some sort of variation on an eco-friendly
theme. This continues to puzzle me because let's all face up to
the ugly truth - if you really want to be ultra-eco-sensitive, you
shouldn't travel anywhere, other than on your bicycle. If
you're traveling thousands of miles, then by the beliefs of the
eco-freaks, you're massively harming the world, contributing to global
warming (something we desperately need with the planet continuing to set
new records for cold rather than hot temperatures) and all that other
stuff.
Being told that the airline we fly uses some
sort of bio-jet fuel really doesn't address these concerns, and neither
does the hotel we stay at proudly telling us it is saving energy by
using even dimmer lights in the hotel rooms and changing the sheets less
frequently. My feeling is that by pretending to (or, worse still,
genuinely) believing in all the global warming theories, and by paying
lip-service to doing things to offset their 'carbon footprints', travel
operators are merely appeasing the eco-freaks, the same way that Neville
Chamberlain appeased Hitler prior to WW2. Each concession given to
the other side only encourages them to become more militant and to seek
further concessions.
The truth is that eco-friendly tourism
can not comprise anything more than staying at home and reading a
library book about a destination. Even watching a travel video
starts to be less eco-friendly.
The travel industry would be better advised
to point out the hypocrisies and inconsistencies of the eco-freaks and
the pet projects they campaign for/against rather than surrendering to
the views of these people. Because, for sure, they'll now find
out, eventually, that the eco-freaks themselves want nothing more/less
than to massively curtail all our travel, whether it be so-called
eco-friendly travel or not. If we want to 'save the planet', we
can do this better by reducing population growth, and spending money on
improving energy efficiency and good eco-practices in places such as
China and India, not by cutting back on our personal travel.
In addition to the eco-friendly theme of the
show, I did sense a much greater sense of confidence about the future
than was the case at last year's show. Leading indicators continue
to hint that we may have turned the corner in this recession; let's hope
that is so.
This will be a short newsletter (sort of)
and with no feature column, due to traveling. What with jetlag and
the awful inefficiencies of trying to work in a hotel room with slow
unreliable internet and very uncomfortable desk/chair, I find it is
taking me two or three times as long to do anything/everything, while
being very physically draining, and at a time when I just don't have 2-3
times as much time to do things in anyway!
I've heard from several readers expressing
their appreciation of the
Magellan's 10% discount offer, which is open
for one more week. There truly is a terrific range of different
things to buy, and the 10% discount makes it even better. And
Scott (of Alaska Travelgram fame) sent in a link to this
Youtube video
he made while touring one of Magellan's 'brick and mortar' stores.
It was a very good October for Southwest
Airlines. Not only were passenger numbers up 1.9% on
last year, but because it had cut back on flights, it had an average of
a 79.2% load factor (percentage seats filled per flight) - the highest
in its history. And, best of all (from the airline's perspective)
its revenue per available seat mile was also up, by about 1%. This
doesn't mean its fares were up 1% year on year, though - because this
revenue is measured per available seat mile, when the percentage of
seats sold increases, the revenue per ASM increases, even if the fares
don't.
Compare that to Continental, which
estimates a drop in its ASM of about 15 - 16%, and US Airways,
with a 9% drop. Details
here.
It isn't just Joe Brancatelli who says
bag fees are bad for airlines. Southwest is now saying it
attributes part of its success to not charging bag fees - see
this story. But at the same time Southwest says that it
believes it has picked up an extra 2% - 3% of passengers due to not
charging bag fees (that might not sound like much, but it made the
difference between having an increase or a decrease in traffic in
October), other airlines are gleefully boasting at how they can add
extra fees and claiming that their passengers don't mind - see
this story.
But of course the weakness in their logic is
they don't see the passengers who no longer book with them. Those
passengers - part of the reason why such airlines are reporting
decreased passenger numbers - have switched to Southwest.
More hotel follies. I included an email
last week from a reader
who was charged $20 to be allowed in to his hotel room prior to the
official 3pm checkin time, even though the room was ready and waiting
for him. Reader Marc follows up with his experience and his solution :
I was amazed at the commentary you had about hotels charging you
for checking-in and getting a room before the normal check-in time. This
exact same thing happened to me at the Marriott Hotel at the Sao Paulo
Airport in Brazil (a great hotel, by the way).
I arrived around 8am and was told I would have to pay a 50% charge on
top of my $100 rate for checking-in before 4pm. After flying 10
hours, the last thing I wanted to do was head to my day-long meetings
after flying all night and looking a bit disheveled! I agreed to
pay the rate but argued that the room was empty anyway and it would cost
them nothing to allow me to use it early. They did not agree and
charged me the extra amount.
Upon my return to the States, I contacted the Elite department (I'm a
Marriott Platinum) and complained that the room was empty anyway, so why
not give me the room early? They forwarded my complaint to the
General Manager of the hotel and they have since changed the policy.
He apparently agreed that it was better customer service than to
potentially lose a good customer. Since that day, I have never had
a problem checking-in early at any Marriott hotel that I have stayed in.
It's just another reason to become an Elite member and stay at a hotel
chain you really like. Loyalty does have its benefits.
Perhaps the main moral of Marc's story is to always complain - both
directly to the hotel, and subsequently to the franchise head office, if
you find yourself in a similar situation. Don't passively allow
this to become another normal fee that hotels plan on charging us,
because if we allow that to happen, you know what the next evolution
will be, don't you? Hotels will start moving their checkin time
later and later, and before you know where you are, if you want to
checkin before 6pm (or maybe later) you'll be paying major surcharges.
Of course, not all of us always stay at
hotels where we are elite members of their frequent guest programs.
Reader Tom has another strategy that anyone can use. He writes
Many times (esp. for corporate
travelers?) cancel policy is up until 6 p.m. So if being hit up
for an early check-in fee, you could counter and say, "I can cancel
my room up until 6 p.m., so let me see if I can find another hotel
that will let me check in early for no additional charge". And then
do it if they don't revert.
Reader R writes in about another problem
with hotel bookings, but this time, not the fault of the hotels
themselves :
Are you aware of the
following scam perpetrated by on-line hotel booking agents like Orbitz, Travelocity and Hotels.com?
When they take a reservation, they always claim (in the fine print) that
the hotel has a cancellation policy that penalizes you a full night's
amount if you cancel up to a mere 24 hours prior to check-in. No hotel
I'm aware of actually does that.
This experience brought this to light :
I made a reservation through Hotels.com for
two nights at Red Lion Downtown, Seattle, four week in advance. As
soon as I made the reservation, I realized I'd made a mistake - it should
have been one night, not two. So I immediately cancelled the
reservation and rebooked properly. A check
of the credit card account the next day revealed a charge for two nights,
then a refund for one night only, followed by a recharge for one night.
I checked with the hotel
directly, and they acknowledged this was not their policy, telling me they
refund the whole amount up to some reasonable short interval before
check-in. A phone call to Hotels.com - after a presumably sham delay while
the rep "checked with the hotel" - extracted a promise for a full refund
which in fact appeared on my credit card account a short time later. I
would have of course disputed the charge with the credit card company if
they had refused and they probably knew that.
To be fair, some hotels these days do have varying cancellation policies
that may incur some penalty, even for a moderately in advance
cancellation, but it would be unusual for a hotel to charge a full one
night cancellation fee on a booking made and immediately cancelled, all
a month in advance.
Talking about hotels, there have been plenty of articles detailing how
hotels are finding the current economic climate very difficult.
But the flip side of this situation - hotels with too few guests - is
that the Priceline service becomes more valuable to hotels, who are
somewhere between keen and desperate to fill their rooms at any price at
all. When hotels are doing well and filling most of their rooms at
close to full price, they have little need for Priceline and you'll find
few bargains there, but at times like the present, you can find
incredible bargains on Priceline, and I'm using it for nearly all my
hotel shopping at present, and getting rates usually well below half the
lowest normal rates for the hotels I stay at.
This is confirmed in
this
article that reports Priceline enjoying excellent increased profits.
One of the things I'm most proud of writing this year is my article
series on How best to use
Priceline to get the absolutely lowest prices for hotel stays.
If you haven't read this series yet, do at least speed read through it
now to understand the basic concepts, and refer back to it next time
you're actually making a Priceline booking. This information will
save you money and get you a better hotel.
Still thinking about hotels, and tourism in
general, a new report has just been released by the European Tour
Operators Association about the impact of the Olympic Games for the last
six cities that hosted them (by the way, I bet you can't name all six
immediately preceding city hosts). Their report finds that the
tourism benefits of hosting the Olympic Games are 'wholly illusory. and
could even be detrimental. This should not surprise you - I
make the same claim whenever discussing the Olympic Games.
“The latest data from Beijing is particularly striking. From the spring
of 2008 international visitor arrivals to Beijing plummeted and in the
month before the Games, they were 30% down on the previous year,” the
study said.
“In the months after the Games, the tourism slump continued with
international arrivals more than 20% down.”
Last year London had nearly 15 million visitors, bringing in over £8
billion. It is already bracing itself for an influx of "atypical"
visitors during the games, whose spending habits are not those of usual
tourists, ETOA claimed.
But if London follows the pattern of Beijing, it
would see over 2.5 million
fewer visitors at a loss of £1.5 billion.
While the data for Beijing needs to be seen in context as 2008 was not a
strong year for tourism in the whole Asia Pacific region, the city still
fared “considerably worse” than the rest of China. Demand for mainland
China may have fallen by two per cent, but Beijing lost 18% of its prior
year’s total.
Tourism growth for Olympic cities tends to be stalled and the stall
becomes most apparent when a comparison is made with competitor
destinations.
For example, in the five years prior to the Olympics, Australia and New
Zealand’s tourism was growing at the same rate but Australia’s growth
lost ground (relative to NZ) significantly straight after the Olympics.
“It is clear that the Olympics did not materially help Australian
tourism, or if it did, it made very little difference,” ETOA said.
“Sydney’s even underperformed against the rest of Australia.
The reason I asked if you could remember the
last six cities to host the games is because one of the (many) nonsenses
that each city and region and country's tourist bodies confidently
assert is that hosting the Olympics will create billions of dollars of
free publicity and ongoing benefits in terms of increased visitor
arrivals for many years into the future. If you can't remember
past Olympic host cities, just how much future benefit do they receive?
When you think about it, the nature of these
claims also shows that the tourism bodies are quietly conceding that
there'll be no immediate benefit, and so they invent an impossible to
measure figure for the value of 'free publicity' and the even more
nebulous 'recognition' that they will get from the Olympics, and they
further diffuse the vague benefits by saying they will flow in for many
years into the future.
The facts of the ETOA study seem starkly
irrefutable. So can someone explain to me why it is that cities
and countries are so eager to be chosen as an Olympic venue?
More drunk pilots? A UA pilot was arrested at Heathrow prior to
flying a flight to Chicago, causing the cancellation of the flight.
One of the other crew members apparently reported him to the local
police. Details
here.
This Week's Security Horror Story : The former Assistant Chief of
Police who wrote the excellent column I perhaps too briefly linked to
last week has now written a
follow up column, pointing out that the signs informing passengers
that being screened with the new 'Whole Body Imaging' machines is an
optional process are displayed only once you've gone through the
process, and also pointing out that on her last trip through BWI they
were only 'randomly' screening women rather than men (due to a TSA staff
shortage).
You should certainly read her first article, and then
consider reading her second article too, and, as was the case with her
first article, the reader comments at the end also make for
thought-provoking reading.
The TSA has had to retreat back from its
insidious 'mission creeping', at least in one respect, and sadly,
probably only temporarily. The TSA's purpose is to ensure that
nothing which could endanger a plane or its passengers gets through
airport security. But it has decided that it should also seek out
any other type of illegal activity it can find, even though it is not
tasked with such duties.
After a dreadful attempt at bullying a
passenger to disclose where he got $4700 in cash that he was taking onto
a flight - there being nothing illegal about carrying such an amount of
cash, and with the passenger standing up for his rights and
surreptitiously recording the TSA bullying, and after the publicity that
ensued and the decision by the ACLU to bring a suit against the TSA,
apparently has caused the TSA to marginally back down from its
self-appointed broader role. Details
here.
I'll be back home next week, and so we'll be
on a normal schedule, although I expect another shorter newsletter next
week too.
Until then, please enjoy safe travels |