|Friday 30 May, 2003|
Good morning. My reference in last week's newsletter about AA cutting back on their 'More Room Throughout Coach' program aroused a lot of comment (and ire) and so I've added to last week's comments and expanded it to a full article, as another in the (sadly quite extensive) series on Airline (Mis)Management.
This Week's Column : AA Puts on the Squeeze : After putting the figurative squeeze on its employees and suppliers, AA is now putting the literal squeeze on its passengers, by adding more seats to its planes. Strangely, AA presently fills no more seats per flight than any of the other 'Big Six' airlines. Adding more seats to planes that are usually one third empty seems a very stupid move!
Here are just two of the comments that you sent in after the commentary last week. From Will :
And from David :
Deathwatch Part 1 - United : The impact of those schedule changes that I've spoken about the last two weeks continue to ripple outwards. Reader Chuck writes in to say
You know there's something crazy in the world when your bank manager smiles at you and says 'Well done' after you tell him you lost $375 million in April. That is what happened at UA. Although a smaller rate of loss than the $1.3 billion it lost in Jan-March; with only $1.1 billion of unrestricted cash, time is quickly running out for the airline. Paradoxically, perhaps, its net loss still had it within the guidelines set by its lenders, and United has been talking about exiting Chapter 11 earlier than originally projected.
While United is attempting to feel good about losing only $375 million in a single month, low-fare new generation - and profitable - airline AirTran Airways is expanding service and plans to buy at least 50 and perhaps as many as 100 new planes. They have yet to choose between Boeing and Airbus, and plan to place an order this summer, with deliveries coming in at the rate of one new plane a month starting from June 04. The new planes will be used for coast to coast flights as well as shorter haul routes as part of their ongoing national expansion program.
Is international First Class going the way of the Dodo? And does anyone really care? Most domestic flights are on planes with one or two classes. Internationally, flights were originally one class, and then became two class, and then Qantas developed the world's first ever mid grade cabin, now known as Business Class. Over the more than 20 years since then, business class has become closer and closer in quality to first class, to the point where both business and first class cabins on some airlines now offer lie-flat sleeper bed seats. While some airlines cut back down to only two classes (eg Continental) other airlines added a fourth class, half-way between coach and business class.
The last year or so have seen massive reductions in the number of people buying first class fares, and British Airways has now announced that it is discontinuing first class on six of their US services. BA says the abolition of first class will allow it to add 50 extra coach class seats on the affected 777s - an ironic 'benefit' when one remembers that only a couple of years ago, BA was saying that it was disinterested in low fare leisure travelers, and wanted to concentrate only on high fare business travelers.
This leaves BA still offering three classes - coach, premium economy, and business class, surely enough choice for most passengers, and modern day business class is as good as first class was ten years ago. As my BA reviews have suggested, the 'sweet spot' for most travelers with normal budgets is premium economy, especially when it is on sale for only $500 more than discounted coach class.
This week's Virgin/Concorde stories : BA's CEO Rod Eddington rather took the wind out of Virgin's sails when he indicated earlier this week that BA might keep 'at least one' Concorde flying as a 'museum exhibit' (whatever that means). He said that BA is speaking to several air museums in Britain about establishing a charitable trust that would keep one (or more?) Concordes flying on some sort of basis. At the same time, he reiterated that the planes were not for sale and would not be passed on to other airlines to be operated on a commercial basis.
Meanwhile, the rumor mill was working overtime with Virgin. After the news about some type of merger talks between Virgin Atlantic Airways (VS) and British Midland came out, BA found itself almost forced to consider taking on a 'spoiler' role by buying one or the other of the two airlines, to stop the possible merger. If VS and British Midland merged, BA would find itself with a much stronger competitor, having access to many more precious Heathrow landing slots, and so their best defense may be to buy one of the two carriers before the other one does.
The thought of BA buying Virgin is a bit like a patient in a hospital swallowing hemlock as a cure for piles. The 'cure' might be worse than the problem! If ever there were two massively incompatible organizations, surely it would have to be BA and VS, with way too much mutual dislike and distrust.
And, perhaps to trade insults, Virgin then let it be known that they had been looking at buying BA in January! VS spokesman Will Whitehorn said: 'We came very close. We were very serious about BA, but we decided with our advisers that BMI was more interesting. We have no for sale sign up, we have an expansion sign up.'
Back on 4 April I wrote an article advocating that current restrictions on foreign ownership of US airlines be removed. In a partial step towards this, the Department of Transportation is seeking to raise the present ceiling on the percentage of voting shares that can be held by foreign citizens in US airlines from 25% to 49%, bringing the U.S. into line with regulations in the EU and elsewhere.
This could meet tough opposition in Congress and the labor movement because of largely misplaced concerns about job security, but if successful, might encourage foreign entrepreneurs such as Virgin's Sir Richard Branson to enter the domestic aviation market. Sir Richard has been studying a plan to set up a low-cost airline in the US, and says he could get one operational within six months of being given permission to proceed. I find that concept exciting. The 'Big Six' dinosaurs find it terrifying.
An interesting commentary was published by airline analyst Samuel Buttrick of UBS Warburg. He estimated that the US airlines had a reduction in earnings of approximately $2 billion from lost revenues and increased fuel costs relating to the Iraq War. At the same time, the airlines received $2.5 billion in federal aid prompted by the war's impact on travel. 'As carriers cash their welfare . . . er, security refund checks, it's safe to do a little Monday morning quarterbacking on the economics of the more recent federal airline bailout,' Buttrick said. 'Essentially, a $2 billion war investment netted the industry $2.5 billion. As wars go, this was a good one for airline economics. Now if airlines could only run their core business as well,' he added.
This week's SARS update. It's back. I stifled any doubtful comments when previously reporting that Toronto was declared SARS free. Unfortunately, there are now more new cases in Toronto, and the CDC have re-issued a new travel alert for that city. New cases continue to be reported all around the world. We're a long way from turning the corner on this problem.
The IRS is casting its eye over frequent flier miles again, but this time, rather than looking at taxing us for the miles we receive, it is looking doubtfully at how Southwest Airlines is accounting for the cost of issuing miles. Most interesting is Southwest's estimate that the incremental cost to them of transporting an award ticket holder on a roundtrip flight is $10 (during the period 1992-95).
I estimate the average incremental cost of one more passenger these days to be closer to $20 for most airlines, but when you match that up against the 25,000 or more miles the ticket costs you, and when you consider that not all miles are ever redeemed, it is clear that the cost to the airlines for each frequent flier mile is substantially less than 0.1 cents. This figure is relevant, because most airlines now have programs that will sell miles, either to marketing partners, or to their own members, with the typical cost per mile being 2c - 3c a mile. Do the math and you'll quickly see that airlines sell frequent flier miles for perhaps 30 times their cost. Do you know any other business than can sell its product for 30 times cost, but still lose billions of dollars a year?
To look at these numbers still more, increasingly airlines are trying to charge a fee for issuing you a free ticket. Guess what. The ticket issuing fee (and now that they are issuing e-tickets and accepting web bookings for mileage awards just how much true cost do they incur?) is many times greater than their total cost of providing the 'free' travel!
Boeing's new airplane, the almost-indistinguishable-from-every-other-plane-they-have-made that they are trying to position as a startling new development in airplane building, now has its own website - http://www.newairplane.com/ . There is a reader survey where you can vote on what you think is the best name for the new plane, with four choices. One of them sounds like the name of a cruise ship (Dreamliner), one sounds like a dot com startup on drugs (eLiner), one sounds like a new warship (Global Cruiser) and the fourth sounds like a cross between an old WW2 bomber and a mountain climber (Stratoclimber). Does anyone care what ridiculous name they call the thing? Why not just call it a 787!
One of the big challenges when buying an airline ticket is knowing if you've got a good deal or not - knowing whether to buy a ticket at today's price, or hold off and wait for a better deal in the future. Ticket prices can vary by hundreds of dollars from one day/week to the next. How much would you pay to be able to have an independent and knowledgeable source advise you if the current ticket price was a good or bad value?
This webpage has an interesting article on the topic, and shows a survey that reveals 52% of those replying would not pay anything at all for this information. Another 20% offered to pay $1, 13% said $3 and 15% said $5. This points to the massive problem within the (primarily US) travel industry at present. Travelers need advice on how best to book and buy their travel needs, but are unwilling to pay fair amounts of money for this help. In my opinion, being able to find out if you should buy a ticket today, or if it is likely to drop in price (perhaps by hundreds of dollars) in the future, is information that on average will save anywhere from $20-100, and also give you peace of mind. But 52% of people that are clever enough to read articles about travel on the internet are not clever enough to pay even $1 for this!
Who wins and who loses in this type of situation? The airlines win, because people can't make the best purchasing decisions. Travelers, and the travel agencies and other information sources they refuse to support, all lose.
This Week's Security Horror Story : Australia gets a double mention. Earlier this week three senior citizens inadvertently entered Sydney's domestic terminal through an unguarded exit door, allowing them direct access into the 'secure' part of the terminal. Security officials, upon realizing this, decided not only to rescreen everyone in the entire terminal, but also to disembark passengers from three flights that were about to leave and rescreen them, too. Chaos reigned for at least six hours, and not just in Sydney but throughout the country. Oh yes - they never did find the three people that were the root cause of this!
Not so funny was the attack on a Qantas flight on Thursday, when an apparent madman, armed with two sharpened wood sticks, a can of (presumably inflammable) aerosol spray and a lighter tried to fight his way into the cockpit of a domestic Australian flight. One flight attendant was seriously injured and a second not quite so seriously injured as they resolutely blocked access to the cockpit (the cockpit door was not a strengthened type door and could easily have been kicked in), and then with the help of passengers, managed to subdue the man.
The really scary part of this story is that wooden sticks don't show up on metal detectors. They would be slightly visible as shapes through an Xray machine, but if you hid the sticks on your person, you could walk through the metal detector without causing an alarm. As we all know, men have been killing other men with wooden sticks for thousands of years. This highlights the urgent need to strengthen all cockpit doors on all planes, and also points out the lunacy of having to surrender nail files while a person can smuggle truly dangerous wooden sticks on board. And don't forget the aerosol and lighter, either - together they are a great way to make a flame thrower.
Back in the US, a man described as a 'paranoid schizophrenic' sneaked through security at Pittsburgh's airport late one night and was found asleep onboard a plane the next morning. He apparently ducked behind a closed ticket counter, went through a baggage tunnel, got out onto the tarmac, then drove a UA van (its keys were 'hidden' in its ashtray) over to a gate, then onto the ramp and boarded an unlocked plane.
Apart from forgetfully buying some Perrier water one day, I haven't bought anything French in several months. Doubtless several wineries in Bordeaux are already feeling the effects of my personal boycott! And so, with my slightly jaundiced eye, I find this story about a campaign to try and make Parisians more friendly particularly amusing. You might, too.
Now here's a guy with a job I'd like. Dr Stephen Leatherman is Director of Florida International University's Laboratory for Coastal Research. What does his job actually entail? Known as 'Dr Beach', he has been visiting beaches nationwide and ranking them on 50 different criteria in an attempt to scientifically find America's best beach. The results of his findings? Kaanapali Beach in Hawaii comes in first, with other Hawaiian beaches at Hanalei Bay, Makalawena Beach and Hanauma Bay also coming in the top ten.
When Dr Beach does his next survey of beaches (I get the feeling this is a job that never ends!) he should add a 51st criteria. The presence of 'Bimbo Securo' childminders. The system, now on sale in Italy for about $100, has a bracelet that a parent can place on their child, and a receiver the parent keeps. If the child wanders further than a programmed distance (15 - 50 yards), the receiver lets out a high pitched squeal. Every receiver has a slightly different tune, presumably so, on a crowded beach, parents will recognize the sound of their receiver from the cacophony of all the other receivers around them also going off.
This week's prize for 'Really Good Idea' goes to Seattle Airport. They are installing 208 automatic defibrillators throughout their terminals - one every 100 yards - so that anyone suffering a heart attack is only seconds away from essential life-saving assistance. The memory of my father dying on his living room floor, while an ambulance too slowly made its way to his house, for lack of a nearby defibrillator, haunts me. A person's chance of recovery from a heart attack diminishes 10% for each minute of delay prior to getting their heart restarted - seconds truly count. These devices are now fully automatic and fully affordable. While there are always too many ways to spend money on health and safety, I'd love to see defibrillators in public spaces everywhere, and ideally in private homes too.
Alas, not quite such a good idea is this story about the latest slant on flying cars - a concept that has been around for fifty years, and still is no closer to reality.
But something that is strangely practical, and is used regularly in Russia, is weather control. This week sees one of my favorite cities in the world celebrating its tercentenary (300th birthday) - Happy Birthday, St Petersburg. As part of the festivities that has 40 world leaders including President Bush in attendance, President Putin has decreed that the weather shall be perfect. And so, it will be. A team of rainmakers is seeding any threatening clouds before they approach St Petersburg, ensuring that the weather in the city is sunny and dry. Canisters of frozen CO2 are fired into the clouds where they explode, causing the clouds to drop their rain. Strangely, with nothing stronger than CO2 being used, it is even quite eco-friendly.
Talking about strange weather control, I came across a gentleman earlier this week who rather convincingly claims he can control the weather, to a limited extent, through ESP. If anyone needs a rainmaker (or rain preventer), let me know. Results, ahem, not guaranteed.
Until next week, please enjoy safe travels and good weather.
|David M Rowell aka The Travel Insider|
|ps : Don't forget to visit Joe Brancatelli's site for his weekly updates, too.|
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