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Friday 26 March, 2004
A three day weekend in Victoria made for a lovely break. Victoria is close to a perfect place to visit and vacation in. It has a wide choice of accommodation, with many hotels offering rooms with gorgeous views over its lovely inner harbor, untarnished by over-development. The city is small and compact, making it easy to get around without needing a car. It has a wide range of restaurants, offering a great mix of cuisines and most at reasonable prices. It has good shopping, without seeming too terribly touristy. It has museums, history and culture, and if you do choose to drive not too far from downtown, it has areas of great natural beauty. And while the Canadian dollar has strengthened, prices remain reasonably good and affordable.
We stayed at the lovely Hotel Grand Pacific, in one of their best suites. But I have to wonder what sort of idiot architect decided to locate their best suites closest to the elevators? The noise of the elevator machinery was annoying and constant.
The hotel also showed how poorly it thinks of travel agents. We stayed in a suite with a winter special rate of C$279/night. A travel agent would earn a 10% commission on booking this room, reducing the net rate down to $251.10. But if a travel agent wished to stay at the hotel, and asked for any 'industry' discounted rate, they would be asked to pay $259 a night - a higher rate than if they booked themselves as a regular guest and collected the commission! These days, travel agents rarely get special treatment or special rates.
I logged on, Tuesday morning, and received a surge of alarm/warning emails from my webserver. I'd set it to generate alarm messages if it ever thought there were more than 100 people logged on simultaneously, believing that this would be an impossibility and indicative of a serious error somewhere. The monitoring software reported a peak of 219 people were being served webpages at 6.19am, thanks to a CNN article featuring our cell phone unlocking service. Amazing.
Continuing the theme of press mentions, the grand winner of our 2003 Best Travel Technology Award, the Plane Quiet headphones, is featured in this month's Entrepreneur magazine as one of six 'Must Haves' in their annual Travel Awards section. The second of our three winners, the Search Alert locks, were another of their recommendations, and I'll shortly be adding a review on another of the products they mention, too.
Plane Quiet announced the latest improvements to their amazing value and quality noise cancelling headphones. This is their fifth upgrade in about a year. Details on this, and how to get a 10% discount, are in my Plane Quiet review.
I've also reviewed another set of noise reducing headphones :
This Week's Column : Koss QZ5 Noise Reducing Headphones : These headphones offer the best noise reduction I've encountered, and are also the cheapest (less than half the price of the Plane Quiets). So why don't I recommend them? Click to the review and find out.
Now for something very different. Reader John 'Woodie' Wood, in lovely South Australia, was very taken by the originality of answers to our BA joke competition a few weeks back. And so he is offering to award two Australian opals, valued at $600, to the winner of a new Travel Insider competition -
One more announcement : Today is your last chance to join our Scotland tour in May. I'm finalizing bookings at midnight, Friday 26 March, so if you want to join what promises to be a wonderful experience with wonderful people, please let me know as soon as possible.
Dinosaur watching : Although you might not think so, based on the continued parlous state of the dinosaur airlines, the industry is enjoying a period of strong growth. The FAA predicts we'll be back to pre 9/11 travel numbers this year, which is a year sooner than their earlier prediction. For the next twelve years, the FAA projects regional and commuter traffic will grow by 6.4% a year and larger airline traffic will grow by 3.6%. By the end of 2015, more than half of all US domestic passengers will be carried variously by low-cost, regional, or commuter carriers.
This is not all good news. Remember back to 2000 and the dreadful delays in air travel. These delays will be aggravated further - because airlines are now flying more frequent services in smaller planes, although the number of passengers might now be returning to 2000 levels, the number of flights is already the same or greater. Bottom line = more congestion in the skies and at the airports.
There are 35,000 commercial passenger and cargo flights in the US every day at present. The FAA is devising (yet another) new way to hopefully lessen the impacts of congestion, but holds off on the obvious solution - restricting the airlines' ability to over-schedule flights at peak times of day. Metering the flow of cars onto freeways is obvious, sensible, and effective. Metering the flow of planes into the skies would be the easiest solution, and would also act as a brake to prevent major dinosaur carriers from adding extra flights that aren't really needed, but so as to try and squeeze out new competitors.
United proudly announced that in February its 'unit revenue' improved 12%, it was meeting its bankruptcy financial guidelines, and it had a positive cash flow of $7 million every day.
Sounds great, doesn't it. But read a bit further and you'll discover that, ooops, all these wonderful results still ended up with a net loss of $259 million for the single month. At the end of the month, it had a cash balance of $2.5 billion.
Two simplistic but opposite questions : How can a company with $2.5 billion in cash declare bankruptcy? And/or, how can a bankrupt company that loses a further quarter billion dollars, in a single month, continue trading (especially when you consider that UA lost $2.8 billion in 2003, and an extra quarter billion in January, all the time while in Chapter 11)? I'm sure there are technical reasons to explain away this seeming contradiction, but to the ordinary man in the street, this type of bankruptcy is a 'heads they win/tails they don't lose' proposition.
In the last five years and two months, UA has lost, in total, $7.4 billion. It is expected to end 2004 with another loss-making year, and 2005 may also show a small loss.
Meanwhile, in what seems to be a competitive response to JetBlue, United announced, this week, it will reinstate daily nonstop service between Dulles and Sacramento, and will add extra service from Dulles to Oakland. As I said last week, United (or the other high cost carriers) can no longer choose to pick fights with their low cost competitors in the belief that they'll automatically win.
Is this the most rational way for an airline losing a quarter billion dollars a month to behave?
JetBlue isn't passively watching the major airlines try and crowd it out, of course. On Thursday they announced further expansion from their JFK hub, with a summer schedule showing 35% more flights than last year. Amazingly, they will be operating seven daily flights between JFK and Buffalo and five a day to Rochester. Other airports to get more JetBlue service include United's Denver hub, where JetBlue is adding another daily flight.
A similar 'tit for tat' competition is mounting between AirTran and American. AirTran is adding more flights to AA's major DFW hub, with two more daily flights between Baltimore and DFW. AA immediately announced it was increasing its own flights between these cities as well.
This is not a rational move, but instead a knee-jerk response to AirTran's new flights. Unless new passengers are going to come mysteriously from somewhere to fill these three new flights every day, AA will find itself operating more flights than before, at greater cost, while having the same or fewer passengers spread over the greater number of flights.
Of course, one of the effects of the competition between AirTran and AA will almost certainly be drops in fares, and that will bring more passengers to the flights. We as passengers should be pleased to see such moves, but we as taxpayers and shareholders should be anxious, because if either airline ends up in bankruptcy due to ill advised competitive responses, our share values will be largely lost and the airline(s) will almost surely tread the well worn path to the government door labeled 'airline handouts - apply within'.
US Airways continues to stagger from problem to problem. CEO David Siegel said, earlier this week
If I was a betting person, and seeing as how Southwest has, by US Airways' own admission, beaten them twice in a row, I'd be backing Southwest in its fight for Philadelphia. Indeed, although Southwest won't start flights at PHL until 9 May, it announced on Thursday that it will rapidly double its flights from PHL (from 14 to 28 a day) on 6 July.
US Airways now hopes to slash its costs from 10¢ a mile down to 6¢ a mile, although only a week ago it was talking about a more modest reduction down to 7.5¢. This massive reduction, to make them amongst the lowest of the low cost carriers, might be difficult, with its unions indicating that they've already made concessions. A mechanics union spokesman said
A furloughed US Airways pilot, recently returned to duty flying on their regional airline subsidiary, told me this week that the extra money he received in his two-weekly pay packet, when moving from receiving unemployment benefits to now getting duty pay again, was 84¢! Truly, any more cuts in his pay packet and he'll be able to make more money unemployed than flying!
Although US Airways recently renegotiated its government loan guarantee, it hasn't bought itself much time. It needs to show a narrowing of operating losses by June, and a return to profitability in 2005. On present indications, these seems difficult.
US Airways may yet have an ace card up its sleeve. Virgin. No - not the Virgin Rainbow opal mentioned above, but Sir Richard Branson's Virgin (come to think of it, Sir Richard would make an ideal owner for the Virgin Rainbow opal.... hope he's reading this!).
Virgin have been announcing massive expansion plans this week, with plans to double in size by 2010. They ordered two new A340-600s and are negotiating with both Boeing and Airbus for another 30 planes. Their new Upper Class suites have proven very successful, siphoning valuable premium fare business from their competitors, and encouraging them in this growth, which will also see new routes established to Cuba and the Bahamas.
Among other comments this week, Sir Richard said
US Airways to invest in Virgin USA? While this sounds like oil and water, Sir Richard has a problem. He needs to find investors to take 51% of his new airline, and can only control 25% of it himself, to meet obsolete and archaic US airline ownership rules (the inappropriateness of these requirements was discussed in an earlier article here).
This might be easier said than done. Paul Gretch, director of the DOT's international aviation office, said last week, when talking about Virgin USA,
Apparently meeting the statistical requirements is not sufficient. The DOT must look at the 'totality of circumstances' to determine who was 'actual control'. In an obvious reference to the UK, Gretch also said an investor from a country with a restrictive aviation agreement with the U.S. could face even more serious scrutiny.
I thought the UK was our number one ally? We have a strange way of showing it.
In other Virgin news, the story at the end of last week's newsletter aroused a great deal of outrage, including some people writing to me as if I were responsible for the proposed new fittings myself.
Interestingly, the widely reported story was wrong in one crucial detail. These fittings had not yet been installed, even though the story read as if the reporter had seen them in person. This week Virgin announced that they would not be installing these fittings, preferring instead to use a less controversial porcelain design. Thank goodness for that.
A government that reduces travel taxes? Sounds unlikely, and let's hope the reporter who penned this story did a better job of getting the facts straight. Apparently the Canadian government is to reduce its Air Travelers Security Charge - a saving of C$2 off domestic and transborder US roundtrips and C$4 off international trips.
Does this mean air travel in Canada is getting safer?
There's an interesting message in the discussion forums that shows one reader's frustration with American Airlines and the response he got from their aawful Customer Service people. We all understand that airlines seek to charge as much as they can get away with, but surely it is also fair that when a loyal customer is confronted with $1000 difference in cost between the airline he loyally flies regularly, and another airline; don't you think his preferred airline should encourage him to fly with them rather than force him to a competing carrier? Isn't it better to get a moderately high fare and keep a loyal customer, instead of getting no fare at all and losing a frequent business flier?
More good news for Airbus. In addition to Virgin's order, Spirit Airlines announced that it will buy 35 A320 series planes from Airbus, with options for up to 60 more. These planes will replace and expand on their current fleet of 32 MD-80 planes, with the first planes to arrive in March 2005.
Perhaps part of Boeing's problem at present is that it is so pre-occupied with negative thoughts about Airbus it has no room left for any positive developments of its own. There's nothing more futile than arguing which horse will win a race - after the race has been run, but Boeing continues to heap misplaced scorn on the company that, by almost every measure, has now eclipsed Boeing and is winning the bulk of new airplane orders.
The latest example of how Boeing is so embittered by Airbus' success was quoted in the British Guardian newspaper last Friday. Randy Baseler, head of marketing for Boeing's commercial airplanes is quoted as ridiculing Airbus' forecast that there may be a market for 1138 of its new super-jumbo A380 planes. He said the demand would be a maximum of 320 planes.
Question to Mr Baseler : Airbus has already sold over 130 of these planes, and the plane has yet to take to the air for the first time. How many 7E7s have you sold? Or how many 747Xs? Or how many Sonic Cruisers?
Some people might unkindly infer that Boeing is an expert on failed plane projects. What do non Boeing people think about the probable success of the A380? Quite apart from the airlines that are voting their thoughts with their check books, Heathrow Airport gives a ringing testimonial for the A380 when it predicts that by 2016 (ten years after the A380 starts flying) one in every eight flights into its airport will be an A380. By contrast, at present only one in every nine flights is a Boeing 747, a plane that has now had 30 years of production.
There is no point whatsoever in Boeing talking about will/won't the A380 be a success. With 135 sales so far, the A380 is already a success. I discuss this more in part four of my series on 'Where is Boeing Going?'.
Do you hunt for bargains on eBay? Here's a cautionary tale, if you do.
This Week's Security Horror Story : Thanks to reader Mark, who spotted an apparently foolproof way to smuggle a gun through airport security. Indeed, this method is so foolproof that TSA attorneys tried to censor testimony given to a Congressional hearing in which this information was described. Not all publishers agreed to censor this unclassified testimony, and it remains in the Congressional Quarterly and Federal News Service.
So, if you'd like to smuggle a gun onto a plane, you can read this article to learn how.
Although illegally walking across the Mexican border has never been easier, with groups of US activists even setting up refreshment comfort stations on known illegal immigrant trails (apparently trails that aren't known to our Border Patrol), the official border controls continue to escalate and inconvenience lawful legal visitors. Congress imposed a deadline of October this year for foreign governments seeking expedited visa approvals for their citizens to replace current passports with new high-tech biometric passports.
There's only one problem. It seems that few - or none - of the foreign governments will have new passports introduced by then - even Britain says it won't have acceptable passports before summer 2005. Tourism industry officials, and even SecState Powell, estimate this might cost our economy billions of dollars in lost tourism earnings, and are pleading with Congress to extend their deadline to a more realistic time frame.
Why is Congress unable or unwilling to look at our Mexican border problem - a problem we can surely solve ourselves, while preferring instead to try and force friendly foreign governments to meet stringent new US requirements for their passports. This requirement is all the more hypocritical when one contrasts it with the red-carpet treatment given to almost certainly illegal immigrants brandishing Mexican 'matricular consular' documents of dubious validity.
Memo to terrorists : Fly to Mexico, then stroll across our border at your leisure.
Reader Tom reports on trying to book some flights on the British West Indian Airways website. On this page, he sees the following conditions :
Tom wonders if this means you first buy a ticket, and only after you've bought it, are then told how much it will cost?
Thinking of going downunder sometime soon? Qantas has a special with fares reduced by up to 45% between Los Angeles and Australia or New Zealand. The airline now offers 12 flights to New Zealand and 25 to Australia every week. Tickets start at $698 roundtrip from Los Angeles to Auckland, $798 to Sydney or $1098 to Brisbane or Melbourne. You must book by April 8 for travel between May 1 and 31. Taxes and fees are extra
The westernization of China continues. After an eight year old boy was refused a child discount on a flight because he looked too old, he has now taken China Eastern Airlines to court, seeking compensation and a public apology.
Apparently he is old enough to sue.
Until next week, please enjoy safe travels
David M Rowell aka The Travel Insider
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