Friday 31 December, 2004
There were a lot of 'I'm out of the office' emails last week, and probably a lot more today, too. As for me, I'm in the office and feeling envious, and also feeling like I have a slight touch of the flu.
I'm sure I'm not the only one feeling a bit 'under the weather' at present, and with that in mind, many thanks to those of you who took time out of your Christmas celebrations to answer our survey about owning a New Zealand winter home, enabling you to escape winter and enjoy a second summer in the southern hemisphere each year. The information received has been very helpful, and in particular, it is as useful to receive feedback if you are not interested in the concept as it is if you are.
If you haven't already had a chance to answer the survey, please consider doing so now. I'll share the findings in next week's newsletter.
Hopefully not too many of you found yourself ensnarled in the awful mess of cancelled flights and delayed baggage last week. Those of you who were stranded are perhaps already planning to move to NZ!
US Airways apparently suffered an unusually large number of staff calling in sick over the Christmas period, and this combined with bad weather resulted in their operations going all pear-shaped. However, US Airways assures us this was not due to any union action; it was just an unexpected random set of events.
If it wasn't union action, what was it? Could it possibly be that US Airways just didn't have enough staff rostered to allow for normal levels of absenteeism?
Whether random or not, it probably indeed was unexpected. Only a month ago I was writing about US Airways offering a massive bribe to staff - employees who worked through both Thanksgiving and Christmas with 'perfect attendance' were to be given two free positive space tickets anywhere US flies. As I said at the time, this is a massive and unusual bribe to offer employees just to get them to do the job they're paid for. Even a bribe of this nature proved insufficient.
Many readers have shared stories with me of watching other airlines' staff kill the airline and their own futures. It seems like those who won't learn the lessons of history are doomed to repeat them, but it is impossible to understand what advantage a US Airways employee thinks s/he is gaining by operationally destructive absenteeism at a critical time when the company is struggling to maintain consumer and investor confidence.
It will be interesting to see what happens today. US Airways still hasn't completed getting luggage to passengers from pre-Christmas flights, and now risks another peak period disruption this weekend. Let's hope for good weather.
Meanwhile, the airline's dual deadline is drawing closer. Its interim financing deal with the ATSB expires on 14 January, and at the same time its largest other creditor, GE Capital, could conceivably repossess up to 200 of the airline's 280 aircraft. Both outcomes appear to revolve around the airline securing a new deal with its unions, and their bankruptcy judge has said he'll decide if he tosses out the existing contracts on 6 January, assuming that the airline and its unions don't 'agree' on new contracts prior to that time.
One of the underlying foundations of our western law of contract is the notion of equality of bargaining power. While this is many times a 'legal fiction', nowhere is it clearly more so than in a situation where the unions are being told 'either you agree to this, or we get to take even more from you on Jan 7'.
Another foundation of our entire western commercial system is the sanctity and enforceability of contracts. Sort of like - ummm - the contracts signed between US and its unions that are still current, and which the airline and its bankruptcy judge partner are now threatening to unilaterally scrap.
$35 million. $1.4 billion. 125,000 dead - so far. 14,000 retired pilots. Millions of other people devastated and distraught. Response to an international disaster of biblical proportions. Bailing out United Airlines.
Can you match these statements up? Yes, the government is giving $35 million for disaster relief from the tsunami. Oh - the other thing? The forty times greater $1.4 billion? Squeezed into the tail end of the quietest news week of the year is an announcement that the Pension Benefit Guaranty Corporation has applied for court permission to take over United's Pilot Pension Plan. In doing so, it assumes a liability for $1.4 billion in benefits, making it the second largest bailout by the PBGC.
Curiously, United professes not to be pleased by having this burden taken off its hands, and the pilots in particular seem disappointed. Why is that, you might wonder? Certainly not due to any embarrassment at accepting a $1.4 billion taxpayer bailout!
No, the reason that UA and its pilots don't want to be bailed out now is because they'd been hoping to wait until May before holding their hands out. You see, in May, there is scheduled to be a sudden $140 million jump in the pension plan's obligations.
There is something totally and completely wrong when United can simply walk about from this liability. Taxpayer money should not be used while United still has a single dollar of its own cash available. Taxpayer money should be used as a last desperate resort.
How fair is this on the other airlines, struggling with their own pension plan commitments? Last week I mentioned the broad hint from DL that it hoped for government assistance. How can the government and its PBGC refuse DL when it has now stepped in at UA? And what about NW, AA and the other airlines? Here is a table showing pension deficits (the bracketed numbers) at the big six US carriers.
Airline 1999 2000
2001 2002 2003
Note also there is still a lot more remaining liability at United.
While it was prudent of the PBGC to try and minimize the level of payout it will have to make, this is another example of legislation initially being passed to achieve a good purpose - ie to protect pensions when/if disaster strikes and companies vanish leaving behind unfunded pension plans - now being perverted and being gamed by UA and the pilots to achieve maximum benefit while allowing United to fly away, free of obligation or censure.
If you are a JoeSentMe.com subscriber, you were told about a special deal yesterday morning. BA have another incredible business class sale on at present. You can buy enormously discounted business class fares to London and twelve other cities; roundtrips to London are as little as $2100, compared to normal business class fares of as much as $10,000 and more. You can travel pretty much any time in 2005, but need to buy your tickets before the end of Sunday. Details here.
2005 marks the fifth anniversary of the high quality low fare airline Jet Blue. The airline itself is celebrating in the traditional industry manner - by offering an airfare sale, with coast to coast fares available for as little as $170 roundtrip. Yet again I find myself wishing that JetBlue didn't only have one horrible redeye flight a day between Seattle and New York!
JetBlue's birthday is being marked in another way, too. It has been deemed a 'major airline' due to it now having revenues exceeding $1 billion a year. Congratulations to JetBlue for a wonderful first five years, and best wishes for the next many multiples of five years ahead.
United also announced a New Year Air Fare sale, but unlike JetBlue's, United's sale generally seemed to comprise prices that were of no special value at all.
I was researching the sale prices for travel to various destinations on their website in the hope of finding a good deal, and noticed an extraordinary thing - when you search for airfares, United's website is currently quoting not only UA prices, but also lower prices on other airlines, too. You can't book the itineraries from other airlines through the United site, and while this is a great public service offered by UA, one has to wonder how many people would actually choose to book the UA option when there is a several hundred dollar cheaper option offered by another airline displayed prominently on the same page!
The fare/schedule display is actually showing a url from a third party - www.itn.net - and keying in that url by itself lands one on an American Express page. I guess this interlocking set of connections is why they call it the world wide web.
Less than 24 hours remain for Boeing to make its target 200 orders for the new 7E7. Currently the count is stuck on 56, although there are an equal number of pending orders not yet actually committed to by such leading airlines as Vietnam Airlines.
Oh yes, and Boeing got a surprise gift from the man who was formerly head of their 737 and 757 programs up here in Seattle. In his capacity as CEO at Continental, Gordon Bethune tossed his former company a curiously provisional order for only ten 7E7s. Bethune retires today.
While Boeing is making all the ritualistic noises of delight at getting its first 7E7 order from a US airline, skeptics might wonder why it took Bethune so long to do what he was predestined to do and yet again help out Boeing, and why, when finally choosing to do so in his last days in office, the announcement was for so few 7E7s and with so many qualifications.
Continental has a fleet of 350 mainline jets, including (as at the end of 2003) 18 777s, 26 767s, 45 757s and a huge number of 737s, 51 of which now average 18+ years old. It makes no sense to add ten only 7E7s to CO's fleet.
These would presumably be to replace either 767s or 757s. While there may be economic reasons to replace these current planes, there certainly aren't mechanical reasons. The 767s are under four years old, and the 757s are about seven years old. And a small order for only ten planes simply adds another new plane type to their current fleet mix, and in too small a number to be truly operationally flexible.
The real deal between CO and Boeing - to be ratified by CO's directors prior to the end of February - may well be very different to the paper announcement on Wednesday, which was rightly described by the Seattle Times as a parting gift to Boeing from Bethune. However, one thing is certain - CO will get a sweetheart deal from Boeing for its kind support.
But - just how good a deal will CO get? Of course, this is a matter of commercial confidentiality, and we have no way of ever knowing. Or do we/will we? Amazingly, some people are lobbying to make the prices paid for airplanes a matter of public record rather than the closely guarded commercial secret it presently is.
The airlines don't want their competitors to know what prices they have paid for planes, and absolutely neither Boeing nor Airbus want their deals exposed for the less fortunate airlines to see. So who does want this data made public? Professional airline appraisers, who say their job at estimating used airplane values is currently too difficult without knowing this information.
Plainly they haven't understood that having a difficult task is the best form of job security. If airplane pricing was public knowledge, maybe there'd be no need for them at all! Word of advice to airplane appraisers : Difficult is good. More details here.
And completing a trio of Seattle Times links, here's an interesting story on the ongoing and understated Boeing/Airforce 767 tanker deal/scandal.
Just in case you're feeling relaxed next time you fly, here's a nasty story about problems with the FAA's Air Traffic Control system, and their passive approach towards resolving the issues.
It is enough to encourage you to drive more and fly less. Although this would be foolish; flying remains vastly safer than driving. But, talking about driving, I was comparing notes with a reader about our respective Jaguars. I tried to avoid dividing the purchase price and maintenance costs of my XJS by the mere 30,000 miles I've driven it these last 10.5 years, because the answer would reveal an embarrassingly high cost per mile, making it far cheaper to simply take taxis everywhere. Don't laugh - do your own sums for your car and you might come to a similar conclusion!
And now, adding further to my chagrin, here's an interesting story about fascinating new car sharing services which seem to offer a viable alternative to car ownership, particularly for people living in central city areas. A recent wealth study showed that one of the most important factors to retire wealthy is to avoid unnecessarily extravagant car costs during one's working life.
Do you know someone who works for Cingular Wireless? If so, see if you can find out the secret codes Cingular gives to politicians (!) and emergency workers for priority over-ride network access.
This Week's Security Horror Story : The government continues to spend millions of dollars to selectively 'protect our borders'. But if you're a terrorist seeking to enter the US, and if you don't want the minor hassle of entering via the open Mexican border, there's another easy and very low-tech strategy to use.
Simply steal a passport, and use that to get into the US. Not only is it unlikely you'll be detected as using a stolen passport, but even if, after you've entered the country, someone realizes the passport you used was stolen, no-one is going to worry about it or come looking for you.
More details about this security gap here.
A Freudian slip? Conspiracy theorists have an alternate view of what happened on 9/11. The best known of these alternative theories is it was not a full sized plane that crashed into the Pentagon, and the flight that crashed in Pennsylvania was not deliberately crashed by terrorists in a struggle for control of the plane with heroically resisting passengers, but rather it was shot down by Air Force jets to stop it from completing its suicide flight to the DC area.
And so imagine the puzzlement that we all must feel when Defense Secretary Rumsfeld referred to the 9/11 events in an address to US troops in Baghdad and included the phrase 'shot down the plane over Pennsylvania'.
A Pentagon spokesman insisted that Rumsfeld simply misspoke. I'm sure we can all agree that Rumsfeld did not mean to say what he said....
This truly is a slow news week, and due to the lack of anything more serious to report, a non-story is getting a lot of air and press time. There has been a sudden outbreak of pilots all around the country reporting that they've had laser beams shine into their cockpit while flying planes at low altitude.
This news story in particular is intriguing, because it claims FAA radar managed to track a laser beam and determine where it originated from. That is, however, a total technical impossibility.
At the risk of destroying an interesting story, could I wonder if there is any connection between these 'sightings' and the fact that they have happened in the week after Christmas. I remember the first time I received a laser pointer. Guess what I did with it? Yup. I wanted to see how far the beam would travel, and so I tried shining it at far away objects, including clouds (but not planes). Laser pointers get more powerful every year.
Reader Randy reports on his recent flight and security experiences :
Reader and travel agent Cate has a nice addition to my comment that we should all resolve to be more pro-active and participatory in the world around us.
Talking about New Year resolutions, the five most common are :
If your resolution is to improve your social situation, the last three paragraphs of this article report on a new book to help you use the text messaging on your cell phone to best advantage.
If you're in London, its probably still not to late to book at table at the Cipriani restaurant in Mayfair to participate in a record breaking New Years Eve activity.
But if you're embarking on more of a do-it-yourself relationship with Dom P, perhaps you need to read up on this.
I plan to be in Las Vegas this time next week. My own new year resolution? To win a million dollars on the nickel slot machines. Should I not have succeeded at this by Thursday night, I'll send out a newsletter and feature story, same as normal.
Until then, please enjoy safe travels and may your own resolutions be at least as successful as mine.
David M Rowell aka The Travel Insider
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