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Friday 14 January, 2005 

Good morning

The exodus of 140,000+ people from CES in Las Vegas went reasonably smoothly last weekend, and, in my case, a three hour early arrival at the airport was greeted by a mere 20 minutes to check in and get through security and to the gate.  I found a seat next to a power outlet and happily spent two and a half hours working at emails before enjoying a comfortable flight back to Seattle with America West.

A small triumph.  I managed to pass through security, both in Seattle and Las Vegas, while leaving my shoes on.  Now if only I didn't have to take my watch and belt off.....

As is often the case, I ended up in a last minute rush to travel to Vegas, and in particular found myself with no ironed shirts to take with me.  I needn't have worried.  I stuffed a couple of the wrinkle free shirts I reviewed last year into my bag, and even with hand-washings in the hotel room, they looked perfect every day.

When I checked in for my America West flight back from Vegas to Seattle, the automatic checkin machine invited me to pay $100 for a first class upgrade.  I remember when these were only $50, and chose not to spend $100 (alas, I did not win my fortune while in Vegas).  And then, while waiting to board at the gate, with only minutes prior to boarding, the gate agent made an announcement offering to sell the remaining first class upgrades, still for $100.  How can HP frequent fliers hope to get free upgrades when the airline goes to this much trouble to sell their first class seats.

Most Vegas hotels require government issued photo ID at checkin.  Do you know why?  They send your information to the LVPD, who check your details against their want lists.  A sign in the hotel lobby explained this 'voluntary program'.  Voluntary?  Sure.  You are free to participate in the program or not.  Although, if you choose not to participate, they'll refuse to allow you to stay in their hotel.

A good idea?  I find it troubling, and a further encroachment on our First Amendment rights (the First Amendment covers a lot more than freedom of speech).  Of course, this is not entirely a government action, and we are free to stay at the hotel or not, but when every hotel in town has the same requirement, where is our freedom then?  The First Amendment right of peaceful assembly is already under attack by the need to show government issued ID before flying anywhere, and now is being further attacked by the difficulty in finding lodging without again showing government issued ID.

There's no feature article this week, for a couple of reasons.  Much to my delight, I have been swamped with orders for the Emergency Cell Phone Battery Recharger that was featured last week.  Be pitiless, and continue flooding me with more orders for this lovely and useful gadget!

The other reason is positive and exciting.  I've spent much of the week getting some blogging software online to support one or more blogs on the Travel Insider website.  I am still uncertain how to best add a blog to the existing newsletter and web articles; but it seems blogging is increasingly an expected element of websites like this.

I know there are plenty of free (or moderately priced) and easily deployed blogging solutions out there, running on third party servers, such as Google's www.blogger.com and Six Apart's www.typepad.com, but I'd prefer a fully self-contained inhouse blogging service, which allows for better control and scalability.

Now for an interesting opportunity for you.  My plan is to have multiple blogs hosted on the website, and if you'd like to establish your own personal blog (with a general theme more or less to do with travel and/or technology) then please let me know and perhaps you might become part of the new Travel Insider blogging community.  At this stage, I expect there to be no charge to add your blog to the site, merely a requirement for a reasonable standard of grammar, spelling and content.  Posting to your own blog will be simple and straightforward, requiring nothing more than the internet browser you already have.

All going well, there'll be a blog ready to reveal next week.

Dinosaur watching :  The ATSB has extended the terms of its loan guarantee to US Airways yet again, this time through to 30 June.  Details have yet to be announced, but it seems fair to guess this represents yet another liberalization of the initial loan guarantee terms.  If the ATSB stuck to its original guarantee provisions, it seems almost certain the airline would have to close down, meaning it is only the government keeping US in business.

Question to the other dinosaurs :  How do you feel about the government supporting your bankrupt competitor that otherwise would have gone out of business?

When thieves fall out?  Not that either Northwest or US Airways can be considered a thief, but it is surprising to see the usual solidarity between the dinosaurs crack around the edges.  There is a not very well known 'airline credit card' airlines issue to corporate travelers called the UATP.  American, Continental, Delta, United and US Airways all issue UATP cards to travelers, much like banks issue Visa cards.  These - and just about all other - airlines then accept UATP as a method of payment for tickets, like regular stores accept Visa cards.  The benefit to the airline is that the cost of processing charges on UATP cards is lower than the cost of processing charges on regular credit cards.

But late last week NW stopped accepting charges from UATP cards issued by US Airways. Northwest won't say why, and US Airways is not making any public comments.  UATP is unaware of any airline previously refusing to accept charges on cards issued by another airline, whether it be in bankruptcy or not.

One can only speculate as to why NW no longer accepts US charges.

Rats abandoning the sinking ship?  US is losing a number of senior executives at present.  Its CFO left in November.  Two VPs are leaving at the end of January, as are two other key managers.  On Thursday the latest departure was announced - Ben Baldanza, the senior VP in charge of both planning and marketing.

Bearing in mind US' demonstrated inability to project and plan for marketplace changes, and its poor standing in general; you'd perhaps think that losing the man in charge of these functions is not necessarily a bad thing.  But perhaps the true measure of the man is the job he moves to.  He is now to be President and COO of Spirit Airlines - Spirit obviously believes the dire straits US Airways is in at present is nothing to do with Baldanza.

Which just goes to show.  I've often said 'who in their right mind would want to employ a key member of a management team that spectacularly failed to succeed in managing their airline?'  And now we know the answer.  Another airline.

In case you wondered, Spirit explain 'With vast domestic and international experience, he brings an outstanding balance of operational, financial and marketing expertise. [Ben] is well qualified for our domestic and international expansion where we have opened three new routes in less than four months.'

Ben is also well qualified at domestic and international shrinking.  He was one of those responsible for US downgrading Pittsburgh from a hub to a 'focus city', which saw a drastic cut back in both domestic and international flights.

Rats abandoning the sinking ship 2?  The CEO, COO and CFO of Aer Lingus announced in November their intention to resign sometime this year, before May.  They said their decision was based on a lack of progress over the government owned airline's future funding, claiming the airline needs 1 billion to cover the cost of aircraft upgrades.

It is very nice of them to give such an extended period of notice.  But - ooops.  It appears that in addition to keeping their day-jobs, they've been doing some moonlighting on the side, attempting to create a new airline that would immediately and directly compete with their present employer, Aer Lingus.

Fortunately, there's no need to worry about what seems to be a clear conflict of interest.  The Irish Minister for Transport explained that a conflict of interest would not be allowed to arise, and added that the airline's chairman is 'having discussions' with the departing executives to ensure corporate governance standards would be adhered to.

In the past, I've fired people on the spot, escorted them immediately out the door, and changed all the locks and passwords, the instant I hear they are planning to leave and join or start a competitor.  Shame on me.  I must learn to trust people more.

Update :  A week after this story first broke, it was announced that all three would leave on 28 January.  Departing CEO Willie Walsh sought to reassure us by denying conflicts of interest, saying he has been focused completely on his responsibilities at Aer Lingus.  And as for the future?   'What I do after I leave Aer Lingus is still too early to say' was his response.

This Week's Cloudy Crystal Ball :  Calyon Securities airline analyst Ray Neidl said he anticipates industrywide losses in 2005 to be about $1.9 billion.  This compares with an industrywide loss estimated at $2 billion - for the fourth quarter alone last year.

He bases this rosy prediction on two main factors.  First being massive cuts in labor costs.  And the second being a reduced cost of jet fuel.  In 2004, the airlines spent an estimated $6 billion more on jet fuel than they did in 2003, a 40% increase.  Plainly jet fuel costs are an important part of predicting overall industry profitability.

Oh yes - Neidl says his projection is based on an assumption that oil prices average $35/barrel for 2005.  On Thursday, oil traded at almost $48/barrel.

Great minds don't always think alike :  JP Morgan analyst Jamie Baker predicts a $2.8 billion loss for US airlines this year, and bases his costs on oil costing $39/barrel.  He also predicts that US Airways will survive the year, primarily because it is not in the interests of the airline's creditors to see it fail.

Actions speak louder than words :  Delta CEO Gerald Grinstein had some straight talk to offer this week.  At a Georgia Chamber of Commerce meeting, he said (excerpts)

We knew that we were going to make some mistakes, and we may have already made some.

Half of Wall Street says that we're the greatest geniuses that ever walked.  The other half says, "I've never seen such dumbos running an airline before." In this industry, they could both be right.

What would happen if Home Depot charged extra for paint that wasn't used on Saturday night?  On the other hand, that is exactly what we were doing, which was an irritant.

Grinstein explained his airline's fare structure overhaul was part of their strategy to win back business travelers.  But, at more or less the same time that CEO Grinstein was expounding on the positive things DL had planned for the future, an internal memo spoke about 'service changes' for passengers on overseas flights.  DL is reducing its number of flight attendants from eight to seven on 767ERs and from ten to nine on 777s.

Another change, to be introduced from 1 April, is the elimination of meals for flight crews.

And the winner is :  Airbus.  In 2004, Airbus received new orders for 370 new planes.  Boeing received orders for 272 new planes.  In 2004, Airbus delivered 320 planes.  Boeing delivered 285.  I'm maintaining an interesting table of Airbus and Boeing market shares in part 5 of my Boeing analysis series.

On Monday, Airbus announced a new customer for its A380 super-jumbo.  UPS has placed an order for ten, although as part of the deal, it is also cancelling orders for A300's by 37 planes, so the net increase in order value for Airbus is not great.  Fedex have already ordered A380 freighters.

Here's a great tip from European travel insider and general travel guru, Bob Bestor, publisher of the Gemutlichkeit Travel Newsletter (reviewed here).  He says Lufthansa and most of the other transatlantic airlines are focusing their seat inventory on the European outbound market.  Due to the strength of the Euro they expect an unprecedented number of visitors to the US from Europe, and Bob understands some LH flights in July and August are already full. His advice :  If you're planning to visit Europe this year, book flights as early as possible.

Germany's Air Traffic Control company is reducing its fees to airlines by 20% - 28%.  An increase in air traffic means it does not need to charge as much per flight.  Charges are based on the plane's weight and distance traveled, and typical charges range from 581 (formerly 750) for a 737 flying between Hamburg and Munich to 630 (down from 830) for an A340 flying between Frankfurt and New York.

The Canadian government wants to increase the weight estimates of passengers. The government says the average weight of men should now be 206 pounds (formerly 193lbs) and the average weight of women should be 171 lbs (formerly 146lbs)

'There aren't enough superlatives to describe this promotion,' says Elizabeth Weisser, BA's VP of Marketing for North America.  And what exactly is the promotion that she is unable to describe sufficiently positively?  If you buy a business or first class ticket from the US to London on BA, you'll get 40,250 bonus frequent flier miles in their frequent flier program.

Sounds like a great deal.  Yes - but only for the airline, and that is presumably why Ms Weisser was so excited.  A business class ticket is going to cost $5000-7000 more than a coach or premium economy class ticket on BA.  A first class ticket could cost $10,000+ more.  And exactly how much are the 40,250 bonus miles worth to you?  A general rule of thumb says that frequent flier miles are worth about 2c each.

So you're paying $5,000-$10,000 extra to get $805 worth of frequent flier miles.

The Luddites are alive and well in New Jersey.  The NJ Assembly is debating a law that would require cell phones with cameras to make some sort of noise or flash a warning light whenever a picture is being taken.  Why is a cell phone with a camera considered to be more offensive than a miniature digital camera that is much smaller and less obvious?

Here's a slightly embarrassing (to T-mobile and the US Secret Service) story of a hacker who penetrated T-mobile's system and was able to read messages sent to Secret Service agents and take copies of cell phone photos taken by movie stars (among others).  An interesting issue to wonder about is what T-mobile is doing storing copies of private photos and messages in its computer system.  Shouldn't there be a law against that - where's the NJ Assembly?

The long process of admitting that cell phones are dangerous to their users has made another step forward.  The British Government's leading advisor on radiation said on Wednesday that children under the age of nine should not use mobile phones, due to health risks, and children between the ages of 9 - 14 should only make short essential calls with low powered models.  This article includes a fascinating diagram showing how far into the brain cell phone radiation penetrates.

USA TODAY reports that a new CNN/Gallup Poll shows that people who fly at least occasionally are strongly opposed to lifting the ban on cell phone use during flights.  Almost seven in ten frequent or occasional fliers want the government to keep the ban.  Women and fliers over 50 are the most strongly inclined to keep cabins free of cell phone chatter.

This Week's Security Horror Story :  I wrote, in December, about the man arrested in Honolulu for having a box cutter type blade hidden in his shoe sole.  At the time I said

Bizarrely, the TSA and police won't reveal the excuse the man offered for having the blade in his shoe.  Which of course means the man probably had a perfectly believable excuse.

The man has now had all charges dropped.  His super secret excuse is now revealed.  His wife had arranged for his shoes to be resoled and apparently the shoe repair shop somehow left a blade in the shoe.  The man passed an FBI lie-detector test to prove he knew nothing about the blade stuck between the sole and the shoe.

Why did this need to be kept secret?

Smile - you're on candid camera.  The TSA screener caught on a surveillance video while stealing from passenger luggage in Spokane, WA may actually still be smiling.  She was taking (prescription) drugs from passengers' bags, and for her crime, was sentenced to drug rehab and three years probation.  A slightly more lenient sentence than if she had been, for example, shining $100 laser pointers at passing planes.

A BA flight from London to New York had to be diverted and ended up returning to London due to the Homeland Security Department detecting that one of the passengers on the flight matched up with a suspected member of a Moroccan terror group.  He was deemed a terrorist threat accordingly.

And what happened upon his return to London?  Nothing.  He was interviewed by police and released, free, with no charges against him.

So what exactly was so imperatively dangerous that the flight couldn't be allowed to bring him to New York for questioning and possible immediate deportation back to Britain?

More drunk pilots.  An easyJet pilot tested as being five times the legal limit on Saturday when she (sic) arrived to take charge of a flight with 120 passengers between Berlin and Basle.

I wonder if the 120 easyJet passengers were en route to Geneva to admire the new public toilets being installed there, at a cost of $313,000 per cubicle.

Lastly this week, do you know what a syzygy is?  In a reversal of the usual 'Venice is sinking/flooding' stories, this article tells us exactly what this fascinating word means and how it impacts on Venice.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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