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15 July, 2005 

Good morning

Last week's reader survey brought a good level of response, all the more surprising because it was 'hidden' in the middle of the newsletter.  I guess more people read the newsletter, and more carefully, than I'd previously guessed (thank you).

You answered how much a night you were willing to pay for high speed internet access in your hotel room.  More than half of all responses were from people saying they thought it should be free, the same as other hotel amenities.

Although people could provide answers ranging up to 'over $30/night', no-one was willing to pay more than $20/night, and 99% didn't want to pay more than $12.50.

And (dare I say surprisingly) only two respondents said they didn't care what they paid because they'd simply claim whatever the cost was on their expenses.

There seems to be a big spread between what hotels charge and what people believe to be fair.

Several people also sent in comments, with a consistent theme being why internet access is often free at budget and moderate priced hotels, but charged for at higher priced hotels - even when the different hotel groups are members of the same company.

This counter intuitive hotel pricing policy applies to everything of course - hotels hope people who pay more for their room will also happily pay more for phone calls, movies, room service, parking, and internet access too.  (See below for more on hotel overcharging.)

One reader wrote in to say he doesn't need hotel internet access - he keeps up on his emails with his Blackberry.  This is an interesting glimpse of the future - just as high long distance rates encouraged us all to use our mobile phones in hotel rooms, we'll soon be using high speed internet through our phone too, rather than through the hotel.

Unless, of course, the hotel has an illegal jammer to force us off our phones and onto theirs.

Good news from Qantas.  They've extended their special low fare to New Zealand and you've got two more weeks to purchase it.

In related news, our October New Zealand tour is now a guaranteed departure.  We have sufficient people to enable me to promise this tour will proceed, so you can go ahead, join the tour, and buy your Qantas tickets with confidence.

Several people have chosen to do an abbreviated portion of the tour, starting either in Wellington or Christchurch (tour day 10 or 11).  If you don't have the time to do the full tour, or if you've recently been to Rotorua and Queenstown, you're most welcome to take the second half of the tour by itself (you probably haven't recently been to Hawkes Bay).  Ask for a special rate for whichever part of the tour you want.

I'll be staying on in Hawkes Bay a few more days myself at the end of the tour, and might go up to Gisborne for a day, so if you'd like to stay on with me (or without me) that's an option too.

And, yes, of course travel agents can book this tour on behalf of their clients.

If you include other stops elsewhere in the South Pacific as part of your total travels, or if you're traveling anywhere new, anytime, one of the questions you probably need to answer is 'how will I get to and from each airport?'.  Sure, there's probably an answer to that hidden somewhere on the internet, which may or may not be current and accurate, but here is a much easier way :

This Week's Feature Column :  Salk International's Airport Transit Guide : This slim volume tells you just about everything you need to know on how to get between an airport and the city it serves.  It saved me $50 the first time I used it.  Chances are you will quickly save its $10 cost as well.

Dinosaur watching :  There was a certain inevitability to this story.  After reporting last week United was planning to exit Chapter 11 some time this fall, it now seems this may be delayed.  United may claim the delay is not its fault this time (a dubious claim).  Its unsecured creditors have filed with the court, saying they are getting neither sufficient time nor information to conduct a review of United's plan.

Fancy that.  After more than 31 months in bankruptcy, United is all of a sudden in such a rush to exit its Chapter 11 it seems to be shortchanging its creditors.  Doubtless an inadvertent oversight.

Here's an interesting story.  Former WorldCom CEO Bernard Ebbers was sentenced to 25 years in prison on Wednesday.  His crime - heading up the company during what has been described as the largest corporate fraud in US history, totaling some $11 billion.  The company 'cooked the books' - particularly by describing expenses as capital items rather than as revenue expenses, allowing for improperly high profits to be shown.  When this all came to light, WorldCom's share price plummeted, shedding billions of dollars in value.

By the way, United Airlines' stock has lost about $8.5 billion in value since 2000 (before bankruptcy was declared).  And, as I described in this article, it is sitting on an asset that doesn't appear anywhere on its balance sheet, but which is perhaps worth $15 billion.  And UA has accepted $6.6 billion in government pension bailout aid, while shafting its employees out of billions more.  The total losses to its unsecured creditors remain to be seen.  Add it all up, and it looks like there is a lot more than a mere $11 billion that has disappeared or otherwise is not accounted for with United.

No United executives are in prison, or even under investigation.  Unlike Mr Ebbers, they have committed no crimes.

Talking about bankruptcy (and how can we not), there have been some changes to parts of the Bankruptcy Act that could affect any airline looking at bankruptcy protection.

These new changes go into effect October 17 and offer very slightly more protection to creditors than in the past, making it somewhat harder for companies looking for protection under Chapter 11.  Companies entering Chapter 11 will have 'only' 18 months during which management can seek an exclusive right to file a reorganization plan; and without evidence of actual job offers, companies won't be able to pay officers bonuses to keep them from quitting.

Landlords (eg airports) won't be quite as exposed, either.  Companies will have just 210 days to decide which leased locations to keep open or to close.   Utilities will be allowed to charge companies security deposits while they are in Chapter 11.

These are hardly earth-shattering changes, whereas some of the changes to the personal bankruptcy provisions are more than a bit scary.

If airlines (most notably, Delta and Northwest) are teetering on the verge of bankruptcy, these new provisions might encourage them into Chapter 11 prior to 17 October.

Northwest announced some selective fare increases earlier this week, but it is trying to tell us these are not increases.  Instead, it wants us to believe it had formerly been selectively absorbing airport Passenger Facility Charges (PFCs), but now can no longer afford to do this.

Bizarrely, the 'absorbed' PFC charges still appeared on tickets, and passengers still paid them.  The only thing that has changed now is that fares have gone up on some routes.  Northwest estimates that this fare increase ending of subsidy will make save the airline $100 million a year.

Southwest is the first airline to announce second quarter results.  Notwithstanding the usual litany of excuses its dinosaur competitors like to roll out to justify their continuing losses, Southwest has enjoyed its 57th straight quarterly profit, and a big one at that.  Their net profit rose 41%, from $113 million in Q2 2004 to $159 million this year.

Amazingly, the airline reduced its unit costs by 3.5%.  What about those high oil prices?  While it is true Southwest is more fully hedged than most airlines, even its hedged jet fuel price is higher this year than last year.  They simply do a better job of managing their airline.

The airline confidently expects another good result in Q3.  How many other carriers can say the same?

Well, JetBlue can.  Last week JetBlue said it expects to be profitable for the remainder of 2005, and says it can make profits even if oil prices rise to $80/barrel.

Remember when the dinosaurs used to effortlessly squash low cost carriers by undercutting the low cost carrier's fares and swamping competitive routes with extra flights?  Here are two interesting and contrasting examples of what is happening today.

Firstly, a battle on classic terms is shaping up between JetBlue and Continental.  JetBlue is adding service from Newark, which means it will be flying from all three New York airports.  JetBlue's initial choice of JFK was very sensible, because no dinosaur had a major domestic hub there.  Dinosaurs based at LaGuardia and Newark somehow failed to perceive JetBlue's operation, just across town at JFK, as a threat.

Now JetBlue is taking the battle to the enemy, and will start flights from Newark to Florida on 5 October.  And so, by amazing coincidence, Continental immediately announced the expansion of their flights from Newark to Florida, scheduled to occur on 1 October.  They're also dropping their fares to match.

Can JetBlue ride out the competition from Continental?  In the past, JetBlue has shown a willingness to quickly give up on routes where the stakes became unwinnable.  On the other hand, can Continental afford to bleed more red ink in competition against JetBlue in a scenario where JetBlue's costs allow it to profitably sell fares for much less than Continental?  This will be an interesting battle.

The other 'war' is with Southwest as the aggressor, and the dinosaurs on the defensive.  Southwest is heavily discounting its fares out of Chicago's Midway Airport, and United has pledged to match these discounts on its O'Hare based services.  Southwest has halved many of its Midway originating fares; for example, $168 roundtrip fares to the west coast and $118 to Florida.

Midway is now Southwest's third largest hub, and the airline seems to want to take still more market share from UA and AA, both based across town at O'Hare.

With United still losing money every month, can UA afford to match Southwest's fares?  Or should the question be, can it afford not to?

Congratulations to one of my favorite US airlines (yes, I do like some airlines!).

It may be barely a year old, and awash in red ink as it struggles to find its feet in the tough airline world, but that hasn't prevented Independence Air from placing third in this year's Travel + Leisure Magazine's list of top domestic airlines.  Based on reader surveys, and rating each airline for cabin comfort, in-flight service, customer service, food and value, the results are particularly surprising because this year none of the six dinosaurs appear in the top ten.

The top ten airlines, and their scores, are :

1

Midwest Airlines

75.22

2

JetBlue Airways

74.73

3

Independence Air

68.71

4

Song

68.66

5

Alaska Airlines

63.21

6

Hawaiian Airlines

62.3

7

Frontier Airlines

62.29

8

Southwest Airlines

61.81

9

Aloha Airlines

60.73

10

Horizon Airlines

60.39


Congratulations also to Sydney, for winning Travel + Leisure's accolade as best city in the world.  Sydney has scored tops eight times out of the ten years the awards have been running.  Bangkok, Rome, Florence and Chiang Mai came second through fifth.

Sydney was bested by San Francisco in 2000 and Florence in 2001.

A very well deserved win to Sydney again this year; truly an extraordinary place to visit.

This week's strangest use of oil prices as a scapegoat :  The relentless march towards Qantas and Singapore Air merging continues.  Last Sunday, SQ's CEO said the international airline industry is due for consolidation and Qantas and Singapore Airlines would benefit from at least sharing some facilities.

He said that the industry was expected to make a $US6 billion annual loss when oil prices were below $US50 a barrel. Oil prices are now around $60 per barrel.

"This cannot go on indefinitely," Mr Chew said.

So, let me make sure I'm following his logic.  Because oil prices are rising, airlines should merge?

I calculated, a few weeks back, that BA's $106 fuel surcharges were offset by a mere $20 in extra fuel costs.  I came across an article this week that similarly analyzed Air New Zealand's fuel surcharges.  The article estimated the airline raked in $46 million - $93 million in surcharges over a six month period, while its extra fuel costs were somewhere between $19 million and $27 million (depending on what you use as the baseline cost).

How can airlines continue to blame high fuel costs for their losses when they're shamelessly profiting from every extra dollar in fuel costs, multiplying it by as much as five fold before passing it on to us?

Talking about overcharging, I mentioned last week how some Florida hotels overcharged guests forced to stay with them during the last round of hurricanes.

However, these overcharges were mild and moderate compared to what hotels did last week in London after the bombing.  With public transport in chaos, many people had to stay overnight in London, with some hotels reputedly asking as much as 250 for a room they'd otherwise discount for as little as 80.

Strangely, this BBC web page previously included a specious statement from a Thistle spokesman who reportedly said

Thistle Group did not raise their prices as a response to yesterday's tragedy, Thistle maintained their usual strategy offering the best rate available based on the fact all London hotels had been fully booked.

It doesn't take too much sense to equate 'best rate available based on all hotels fully booked' with 'we charged people as much as we could'.

But, checking on Thursday evening, that statement has disappeared off the page.

Perhaps this is another example of the BBC rewriting its coverage of the bombings.  After freely using the word 'terrorist' to describe the bombers in the first few hours after the attacks, the Beeb changed its mind and you'll not find the word in any description of the attacks at all.

What does it take to be a terrorist these days?

And still more on hotel overcharging in this good USA Today article.

Still on the topic of overcharging, Sky Caps are high on the list of people I don't feel sorry for.  In the 'good old days' being a sky cap was one of the best travel related jobs anyone could ever aspire to.  Just like hotel bellmen, their incomes would almost always vastly exceed that of the people tipping them for their almost non-existent services; a strange situation by virtue of the fact that few sky caps seem to have or need college educations to earn their six figure sums, but instead generally give the impression of belonging to a low socio-economic class

Being a sky cap was such a sought after job that at some airports people are reputed to pay tens of thousands of dollars (I'm not quite sure who to) to get a sky cap position.  And, is it any wonder?  Have you ever calculated, while standing in line, curbside, to check your bag, and watching the skycaps pocketing $1 and $5 bills as fast as they can at the front of the line, just what sort of hourly rate they were earning?  Conservative guess - $50 - $100/hour, and I'll wager that little of it was taxed.

Now that airlines are increasingly charging their own fees for curbside checkin, sky-caps are becoming airline employees, on minimum wage.  Yes - the money they used to make for checking in your several bags is now the money they'll make for an entire hour.

Apparently some sky caps are quite vociferously reminding people that tips are still 'appreciated', over and above the airline fee.  The day I pay a tip to the airline employee behind the checkin counter, and at the gate, is the day I'll also pay a tip to the airline employee at the curb.

As a New Zealander (no tipping in New Zealand) I've never understood the compulsion some people have to pay money to other people for non-existent or minimal services, especially where the recipient earns more than the donor.

Going driving in France this summer?  Better watch your speed.  If you're caught exceeding the speed limit by 12 - 25 mph, you can now expect a 750 fine ($900).  If you're exceeding the limit by more than this, the fine doubles.

The freeway speed limit in France is 80 mph (130 kph) on dry roads and 70 mph (110 kph) on wet roads.

The US phone industry passed a milestone late in 2004.  Figures show that by the end of 2004, the number of cell phone lines exceeded the number of landlines.  There were 177.9 million regular landlines, and 181.1 million cell phone lines.

Ten years ago, there were 25 million cell phone lines.  By the end of 2005, it is projected there will be over 200 million cell phone lines.

And with the growth of free long distance and more minutes a month than most people use, more than a third of households make at least half their long distance calling from home on a cell phone rather than regular phone.

Email spam continues to be one of those problems for which the cure is frequently worse than the ill.  Misconfigured spam filters not only trap regular email as spam, but also fail to warn either the sender or intended recipient of the mail they're censoring.

There are some really stupid new types of supposed anti-spam technology, developed and enthusiastically embraced by techno-geeks with too much knowledge of programming and too little knowledge of real world email usage.  Their efforts are unfortunately often supported by companies such as Microsoft, who want so much to control the world's email, preferably in a way so they can extract some small payment for every email sent and received.

So it was amusing, but unsurprising, to read in this article about how two of these stupid schemes, widely ignored by almost all normal emailers, have been adopted by - oooops, by the spammers themselves.  84% of 'certified spam free' email apparently comes from spammers.

This Week's Security Horror Story :  The World Travel and Tourism Council estimates London's bombings last week will have minimal impact on tourism.  They are projecting a possible 1.9% decline in visitor arrivals for the year.

Apparently your average tourist is braver than our Air Force.  In what can only be described as a shameful act, and a massive victory and encouragement to terrorists the world over, on Monday all 12,000 USAF members stationed in Britain were ordered to keep out of inner London, both while on duty and off-duty, due to safety concerns.  Special permission is required to visit the capital, even to go to the US Embassy.

Curiously, this seems to contradict President Bush's statements that America 'will not retreat in the face of terrorists' and 'In this dark hour, the people of Great Britain can know that the American people stand with them'.

Apparently we stand with our British allies, but only if it is somewhere safer, out of London.  What are we to make of this?  Are we to believe Baghdad is safer than London (there sure are a lot of Americans in Baghdad)?

Note - this order was subsequently rescinded later in the week.  Apparently London is safe once more.

Although cell phones are becoming more essential (see above), authorities cut cell phone service in the tunnels between New York and New Jersey for 'security reasons' subsequent to the London bombings.

Cell phone activated bombs weren't used in the London bombings, and the tunnels under the Hudson are quite a long way from London, but the authorities who apparently know more about our safety than we do deemed this a necessary precaution to take.

What will be next?  Turning off cell phones in sport stadiums?  Shopping malls?  Tall buildings?

Where do we draw the line between zero-tolerance security and acceptable risk?

Not only do the US authorities continue to order planes to return back to their foreign points of departure, but now they no longer even feel the need to tell the airlines why.  An Air France flight bound for Chicago on 8 July was sent back to Paris, and an AF spokesman explained the US authorities were not obliged to explain why they had refused landing rights.

The plane subsequently did fly to Chicago, complete with all passengers, too.  Another false alarm.

Something that has always struck me as ridiculous is the requirement for all passengers to be seated for the first or last 30 minutes of flights in or out of Washington's Reagan National Airport.

There are many reasons why this 'security measure', instituted after 9/11, uniquely for this one airport in the country, is stupid, the most notable of which is that it doesn't also apply to flights to/from Baltimore or Dulles - airports only 5 minutes flying time away from Reagan National.

And now for the good news.  This restriction is to be suspended.

If you read this article about the lifting of the restriction, note the strange equivalency by Homeland Security Secretary Chertoff, near the end of page 2, comparing the 9/11 terrorists with Bernie Goetz on the NY subway.  I'm not sure of his point, but it astonishes me a person in his position chooses to compare a single subway shooting, sort of in self-defense, and with no-one killed (by the way, Goetz was subsequently acquitted of attempted murder and assault charges) with the 9/11 acts of mass terror.

If you're a cynic, you'll know how to interpret this article about no progress being made to solve the 'problem' that allegedly caused the mysterious midair explosion of TW800.  You'll view it as further proof - if such proof were needed - that TW800 did not blow up due to an explosion in an empty fuel tank - an event which has never happened to any other plane before or since.

To end the week other than on a cynical note, here are several 'Lastly this week' items.

You have to read between the lines a bit to understand why British motorists would buy spray-on mud for their vehicles.  See if you can guess.  If I remember (and if it isn't obvious) I'll tell you next week.

Pilot saying :  The only time you have too much fuel is when you're on fire.

Passed on without comment - for it is best unsaid, and shame on you for thinking it.

Truly lastly this week, who else will be at their local bookstore at midnight on Friday?  Yup.  HP6.  Guess what I'll be doing Saturday.

Until next week, please enjoy safe travels

              David M Rowell aka The Travel Insider

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