|Friday 6 June, 2003|
Good morning. I must start off with an important correction. Last week's article referred to AA having the lowest loads of any of the major carriers. This was wrong. I had misread their quarterly report, and the low figure I quoted related only to their regional services. Their mainline jet service in actual fact enjoyed a 69% load factor for the first quarter, and they have had even higher loads since then, with a year to date load factor now at 70.3%.
I'd also like to thank Andrea Rader at AA for very politely pointing out my error. She could have thundered about attorneys and lawsuits, but instead graciously corrected me and understood the simple mistake involved. My correction now is of my own free will rather than in response to threatening letters from lawyers (and so is sincerely meant!). The revised article is here.
This Week's Column : The Book of the Website - Johnny Jet : After building a very popular website full of links to travel websites, Johnny Jet has now published a book that in some respects offers more than the website, and in other respects offers less. Should you buy his book when the website is free?
Deathwatch Part 1 - United : UA is getting ready to again ask the government for a $1.8 billion loan guarantee. The Air Transportation Stabilization Board's refusal to grant a guarantee in December was one of the factors in causing UA to enter Chapter 11. Now they're about to resubmit a new application that claims to reflect substantial cost savings and several strategies to boost revenue and capture business travel (whatever that might mean).
These strategies are now less likely to include a low cost subsidiary carrier. CEO Glenn Tilton noted that it would be difficult to establish a low cost carrier without securing additional labor concessions to 'maximize efficiency' (this is probably a fancy way of saying 'pay less money to our staff in return for more work').
Dueling Headlines : On Monday, Dow Jones issued a release with the headline 'Amer Airlines May Traffic Fell 4.8%'. On the same day, Reuters came out with an item headlined 'AMR's American Airlines' Traffic Rose in May'. Now the subject of AA's loads is one that I'm having to treat very carefully at present, but plainly DJ and Reuters can't both be correct!
The reality is that AA's load factor rose in May. It increased from 69.6% last year to 73.7% this year. That is good. But. The reason AA's load factor increased is not because more people were flying with AA, but because they were operating fewer planes! The actual number of revenue passenger miles - the number of miles that paying passengers were flown - decreased by almost 500 million miles (the equivalent of ten 757s that are 73.7% full flying around the world almost 140 times!). The Dow Jones headline was the more accurate of the two.
AA should be pleased that their load factor has improved, but - like a broken record - yet again I must comment that these airlines are running the risk of shrinking themselves into non-existence.
Other 'dinosaur' airlines also reported disappointing May traffic, with Delta reporting a serious 9.4% drop in its passenger traffic.
It is interesting to compare what happened to the five largest carriers (AA, UA, DL, NW and CO) during the first four months of this year with the results of the five 'best' airlines (Southwest, JetBlue, AirTran, ATA and America West).
The five dinosaurs reported a drop of 3.9% in passenger traffic. Meanwhile, the other five carriers reported an increase of 15.5% in their passenger numbers. The airline industry is alive and well and flourishing in the United States.
Here's a classic example of why the dinosaurs are dying. This in from a reader :
You know something is wrong when the airlines won't even answer their phones to take bookings.
I've just updated Part Two of my three part series on air fare loopholes to include reference to an exciting new court case. Delta and Northwest had the US Supreme Court refuse to hear their appeal against a group of passengers acting collectively to pursue a $4.4 billion claim against the airlines. The claim accuses Delta, Northwest, and US Airways of acting in a conspiracy and of maintaining monopoly prices on routes to their hub airports by refusing to allow passengers to do hidden city ticketing. It will be a long time before the case is heard, appealed and re-appealed, and finally closed, but the implications are enormous. If this succeeds, one of the 'big three' loopholes will have been officially endorsed by the courts, with probable flow-through to the other two loopholes as well. Stay tuned.
Here's a fascinating page you can have fun with - Forbes allow you to vote your opinion on airline CEOs and give month by month tracking of the changes in their approval ratings. For May, the lowest rating (24%) went to UA's Glenn Tilton and the highest rating of 80% went to Southwest's James Parker.
For a change, a European carrier shows that it too is impervious to public opinion. Lufthansa lost 360 million ($425 million) in the first quarter of this year, and has recently imposed shorter working hours and pay cuts on its employees. It has also just announced an increase in remuneration to its Supervisory Board Members, with the Chairman getting an increase from 62,000 up to 165,000 a year!
The discount carriers in Europe continue to astonish and amaze. Irish budget airline Ryanair has just reported a 59% rise in after tax profit for their last year (ending 31 Mar 2003) compared to the year before, with total profit of 239.4 million ($282 million). Passenger numbers grew by 42%. Ryanair now has 15 years of straight increases in profits, and CEO Michael O'Leary is making some bold predictions for its future. He says he expects Ryanair to become Europe's largest carrier within three years, and predicts this year it will beat Air France for the number three position, leaving just British Airways and Lufthansa still larger. He says 'We're going to destroy the airline business as we know it'.
Both Ryanair and major competitor EasyJet have flirted with the concept of totally free tickets (but you pay for baggage, for food and drinks, etc). And Michael O'Leary predicted that in 10-15 years, three quarters of his passengers will be flying for free, and some passengers will be paid to fly, in return for the income they generate for airport operators!
Talking about flying for free, how would you like an airline for free? British Airways 'sold' its German subsidiary, Deutsche BA, to a Nuremburg based aviation consultancy and investment company for $1.20, plus it pledged to invest a further $80 million into the loss-making carrier! BA earlier sold an option to buy the airline for $9.5 million to EasyJet, but EasyJet declined to exercise its option in March.
Seeking to reassure people concerned by its plans to reduce staffing at some airports, the Transportation Security Administration issued a statement saying that these changes will have no impact on wait times to go through security screening, and quoted a recent survey of waiting times as showing that average passenger delays remained well under ten minutes, even after the staff cuts had occurred. The TSA says that it is making better use of part time workers so as to selectively staff up and down for peak and slow periods each day.
If this is true, what can we make of Northwest's statement requiring extra checkin times? The airline announced that domestic passengers now have to check in a minimum of 30 minutes prior to departure, and have to be onboard the plane at least 15 minutes prior to departure. If you're flying out of Denver, Las Vegas, or Atlanta, the 30 minutes increases still further to 45 minutes.
Although NW said that it is making these shifts to compensate for the time passengers and their bags take to clear federal government security checks, this explanation - while barely plausible for the 30 minute check in policy, does not explain why you now have to be on board the plane 15 minutes prior.
This would seem to be a classic example of a dinosaur airline putting passenger convenience last on their list of priorities. By requiring everyone to check in earlier, and get seated earlier, NW can get away with less staffing. If there really is a problem with passengers passing through TSA security, why is it only NW that are extending their checkin times? Surely a more customer-sensitive approach would be to insist that the TSA honor its 'no wait longer than 10 minute' service standard, rather than to further inconvenience passengers, which - as the airlines themselves are quick to acknowledge, means fewer people making fewer flights, and more people either staying at home or choosing other forms of transportation.
Question to Northwest : What will you do when a person reports for their flight ten minutes prior to departure? Refuse to let him onboard the plane that is still standing at the gate? And what about his luggage? Maybe he checked in more than 30 minutes early, and his luggage was loaded, then he got delayed in a long phone call before getting to the gate. Are you going to offload the luggage, too? And, most important question of all to NW - do you think a person would fly with you again in the future if you refused to allow them to board, then left the plane standing at the jetway for ten minutes?
One of the freedoms we have is the freedom to selectively do business with companies and people we like, and to avoid doing business with those we dislike, for whatever reason. For example, most readers of this newsletter surely have airlines that they preferentially fly, and airlines they try and avoid, and no-one has ever suggested that this is bad or wrong.
And so I was surprised when my reference in last week's newsletter to a personal boycott of French products provoked a couple of strong responses. One reader claimed that an attitude of 'if you don't agree with us, we punish you' was a very dangerous attitude. He then asked to unsubscribe from the newsletter - which is fine, but in doing so, surely he is displaying the same behavior he decries in others!
A gentleman in Belgium also asked to unsubscribe, and had this to offer to Americans in general
Unlike the first reader, I don't see a decision to preferentially buy products from companies and countries that one sympathizes with, and avoiding those from countries/companies one does not like, as dangerous, or even as particularly new. Whether it be 'ethical investing', or not buying coffee from companies that 'exploit' their suppliers, or avoiding products produced by a country that wishes us ill on the world stage, one of the few powers we have as consumers is to spend our money as we choose. Long may it remain so.
Excuse my cynicism, but I was always taught the fancier sounding the title, the less important the job. And so when I see a ten syllable long position of 'Service Excellence Coordinator' being created - and by an airline - you have to worry that something is afoot. This article about Delta seems to promise much, but the bottom line seems to be that more automation is being used to replace people. But if DL can make good on their goal that no e-ticketed passenger has more than a 2 minute delay to checkin, then more strength to them. Perhaps Northwest could learn something from Delta?
There's a definite trend towards people taking shorter vacations, and closer to home. I'm honoring that trend myself this weekend, with a quick jaunt into the lovely San Juan Islands just northwest of Seattle.
If you too occasionally like to indulge yourself in last minute mini-vacations, Site 59 has just added another 20 cities that it serves. The service now offers customers from 76 different US cities short vacations across the US (plus to some destinations in Canada, Mexico and the Caribbean) that can be booked between 14 days and 3 hours prior to departure.
I just checked and today (Wednesday) was able to book a weekend for two from Seattle to San Francisco this weekend, including two nights at a good central hotel as well as flights, all taxes and other fees, for just $227.27 per person. The flights were nonstop on Alaska Airlines, and on reasonably convenient flights that had no availability for Alaska's own more limited webspecial fares. Even if I'd accepted Alaska's more limited flight choices, I'd have been paying $160 each just for airfare, and in total would have paid much more than the Site 59 package.
Sometimes Site 59 has great deals and sometimes not, but it is always worth looking at, and the idea of being able to book a quick mini-vacation, as late as the day you choose to go, can be very tempting.
This week's Virgin/Concorde news : Very little news this week, and none of it good. Air France flew its last scheduled flight to/from New York last Friday.
One of the things I liked the most about my Virgin flights earlier this year were their wonderful lounges, and the excellent range of restaurant quality hot food they served their guests - for free. In the US, AA is now serving food in six of its Admirals Clubs, but is selling the food rather than giving it away for free. A breakfast bagel or croissant with some fruit costs $6, sandwiches and salads cost $7-8. Soft drinks and juices remain mercifully free. US Airways and United are studying the concept of selling food in their clubs too.
This week's SARs news is generally good news. Singapore is now off the SARS list. On the bad news side of the ledger is the determination that the virus can survive 15 days outside the body. It can live for up to three days indoors on paper, cloth, metal, plastic and glass surfaces, up to ten days in urine and up to 15 days in blood.
In related news, the heads of STAR alliance carriers have said that traffic has bottomed out and are forecasting increases in demand, with the impact of SARS becoming less of an issue, and similarly the Iraq situation is also receding. The rest of this year should show steady improvements in passenger numbers.
This Week's Security Horror Story : A study by the British Airports Authority revealed that one in five suspect packages were not being detected by security at British airports. This miss rate is comparable to that suggested by studies here in the US. I continue to get regular emails such as this from reader Darriva today :
A man running late for his flight from Medford to Phoenix called in a phony bomb threat to delay the flight so that he could get to the airport and gate in time. The plane was taxiing out to take off when the threat was received, and so returned to the gate, with the passengers then being deplaned and the plane searched. The passengers were 'interviewed by authorities and were not allowed to speak to reporters'. I wonder why not?
I'd commented three weeks ago about Disneyworld being uniquely given restricted airspace status prohibiting any planes from every flying over it, even though no security organization recommended this action be taken. A Christian organization has filed a lawsuit seeking a temporary rollback of these restrictions to enable it to fly planes towing protest banners during Disney's annual 'Gay Days' event.
Disney spokeswoman Rena Callahan said the "safety and enjoyment" of its guests were the only reasons the company wanted the no-fly zones, and wants them kept in place. "We pursued the FAA restrictions for the safety and enjoyment of our guests, and believe this extra layer of protection is in the best interests of those who work and visit the Walt Disney World Resort," Callahan said.
An American tradition is under threat this July 4. This article tells how the federal government has yet to promulgate new regulations concerning how fireworks can be transported by train. The fireworks industry says train shipment is the safest and best way to transport their goods, and few trucking lines are willing to carry them, due to insurance problems.
The notion that fireworks might be a tempting terrorist target seems sensible, but is not. Fireworks have minimal value as explosive devices. On the other hand, anyone can buy 50 lbs of gunpowder at a time without even needing to show ID to the store. Eight terrorists, each visiting five stores, could get a full ton of gunpowder, perfectly legally, in a single day, while arousing no suspicion at all. Wouldn't that be easier and better than trying to steal a freight train full of bottle rockets and sparklers?
Ever since the loss of Columbia, I've been wanting to write an article about the colossal mess that is NASA and its space shuttle program. However, this excellent article pretty much says everything I'd say. Recommended reading.
On a happier note, Singapore has not only freed itself from the scourge of SARS but is also introducing a 'Happy Toilet' initiative that will rate public toilets on an up to five star scale. Toilets will be judged on their cleanliness, layout, toilet paper supply and 'ergonomics' (don't ask!). It is already illegal in Singapore to leave a toilet unflushed.
Lastly this week, the ultimate motor yacht? I've often harbored a desire to own a boat, and occasionally indulge in a bit of 'window shopping' on websites. I think I've now found my dream boat.
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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