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Friday 2 April, 2004
I hope you survived April Fool's Day while being taken in by only a few jokes. There was a temptation to send you a short note from here to celebrate the occasion, but fortunately this temptation safely passed. However, this newsletter is being sent prior to the end of 1 April, so who knows what surprises may lurk herein! :)
Definitely not an April Fool's Day joke is our amazing 'win a pair of one carat opals' competition. All you need do is come up with a humorous reason why a celebrity should buy the Virgin Rainbow, a massive 72 carat opal recently discovered in Australia. More details and entry form here. Entries are free, and you can enter as many times as you like. Some lucky reader is going to end up with two lovely Australian opals - it could be you!
One of the couples on our Scotland tour had to cancel earlier this week. I gave them back their final payment, but kept the deposit. This can be your good fortune - if you'd like to quickly join this tour, I'll substitute your names for theirs, and apply the deposit to your booking, saving you $200 a person. Tour details and sign up form here. There is space for only one couple, and the first to sign up gets the deal.
As often as not, my weekly feature articles mirror something I'm currently interested in, or buying. This week is a case in point - I decided it was time to get a Bluetooth headset to go with my lovely Nokia 3650 phone. But choosing one was not a simple task (I now have six of them in my office!) and I now share what I've learned :
This Week's Column : How to Choose a Bluetooth Headset : Bluetooth headsets for your cell phone can be found for as little as $30, or as much as $300. I tell you what to look for, and what to watch out for, when choosing the best headset.
Dinosaur watching : Doyen of travel writers Joe Brancatelli put out an excellent analysis of the one hour video presentation by US Airways CEO David Siegel last week. I followed his advice and watched the entire presentation, this being the closest I've got to a real US airline CEO. In the past I've sometimes been accused of taking 'cheap shots' at airlines and their senior executives, and even when writing something critical that I'm absolutely sure about, I still suffer from a small voice inside me saying 'David, surely these high paid senior executives can't be that stupid'. Read what Joe says, and then watch the video. You decide.
I hope you read Joe's column, 'Death by Video at US Airways'. The analysis, later in his article, of the importance of the difference in operating costs between high cost airlines such as US Airways and lower cost competitors is particularly eye opening. His weekly newsletters are free and well worth signing up for.
The proof of the pudding is in the eating. And so, how did US Airways' unions react to CEO Siegel's one hour presentation? Two of the International Association of Machinists union leaders have sent a letter to their US Airways members, demanding that CEO Siegel change his ways or 'step aside and give the job to someone capable of handling it'. Union leaders accused Siegel of using fear to make his case for more cuts, and argued that his attempt failed miserably.
Some observers might think there is nothing Siegel would like better than to leave US Airways. His contract includes a provision allowing him to leave US Airways, for any reason, any time this month, and collect a $4.5 million severance package.
A couple of weeks ago I wrote about the changing dynamics of the airline industry, with low cost carriers now having grown to such a size that the dinosaurs can no longer bully them into submission. The Wall St Journal came to the same conclusion on Monday, echoing my comments by saying that the low cost carriers 'have gained a critical mass in the market'.
Further evidence of the scramble by the dinosaurs to regain lost market share is the dinosaurs adding 8% to their capacity in February, compared to the same month a year ago. However, that is unlikely to be enough to regain dominance, and not only are the up and coming new low cost carriers safe from assault by their dinosaur competitors, but, in fact, the opposite dynamic now applies.
The dinosaurs are threatened by the pricing and routes of the low cost competitors. Low cost airlines should now take the battle to the big guys, forcing the dinosaurs to drop their highest fares to the more moderate levels of their competitors, and causing grave financial harm to the dinosaurs in the process.
How feasible is this? For example, when America West started nonstop flights between New York and Los Angeles last October, the one-way walkup fare fell from $1233 to $464, and when AirTran started flying Baltimore-Dallas in November, the one-way unrestricted fare fell from $872 to $392. And, as a lesson in what could happen if low cost carriers become the price setters across the nation's air routes, US Airways says that 70 percent of its domestic flying last year was unprofitable.
Another measure of the growing market leadership of low cost carriers is in a new study by Denver International Airport, showing fares dropped faster there than at any other major airport between 2001 and 2003. The drop in prices was caused by the growth of low cost airlines at the airport. Denver is now served by Frontier, AirTran, America West, ATA, JetBlue, Spirit and Ted, with Frontier alone having 16% of the total passenger traffic.
Air Canada's CEO might finally be getting it. In a presentation this week, he said that low-cost airlines are now officially a worldwide phenomenon, and the industry is reaching 'the second stage of the low-cost revolution' as legacy network airlines adapt or risk perishing. For AC, which faces budget airline competition across its entire domestic network, the 'only place to go is low costs', he declared. Better that he realizes this late than never, I guess.
He then goes on to give us a lesson in how to close down a low cost subsidiary in the most positive way possible. When the various US carriers that have experimented with, and failed at, running low cost operations have closed them down, they've usually admitted that these operations have not been a success. However, with Air Canada, we're told their Tango low-fare operation will be deemphasized as a separate brand of the airline now that AC has overhauled its fare structure in Canada and the US. Describing Tango as 'a truly successful experiment,' he said, 'It's time to move on.'
This is a much better idea than continuing to operate two different styles of airline. I've consistently queried the sense of making improvements to only part of an airline - if something is a good idea, it should be applied to the entire airline, and one now wonders if the holding pattern Delta has placed their Song subsidiary in doesn't presage a similar announcement from Delta in the near future.
Echoing my own projections, IATA CEO Giovanni Bisignani predicted that the industry as a whole will make a profit of $3.2 billion on international flights this year. International passenger traffic for February improved 9.8 percent over February 2003, making six consecutive months of year on year growth. If you're planning on traveling internationally this year, grab any low fare you can find, because there are likely to be less of them.
But, don't despair. Several different new airline startups are talking about offering new discount service across the Atlantic - it seems a long time since we've seen a new discount carrier on international routes. And, as well as startups, some of the existing domestic low cost carriers are starting to look internationally, particularly ATA. Nothing will eventuate this summer, but hopefully we might see new low-priced international competition in time for next summer.
The resurgence in air travel continues to threaten us all. As reported in this article, the FAA predicts that 42 airports will be unable to handle their air traffic by 2020 unless they are expanded. This sixteen year prediction means we need urgent action now. Environmental and other delays are making airline expansion both outrageously costly and ridiculously slow. Boston is now thirty years into its new runway project, and has yet to pour the first slab of concrete, and my own Sea-tac airport looks like it won't finish its extra runway until 2008 - 21 years after the project first started.
Atlanta, Newark, O'Hare, Philadelphia and La Guardia airports are already overcrowded, according to the FAA report.
Bob Cowen's latest monthly newsletter is out. If you don't get this monthly free newsletter, you should - you can sign up from his website.
He makes the valuable point, this month, that the 'free ticket' bribes airlines offer to get you to agree to accept a later flight are capacity controlled, meaning you might have difficulties redeeming them for the flights you want. But, don't despair. Bob suggests the best strategy when offered a free ticket - ask for a cash voucher instead. Chances are you'll get a $300-400 voucher to be applied to a future ticket, and you can buy a roundtrip, wherever you want to go, for about that cost, with less hassle than trying to cash in the free travel voucher. You might even get miles on the ticket you buy with the cash voucher, too!
I mentioned last week that Spirit had placed an order for 35 new planes with Airbus, and options for 50 more. Spirit's CEO, Jacob Schorr, gave some interesting insight into what encouraged them to choose Airbus over Boeing. He said, this week, Boeing had the inside track to win their business, due to the airline's positive experiences with its present aircraft (MD80s, built by McDonnell Douglas and now a part of the Boeing group) but Boeing was simply outsold by Airbus.
Airbus pursued the negotiation 'with greater seriousness and diligence' he said, adding that at one point he 'thought the Airbus salesman worked for Spirit' owing to his commitment to understanding the carrier's requirements. And, as time passed, Spirit became convinced that the A320 family offered significant competitive advantages over the 737s and Boeing ultimately chose to not even submit a final competitive offer!
Spirit's initial order for 35 planes is valued at approximately $2 billion. And Boeing didn't even submit a final offer to keep the business of a present customer? (No, this is not the April Fools Day joke.)
In more Boeing bad news (is there any other kind, these days?) thanks to reader Carolyn for passing in a fascinating article headed 'US Tanker Scandal Grows' that recounts some of the dishonest double-dealing happening behind the scenes as Boeing and the Air Force colluded to create an order for 100 Boeing 767s to be used as Air Force tankers.
My main question about this deal remains unanswered - and perhaps unanswerable. Why would both Boeing and the Air Force choose to base this contract on perpetuating an aircraft that is almost obsolete, instead of using it to launch Boeing's new more efficient latest technology 7E7 plane? Other than the fact that this deal commenced in 2001, well before the 7E7 was first considered, it makes no sense for either the Air Force or Boeing to keep marching lockstep to the 767 when a better plane is desperately trying to be launched.
Here is an interesting story about NASA's new 5,000 mph plane. It is great that their test flight was a success, but the pace of development is painfully slow. An earlier failed test occurred on 2 June 2001. Although the failure wasn't related to the plane or engine design, but rather to the rocket that was boosting it to speed, it took three years for a replacement test flight. It will be a while before this technology comes to a plane and airport anywhere near you.
Not nearly as fast, but perhaps offering greater impact to most of us, is this fascinating new personal airplane technology. You can already order one of these home garage M400 Skycar planes, capable of flying at 290 mph, giving more than 20 mpg while carrying four passengers. The price of this VTOL craft is potentially less than $500,000 - a bit more than my Jaguar or Land Rover, and a bit faster, too, while having better fuel economy. (This is not an April Fool's Day joke.)
Talking about Jaguars reminds me of rental cars. Hertz are holding their annual Florida Drive Out deal, where you can rent cars for as low as $10 a day, picking them up in Florida and dropping them in any of 20 different cities in the northeast. This rate probably won't get you one of their luxury cars like a Jaguar or Land Rover (yes, Hertz do have both these types of cars in their fleet), but it sure does make for an affordable way of driving up the eastern seaboard anytime between 18 April and 28 June. Details from Hertz or your travel agent.
Reader Tom told us last week of his strange experience in booking a British West Indian Airways flight, where it seemed that he'd only be told the ticket's price after he made the booking. He continues the story this week :
Is this perhaps the first time a reader has written in to complain about getting a 'too low' priced ticket from an airline? (No, this is not an April Fool's Day joke.)
This Week's Security Horror Story : Thanks to reader Andy for passing on this story about how a flight was delayed and ultimately cancelled, due to being searched for explosives after a tip-off. The tip-off source? A psychic. (This is not an April Fools Day joke.)
A couple of days later, four Northwest planes and two Amtrak trains were delayed due to bomb threats. No word if the psychic was involved in the threat evaluation this time, but a government official said the threat was not considered credible. So why did they stop the flights? Out of 'an abundance of caution'.
Do you take your shoes off before going through the metal detectors? I always refuse to, and make as much fuss as I feel I safely can, short of being fined for having a bad attitude! The TSA's official policy is that shoe removal is optional, and they only suggest it to make it less likely that metal parts of your shoes will set off the metal detector.
The actual reality is usually very different; if you don't take your shoes off, you'll often find yourself 'randomly' selected for secondary screening. Bob Cowen adds this insight in his latest newsletter
I found myself in the unexpected position of defending the TSA in an interview with CBC Radio earlier this week. By the ultimate measure - successful terrorist attacks on planes - the TSA has been 100% successful. But the inanities of enforcement, such as their shoe policy, make it hard to feel positive about this agency.
There is an interesting case slowly working through the legal system. On the face of it, a crazy right wing extremist is giving the government and airlines a hard time, refusing to show ID and demanding to be allowed to fly on commercial flights. But if you scratch the surface and read the case documents, a more complex story evolves, with interesting revelations including the fact that airlines will let you fly without showing ID in some situations, and the official regulations requiring passengers to show ID are secret. The case, being brought by privacy advocate John Gilmore, suffered a setback this week when a federal judge dismissed the suit, due to it either being 'factually insufficient' or 'lacking a clear legal theory'. Gilmore says he will appeal.
One of the interesting and central points to this case is that we - American citizens - are given the right to free travel in the constitution. Gilmore's case says, in part, that freedom to travel is made impossible if people have to show government issued ID to get on a plane. The government's defense conceded that needing to show ID to board a plane was an infringement, but said people are free to travel using other methods. Since that time, it has become necessary to show ID to board an Amtrak train, and you try driving your car without a driver's license. So how exactly could you conveniently get from one coast to the other, freely and anonymously, without ID? Gilmore has several websites - this one is about this case, and this one appears to be his main site.
I used to be able to buy and use an airline ticket in the US without showing ID, and at the same time, I needed ID to buy an inter-city train ticket in Russia. Today, no ID is needed in Russia, but is needed here in the US. John Gilmore's site includes a picture of Ayatollah Khomeini, saying 'I'm still free - what about you?'
A very different type of lawsuit has been filed by a WV man, seeking $15,000 in damages from US Airways after he fell down an escalator at Fort Myers Airport. The lawsuit states 'US Airways failed to warn (Shuler) and its other passengers of the increased effect that consumption of alcoholic beverages has on airline passengers who consume alcoholic beverages while in flight and while flying at night.' While it is hard to feel sympathetic for the man, his lawsuit may well succeed, based on the simple contention of culpability when serving a visibly drunk person with more liquor.
Some good news. The Statue of Liberty will reopen to the public in about four months time. A security system similar to at airports will be in place, but after passing through it, visitors will again be able to go inside the statue and climb the 354 steps to the observation deck on the statue's crown. The new security measures total $7 million - just how much can a metal detector or two and some rod and chain waiting lines cost?
An interesting statistic from Norway. According to a survey by the Norwegian Telegraph Bureau and the Norwegian National Statistical Office, 100% of all teenagers between the ages of 16 and 19 own a cell phone.
As regular readers will know, I worry about the possible dangers posed by cell phone use (and other high energy electromagnetic radiation sources). Good news for the Brits - maximum allowable radiation exposure limits in the UK were reduced by 80% this week. Let's hope similar levels apply in Norway - radiation is likely to be particularly harmful to children.
Until next week, please enjoy safe travels
David M Rowell aka The Travel Insider
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