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Friday 16 April, 2004
Tax day has passed for another year (although if, like me, you filed for an extension, some of the hassle still remains).
Talking about taxes (yuck!), this review provided a stark and sobering reminder of the financial implications of the growth of The Travel Insider. Two and a half years ago, it was started as a spare time interest, costing me very little in either time or money. Today, the website has become a monster - in the best possible way; but along with the growth in content and traffic has come a massive increase in time needed to maintain the site, maintain the mailing list, answer emails, research new stories, buy items to review, and steadily increasing web hosting costs. With the exception of a few much appreciated donors, all these costs are coming out of my pocket, and the increased time it all demands is detracting from time available to earn money other ways.
I'm keen to continue to develop the site and newsletter, and like every other electronic publisher am looking around for a suitable model to enable this to earn a modest income. If there was a way to simply collect a nickel from every person when visiting the site, the matter would be solved. But, alas, this type of 'micro-commerce' is not yet possible and so I'll try the 'PBS model' of asking for voluntary donations from newsletter subscribers and site visitors.
If you feel you've received some value from the newsletter and website - perhaps you bought something with a Travel Insider discount; or if you just plain want to see an independent voice continue to develop and provide a counter to the 'conventional wisdom' the mass media offers, please now consider a small donation. Our 'Help This Site' page makes it easy for you.
Here's another mini-instant survey that you'll hopefully click on to answer. I'm trying to understand how you use your cell phone and manage its battery life. Please click on the link that best describes what you do - this will create an empty email with your answer in the subject line. Answers will be automatically collected and counted and results given next week.
If you are a 'heavy' user of your phone (ie more than 30 minutes of talking on most days and phone nearly always on) do you
If you are a 'light' user of your phone (ie less than 30 minutes of talking on it most days and phone on for less than half a day each day) do you
Our Win a Pair of Opals competition closed on Sunday with a massive number of entries; and many of them excellent. With one of the two miners who found the Virgin Rainbow somewhere deep inside an opal mine, somewhere in Australia's vast Outback, we've been unable to get a judging quorum and consensus, so the winner will now be announced next week.
Last week's feature review of the First Class Sleeper caused Friday's web traffic to set a new record. This excellent device has obviously been of interest to many of you - let me know if you agree with my positive review when you've had a chance to try it yourself.
I'm continuing to search out the latest and greatest travel aids for our upcoming Scottish Tour, and have two more items to suggest for your consideration this week :
This Week's Column : Expandable and Collapsible Bags : Most of us have a luggage imbalance. We need more luggage capacity traveling in one direction than the other. Here are a couple of inexpensive items to help you with the things you buy while you're traveling.
Dinosaur Watching : The dinosaurs have selected a new scapegoat on which to blame their continuing losses. It was, for the longest time, 9/11, or 'the situation in the Middle East'. SARS was given a good bashing, too. But each of these issues have faded away, while the dinosaurs' problems stubbornly remain.
The latest scapegoat? Rising fuel prices. This has the benefit of being plausible - we all can see what is happening when we gas up our cars. But what does it say about the management skills of airline executives when their only response to increasing fuel prices is to passively say 'well, that means we're going to lose more money'? In most other businesses, if a critical cost component sharply increases, you do something to respond to the increase, up to and including raising your product's selling price - especially if it is a cost increase shared equally by your competitors, too.
Of course, the dinosaurs will lament 'we can't raise our fares any more' and that may be true - please don't let me be the first to encourage any airline to increase its airfares! But there are other ways an airline can respond to an increase in fuel costs as well as simply increasing ticket prices. For example, it can re-jig its schedules to get best use out of matching planes with routes for best fuel economies. It can try and sell more unsold seats so as to increase the number of paying passengers and money it makes from each flight operated. It can reschedule flights so as to reduce delays, in the air or on the ground, with less fuel burned for each journey. It can even try and grow its services so as to spread its massive fixed costs over a larger number of flights and passengers, compensating for the increased variable fuel cost.
But while dinosaurs like United and Delta are projecting increases of as much as $500 million in extra losses due to fuel costs this year, new low cost carriers are steadily growing, and remaining steadily profitable. Of course fuel costs are increasing, and of course this has an effect on an airline. But the good airlines are finding ways to respond and stay profitable, while the dinosaurs sit back and hint that it is the government's fault that fuel is so expensive and perhaps the government should give them another round of cash inputs.
Few people are willing to accept the ugly truth - high(er) fuel costs are here to stay. And so, the other thing an airline can and should do is accelerate the retirement of older less fuel efficient planes and upgrade its fleet to use the latest best engine and airplane designs. Sure, new planes are expensive, but I'm reminded of how photocopier salesmen sell me photocopiers. They explain to me I'm doing 75,000 copies a month, and the present copier I own is costing me 2.2c a copy. Their new copier would cost $20,000 to buy, or $380/month in lease payments, but would only cost me 1.65c a copy, and also give better quality and faster copying speed. The net result - the new $20,000 copier works better and ends up costing me nothing, due to the saving in per copy costs, and possibly even making me money, every month. Similar logic applies to new plane purchasing.
Boeing should be harvesting hundreds of orders for its allegedly super-efficient new 7E7 plane. Instead, all it can manage are weak press releases about finalizing arrangements for the plane's off-shore construction (as if anyone thinks it a good thing that most of the 7E7 will be made offshore rather than by US companies and US workers), and continuing empty statements about announcing a first launch customer 'very shortly'.
US Airways - an airline that is hovering on death's door and which is desperately pleading with its unions for pay and benefit givebacks, has just committed a heinous act of corporate stupidity. The Board of Directors has given CEO David Siegel a compensation package that some people are valuing as high as $11 million. In reality it is probably worth much less (due to an erosion in share prices, and his share options, with an option price of $7.42, are worthless when matched against the current share price of about $4), but it still makes up a seven figure package.
International Association of Machinists spokesman Joe Tiberi said 'It's hypocritical to take home millions of dollars and ask employees who make $25,000 to $30,000 to bear the brunt' (of the restructuring plan).
One of the distinguishing features of the 'full service' dinosaur airlines has been their first class cabins. And so, you'd think the dinosaurs would seize on this competitive advantage and take full benefit from it. But, no. Not only have almost all the dinosaurs vastly cut back on the quality of their first class service, but now they're reducing the number of first class seats. US Airways has reduced the number of first class seats on their 757s (from 24 down to 8) and is now considering eliminating first class entirely on all domestic services.
The reason for this - they say they've been giving away 'too many' upgrades. US Airways thinks this a bad thing. This fails to appreciate the total picture. The people who are getting low priced or free upgrades are usually very frequent fliers who spend thousands of dollars a year with the airline, and who usually buy more expensive than average coach fares, even if they're not buying first class fares directly. If US Airways drops its first class cabins, it can expect to lose many of those high yield high value business travelers. It is hard to see the sense in that - but maybe if I was promised $11 million a year, I too would be able to advocate what presently looks like a stupid move.
Fellow dinosaurs United and Delta are silently eliminating first class by switching routes from their main brand to their 'discount' brand Ted or Song (with no first class).
Singapore Airlines is selling eight of its nearly new 747-400s. The planes are being sold to two unnamed buyers, who will be converting them to freighters. SQ is not buying new 747s to replace the eight it is getting rid of, but it does have 10 Airbus A380 super-jumbos on order. No comment from Boeing on this.
Some good news for Boeing. Cathay Pacific is buying two new 777s. And - some bad news for Boeing - Cathay is also buying six new A330-300s.
Some truly good news for Boeing. EVA Air is buying another eight 777s, adding to a current order for seven of them.
And some truly bad news for Boeing. According to rumors, proposed new startup airline, Virgin USA, has told Boeing it is out of the running for its order of the 20 - 30 planes needed to get the airline going. While 'it ain't over 'till it's over', it appears that Virgin's message to Boeing was fairly blunt in nature! This, combined with the leaked details of the deal, make it either a high stakes public negotiating ploy or a real dismissal of the Boeing offer - an offer that Boeing has been attempting to finesse for over a year now. No-one is prepared to issue an on the record comment.
And more Boeing news - its tanker scandal continues to be the story that won't go away. The latest development has a fired Boeing executive now pleading guilty to a conspiracy charge, and, ominously, 'cooperating with the federal prosecutors'. As quoted by this article, a conspiracy, by definition, involves more than one person, so there might be more life in this story yet.
If you're a cruise line and you want to quietly increase your fares by $70 per person on your one week cruises, what do you do? Well, if you're Holland America Line, you simply eliminate your 'no tipping required' policy and change it to a $10 per person pre-paid gratuity. Net result - the passengers pay an extra $70/week, but, almost for sure, the crew don't see any more money. A nice extra profit for HAL, though, while brochure prices remain unchanged.
I mentioned a couple of weeks ago the FAA predicts 42 airports in the US will be unable to handle their traffic by 2020, and complained about the snail's pace of airport expansion in this country.
Contrast our own inability to pour a slab of concrete, paint markings on it, and announce a new runway open for business in less than 15 - 20 years, with what is happening in China. In this single year alone, China will build two major trunk airports and 33 feeder airports. Yes, not just runways, but entire airports. In addition, another 23 major construction projects at existing airports are also underway.
China's extraordinary growth is mainly occurring off our radar screens. I noticed this from a different perspective when attending the annual Consumer Electronics Show in Vegas back in January. The number of US companies with their own designed and built new equipment innovations? Almost nil. The number of Chinese companies offering innovative new technologies in a wide variety of different fields? Hundreds and hundreds. What particularly surprised me is that China is not just the low cost assembler of high tech gear, but it is also, increasingly, the brains behind the design of the products as well.
This is good news for China, of course. But is it also good news for the 'first world' countries?
This Week's Security Horror Story : At first, this story sounds all too familiar. A woman forgot she had a loaded 9mm handgun in her carry-on bag and only realized this, after passing through airport security, at the gate.
But what makes this story fully deserving of its Horror Story of the Week status is this : When she passed her carryon bag through the X-ray machine, the screener 'noticed something suspicious' and so called for a hand search of the woman's bag. So far, so good.
But the person hand searching the bag did not find the loaded 9mm semi-auto pistol!
I think we've all believed, until now, that while dangerous objects might sometimes not be detected on the Xray screen, a hand search after a bag had shown itself to contain a suspicious object would absolutely of course find anything dangerous. Apparently, not so.
Interestingly, the night before this news broke, I was evaluating a fascinating new computer carry bag being sold by Travel Essentials. It boasted 36 different compartments (including one hidden compartment), and in an email to the store owner, I shared my own experiences that regularly when my own humble 12 compartment computer carry bag is hand searched, the screener never looks in all 12 places, and I wondered what would happen when confronted with a bag containing 36 different places to put things.
It seems we now know the answer.
Back to the woman and her gun. After confessing her mistake to a gate agent, all the passengers on the flight had to be rescreened (why?) and the woman is now being threatened with a federal felony charge that could give her up to ten years in jail and/or a $250,000 fine. Suggestion : If you find you too forgot you were carrying a weapon, don't tell anyone. Just quietly take your flight. Honesty is not being rewarded, and the TSA doesn't understand the concept of 'innocent mistake'. Unless, of course, it is in reference to their screening personnel who couldn't find a semi-auto handgun in a woman's carryon!
In another airport gun incident, an air marshal accidentally left her gun in a public restroom in the secure part of an airport. A passenger discovered it and turned it in.
My comment last week about the inappropriateness of freely letting Canadians and Mexicans into the US, while requiring our allies, the British and Australians, to be fingerprinted, caused howls of anguish from several Canadian readers. But I don't think I was necessarily advocating that Canadians should be fingerprinted. Rather, I was more hoping that the unfairness of fingerprinting British and Australian visitors (to say nothing of my fellow New Zealanders, too!) would be shown in clear contrast and that this requirement would be lifted.
There is also one other glaring security loophole. The most prolific nationality of travelers into the US is American citizens themselves. Why are we insisting on draconian 'security' requirements for foreign visitors, when it remains remarkably easy to get a US passport, with no fingerprinting required. Or are all Americans, by nature of their citizenship, automatically and obviously never likely to be terrorists? (If this is true, maybe we don't need the TSA at all!)
Toronto's new Terminal 1 is now open. Amongst other state of the art features, we are told it includes 'as many as 10,000' security cameras for monitoring people throughout the terminal.
Sounds like overkill. How many people will be continually watching the potentially 10,000 different sets of images being transmitted from the cameras?
But if you think that is overkill, this article reports that the average Briton is captured on camera 300 times a day, and predicts the present count of 4 million cameras will increase to 25 million within three years - almost one camera for every two people in Britain.
A group of lawyers representing customers who stayed in a Starwood hotel in Florida from February 28, 1998 to the present have filed a class action suit against the company. The suit is over a resort fee charged to hotel guests. The complaint says guests improperly paid the resort fees as well as quoted room rates and taxes. Class members say they were not made aware of the fees, and/or the fees were misrepresented as taxes. The suit may be expanded to include other hotel guests in other states. Good luck to them.
Lastly this week, doughnuts can apparently clog more than just your arteries. Hawaii residents love Krispy Kreme Doughnuts so much that they often stock up at a new store in Maui before boarding inter-island flights back home, overloading airline luggage bins along the way, with some passengers bringing as many as five or six boxes onboard as carryon.
Proving that where there's a good doughnut, you'll find a policeman not far away, on the day the Maui store opened, a Kauai police officer made a special flight to buy doughnuts for his entire department.
And, with the effects of eating a lot of doughnuts in mind, here's an interesting article.
Until next week, please enjoy safe travels
David M Rowell aka The Travel Insider
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