23 September, 2005
My survey last week about our levels of disaster preparedness took an extra note of relevance with the anticipated impact of Hurricane Rita on Saturday. Houston, on Thursday morning, was described as having their gas stations running out of gas and grocery stores emptying of all nonperishable items. People driving out of the city were running out of gas on the jammed freeways.
So how did you rate your current degree of preparedness? Some readers are extraordinarily well prepared, with diesel generators, large fuel dumps, thousands of gallons of water, and large supplies of food and other essentials. But most readers are not so well prepared.
Three quarters of readers believe they need to improve their state of preparedness. The other quarter is split equally into readers who are very well prepared; who are reasonably well prepared and comfortable with their situation; and those who are not well prepared but see no reason to improve.
With this as encouragement I'll be writing on the topic some more, and next week plan to feature a special and rather frightening article on one specific type of immediate threat to us all and the general lack of preparedness for this.
On a much more upbeat note, this week I add another item to my review series on luggage. Initially I limited myself to only reviewing wheeled carry-on pieces, but here's a non-wheeled piece you should consider :
This Week's Feature Column : Beating the Airlines' Luggage Limits : With airlines lowering their free luggage allowances, lightweight luggage becomes increasingly important. Here's an amazing 4lb duffel bag that holds up to 50lbs of clothing, with a warranty that reads 'This product is guaranteed forever, be sure to include it in your will'.
Dinosaur watching : Good news and bad news for US Airways. On the apparently positive side, the airline is in the last few days of its Chapter 11 and will be appearing in its new form, merged with America West, any day now.
On the definitely negative side, in a new filing with the SEC, it cautioned that it expects 'significant' operating losses 'to continue through 2006'. This is perhaps not surprising when you consider that a pro forma P&L for a combined America West and US Airways for the first half of this year shows a $272 million net loss.
But shouldn't any company be required to submit a business plan in which it makes a profit rather than continuing to make a loss, as a precondition to exit Chapter 11 instead of being required to be closed down and wound up?
What exactly is Chapter 11 when non-bankrupt companies can enter Chapter 11 at a time and on a basis of their own choosing, and when non-profitable companies can similarly exit it with very little review or oversight?
Remember Martha Stewart? She sold 3928 shares in Imclone, a company she wasn't the Chairman of, or anything at all other than a passive investor, on the basis of some insider information. The share price dropped by two thirds shortly after her sale, but since Dec 2001 when she sold her shares, it has risen back up and for a while was trading at levels higher than when she sold her shares. This makes the exact nature of her financial benefit difficult to calculate, but when questioned about the sale, she attempted to obfuscate her way out of the investigation. Martha was prosecuted, tried, convicted, and sent to prison.
Remember Gary Wilson? As I wrote here, here and here, he sold 3.1 of his 4 million shares in Northwest - the company of which he is Chairman of the Board - between May and July. He sold another 300,000 of his shares less than a month before NW filed Chapter 11, leaving him now with only 600,000 shares. His remaining shares, and those of all other shareholders, have now become essentially worthless after the stock was delisted by NASDAQ on Monday.
Unlike Martha, it is possible to reasonably accurately calculate the benefit he received from his very good sense of timing. He probably sold most of his shares for as much as $5 each, possibly realizing as much as $15 million in the process.
Wasn't that amazing good fortune on his part! It apparently wasn't due to any insider tip off or anything like that, either. He was questioned about his share selling at NW's AGM in July and explained that he wasn't dumping his shares. Oh no, he was merely diversifying his portfolio.
Unlike Martha, because he told the truth, he has no liability at all.
The chattering classes have been gossiping about the possibility of Northwest and Delta merging. After all, both airlines entered bankruptcy within minutes of each other, so doesn't it make obvious sense they should now merge (or so the reasoning goes). Surprisingly, it might indeed make a modicum of sense - the two airlines have little overlap in their route networks, so a merger wouldn't be automatically viewed as a monopolistic reduction of competition.
But merging two troubled carriers doesn't lead to one successful carrier, it merely creates one larger and more troubled carrier. The problems NW and DL are struggling to resolve won't be solved simply by merging.
Reader Gordon writes :
Rumors are continuing to circulate about a bankruptcy filing by Independence Air. Sadly, some rumors are even speculating the struggling startup might need to file for a Chapter 7 liquidation rather than a Chapter 11 reorganization.
There seems to be a growing trend when airlines rename themselves to do stupid things with the normal rules surrounding capitalization. For example, bmi. Or AAdvantage. Even airline alliances are copying - for example, oneworld.
Here's the latest and even more extreme example - AiRUnion - a new merged airline alliance in Russia.
There was some typically blunt talk from Ryanair's CEO Michael O'Leary this week. As I'd suggested a couple of weeks ago, he accused European legislators of trying to prop up their national dinosaur flag carriers at the expense of the new breed of discount carriers (most notable of which is, of course, his own airline).
Giving the keynote address to the World Low Cost Airlines Congress in Amsterdam last week, he said
Michael O'Leary commented Ryanair was looking at extending into offering long-haul services as well as the current short flight network it currently operates.
He also said the airline would never impose a fuel surcharge, something he described as 'profiteering at passengers' expense.' BA now charges $140 on a return ticket for their long haul flights, almost half the cost of a return ticket between New York and London.
O'Leary's comments and plans would probably be anathema to Joel Widzer, the person who dislikes low fare carriers and peculiarly advocates we should all support dinosaur carriers and who went on to suggest it would be un-American not to pay over the odds for the poor service they provide (see my comments last week).
I'd hoped Joel was displaying a bizarre sense of humor, but several readers have shown me their emails with Joel that shows him to apparently believe what he writes. Joel also sent a note to me. In full, his note said
I was puzzled by his claim that his column generated over 500,000 hits in one day; not only because he seemed to think this meant people reading it supported his unusual ideas, but also because the only people who refer to 'hits' these days are either people with no knowledge of the internet or people deliberately trying to distort and overstate the importance and popularity of their website. A single web page can generate anywhere from 1 to 100 'hits' depending on how it is designed; and so a fairer and more consistent measure is page views rather than 'hits'.
To try and get some sense of just how widely read Joel's article might have been, I used the Alexa rating service to compare the traffic to the entire large site - of which Joel's article is only one tiny piece - against the traffic to The Travel Insider. As this chart reveals, on every day over the last two years, my site has received more page views than the site on which Joel's article was published. My site seldom if ever gets 500,000 'hits' in a day.
Either Alexa is mistaken or Joel is mistaken, not only about the airline industry, but about his webpage as well. You choose which....
No word yet as to Joel's thoughts about this piece of news : one of his beloved dinosaurs is - gasp - cutting back on service. This latest time, US Airways has deactivated its at seat power that had been on its A330 planes. It is doing this because the system had become too expensive to maintain.
Applying that logic more broadly, I guess US Airways may soon decide its planes are too expensive to fly and discontinue flights entirely. Which might be a kindness for all concerned, being as how (see first item in dinosaur watching, above) they are outlooking nothing more exciting than continued losses into the near future.
While dinosaur airlines continue to post losses and blame fuel costs, it is interesting to see what is happening in other sectors of the travel industry. Carnival Cruise Lines - another operation with massive fuel costs - has just posted a record profit for their third quarter. Profits increased 11% to $1.15 billion for the quarter, even though their fuel bill went up 36% during the quarter.
How is it that cruise lines, also suffering from fuel costs, and truly suffering from over-capacity (another airline excuse) are able to improve their profits while dinosaur airlines can not? Why is it that most of us dislike the dinosaurs while increasing numbers of Americans love to cruise?
Lies, damn lies and statistics : Apparently based on Kyoto Treaty guidelines, the British government wants to reduce the level of carbon emissions Britain produces, down to 40% of the level of emissions in 1990.
There is a general correlation between industry, gdp, and carbon emissions - the more the first two increase, the more the third increases. For a generally growing economy to seek to reduce their level of carbon emissions by this huge amount, the country will need to either retreat back into quasi-third world poverty or drastically change its entire way of life (and set the standard of living back 50 - 100 years in the process).
Increasingly desperate advocates of this plan have now set their sights on what they believe to be an easy target - air travel. Britain's Friends of the Earth have gone as far as to say
It is true that air travel numbers are increasing, all around the world. But what is the alternative? We should all stay at home? Take a car - which uses almost the same amount of fuel per passenger/mile as a plane? Maybe travel by bus - but that is less fuel efficient than a plane. Perhaps we should take a more efficient train, but suffer a one week journey time to travel each way from coast to coast?
There is no easy solution to this problem, and people who choose to singularly attack aviation are deluding themselves and the people they seek to influence when they do so. The single biggest step (other than putting a global ground hold on all aviation) to reduce carbon generation is a switch to nuclear power generation. But the Friends of the Earth are silent on that point.
Why are the Friends of the Earth (and others) unwilling to compromise on nuclear power but insisting we massively cut back on air travel?
Meanwhile, in other energy news, fuel cell powered portable devices are moving closer to reality. Fuel cells offer the ability to generate a large amount of power in a small lightweight and easily rechargeable unit. Here's a picture of a prototype Toshiba MP3 player which gets 35 hours of playing from 1/8th of an ounce of methanol.
What happens to the methanol in the fuel cell? Ummm...... it gets converted into carbon emissions, alas (CO2 and H2O).
This Week's Security Horror Story : A recent Justice Department report concluded that the TSA's 'Secure Flight' program (to allow some passengers to be subject to less scrutiny than regular passengers) is unfocused and not yet ready to be implemented. The DoJ's Inspector General, Glenn Fine, said the TSA has failed to coordinate properly with the FBI's Terrorist Screening Center, suggesting the TSA can't get the proper data it needs to get the program operational.
This is the third major government oversight report to fault Secure Flight's progress in recent months. In separate reports earlier this year, the Government Accountability Office concluded TSA wasn't making satisfactory progress and in at least one case that it violated the privacy of more than 100 million passengers when it collected data while preparing to compare names to terrorist watchlists.
The ACLU describes Secure Flight as a 'fundamentally flawed program that would jeopardize our privacy and security if launched'.
Security expert Bruce Schneier, author a book on security describes Secure Flight as 'A disaster in every way'. He adds 'The TSA has been operating with complete disregard for the law or Congress. It has lied to pretty much everyone. It is turning Secure Flight from a simple program to match airline passengers against terrorist watchlists into a complex program that compiles dossiers on passengers in order to give them some kind of score indicating the likelihood that they are a terrorist.'
The TSA's response? They said they still intend to implement the Secure Flight program by the end of this month (less than a week away).
There is no one solution to making commuter trains, buses or highways immune to terrorist attacks, according to a security expert this week. Gosh - how much of an expert do you have to be to know that obvious fact? One wonders how many hundreds of thousands of dollars of research went into developing this finding; perhaps this 'expert' could simply start reading these weekly newsletters!
With the destruction caused by Hurricane Katrina, there's been a lot of focus on the broader subject of disaster preparedness in general, rather than 'just' protecting against and responding to terrorist threats.
Here in the Seattle area, we have a high statistical likelihood of a really big earthquake in the relatively near future. We have some vulnerable overhead freeways, and any such earthquake is likely to cause massive destruction and probably substantial loss of life. But unfortunately, federal funds are only available to the region for anti-terrorism drills, and so - as this article shows - it has become necessary to base earthquake drills revolving around collapsed viaducts under the pretense of a terrorist bomb damaging the structure rather than an earthquake.
The article goes on to quote other examples of over-preparedness for unlikely terrorist attacks, while depriving the region of much more likely to occur and desperately needed measures to prepare for natural disasters.
Long time readers know of my interest in and travels to Russia. But here's a tour I think I'll avoid - experiencing the life of a 19th century barge hauler. Tour participants pay $100/day to be harnessed with other tour members, and then have to haul barges up the Volga river in the manner of laborers in the 19th century. Dinner is a traditional meal of murtsovka - a dish of soupy mush made of rye bread, onions, a little salt, a few drops of hemp oil all mixed in Volga River water, and participants wear traditional burlap clothing.
The director of the tourist agency organizing the excursions says wealthy Russians who are bored with foreign vacations will derive a novel pleasure from paying good money to amuse themselves to stay home and suffer. To say nothing of all the carbon emissions they'll save.
Not so keen on suffering, however, were these Gambian tourists who took innovative measures to ensure they could watch a soccer game.
Until next week, please enjoy safe travels.
David M Rowell aka The Travel Insider
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