All that remains of a Sukhoi Superjet 100 after it crashed into the side of a mountain in Indonesia this week.

Good morning

Happy 75th birthday to the Golden Gate Bridge, which opened in May 1937.

It has become one of the world’s most instantly recognizable bridges, and is approaching its two billionth vehicle crossing sometime very soon.

Although having the longest span in the world when built, it lost that title in 1964 to the Verrazano Narrows Bridge, and nowadays is the ninth longest suspension bridge, with a 4,200 ft main span length.  The longest suspension bridge is now the Akashi-Kaikyo bridge in Japan with a 6,529 ft main span length, the longest US bridge remains the Verrazano Narrows bridge in New York with a 4,260 ft main span length.

Since opening, the bridge has closed three times due to extreme weather, the longest time being in December 1983 (3 1/2 hours).  Its original construction cost was $37 million (as against a projected cost of $27 million); in 2003 an estimate suggested it would cost $1.2 billion to replace.

Among other distinctive claims, more people die by suicide by jumping from the Golden Gate Bridge than at any other site in the world.  About 98% of the people who jump die, due both to the 245 ft distance down to the water level and the cold waters that flow underneath.  The exact count is not known, because many of the bodies are taken with the tide out to sea, never to be found again, with one study suggesting as many as three times more people jump than are officially estimated and recorded.

Many thanks to all who sent in their opinions for last week’s reader survey on nonrefundable airfares.  I’ve taken the responses and written a separate article on the topic, which you’ll see as the second part of today’s newsletter compilation.  Meanwhile, please keep reading for :

• The Worst Time for a Crash
• Air Canada Doesn’t Have a Crash, but …..
• Are Airplane Seatbelts Still Adequate
• Israeli President Spurns El Al and Flies on Air Canada Instead
• How Much Would You Pay for Unlimited First Class Travel for Life
• World’s Best Airports
• Dallas Hotels Shoot Themselves in the Foot
• Carnival Cruise’s Paranoia
• Someone Orders Suspected Terrorist Off JetBlue Flight – an 18 Month Old Baby
• And Lastly This Week….

 The Worst Time for a Crash?

There’s never a good time for an airplane to crash and kill all on board.  But some times are probably worse than others, and the crash earlier this week in Indonesia seems to be an example of a very bad time to have a crash.

The Russian Sukhoi Superjet 100 was being flown by Sukhoi’s top pilots, and hosting a group of Indonesian air industry VIPs on a demonstration flight as part of an attempt to sell the plane to Indonesian airlines (an attempt that apparently, at least up to that point, was proceeding successfully).  All 47 people on board perished.

However, the crash is starting to seem like it may be more due to pilot error than a problem with the plane itself.  While the early reports are still extremely sketchy, it seems this may have been an example of ‘controlled flight into terrain’ – translation :  The pilot flew the plane into the side of a mountain he didn’t realize was in front of him.

For reasons not yet known, the pilot asked for permission to descend from a barely safe altitude of 10,000 ft down to a more dangerous 6,000 ft flight level in an area where there were nearby mountain peaks much higher than 6,000 ft and visibility was poor.

The plane’s wreckage, on 7,200 ft high Mt Salak, is thought to be at about 5,800 ft.  At the time of writing, neither black box has been found, so everything is conjecture.

The plane was originally designed with inputs from Boeing, and is intended as a competitor in the 100 seat passenger jet segment.  It is the first civilian plane designed by Sukhoi, best known for its fighters.

Air Canada Doesn’t Have a Crash, but…..

…. the passengers are suing, anyway, after an incident in January 2011 where an apparently groggy co-pilot woke up at the controls, misunderstood what he was seeing out the windows, and plunged the plane into an emergency dive to avoid what he thought was an incipient crash with what he thought was another plane.

The passengers are apparently suing not just for the terrifying 46 seconds that followed (until the pilot in command, who was actually and officially flying the plane at the time, managed to take control back from the strangely behaving co-pilot) but also for being lied to, consistently, by Air Canada as to what had happened.

Air Canada told passengers it was merely turbulence that caused the plane to porpoise down and up again, and it was only after an official accident report was published by Canada’s Transportation Safety Board that people found out the truth.  16 passengers and flight attendants suffered injuries, with seven requiring hospitalization after the plane arrived in Zurich.

Here’s an interesting story about this event and situation.

Are Airplane Seatbelts Still Adequate

Talking about airplane crashes, there’s an interesting article here that wonders if the seatbelts in planes remain sufficiently strong for today’s heavier passengers.

The seatbelt standards were set 60 years ago, at a time when the average man weighed 170lbs.  Today the average man weighs 195lbs (and the average woman 165 lbs).  But there has been no change to the specifications, or to the dimensions and weight of test dummies used to validate compliance.

While you might think, particularly when juxtaposed with the previous article, that seatbelts of any nature on a plane are a bit like a thimble being used to try and bail the water out of the sinking Titanic, the reality is that most airplane crashes are survivable, and most airplane passengers survive.  Sturdy seats and appropriate seatbelts can have a material difference in terms of how many people survive the plane’s crash landing and are able to then evacuate the plane in a timely manner.

I’ve an interesting and potentially life saving series of four articles on How to Survive a Plane Crash.  Well worth speed reading through.

Israeli President Spurns El Al and Flies on Air Canada Instead

It is easy to forget, when we see pictures of our own peripatetic President and his family clocking up the miles on Air Force One and other official planes that not all other heads of government have their own fleet of planes.  Even the Prime Minister of England simply hops onto a regular commercial flight when flying somewhere.  So too does Israeli President Shimon Peres.

Normally it is considered good form for a country’s head of state to fly on some type of national flag carrier airline, which for President Peres would of course be El Al.

Although Mr Peres doesn’t travel with quite the retinue of attendants that our President does, there is one formality that Israeli protocol requires whenever their President or Prime Minister travels somewhere – a kit of medical gear and an oxygen tank should accompany him, in case of medical emergencies.

For his recent trip to Canada, El Al announced that it would charge Mr Peres (or, more likely, the Israeli government in general) almost $5,000 for the oxygen tank.  El Al had never levied this charge before.

Mr Peres refused to pay the outrageous fee, and booked a ticket on Air Canada instead.  Good for him.

How Much Would You Pay for Unlimited First Class Travel for Life?

Some years ago, several US carriers would occasionally offer passes giving the bearer (and, potentially, any companion of the bearer’s choosing, too) the opportunity to fly, as much as they wanted, free of any restrictions whatsoever, in first class.  Domestic or international, as often as they wished, it was all included – indeed, the deals were so amazingly generous that they would also accumulate frequent flier miles on all their flights.  And all those nasty taxes and fuel surcharges that we get stung with on our ‘free’ tickets these days – they were all included, too.

How much would you pay for unlimited first class travel for you and a companion, for the rest of your life?  Keep in mind that a single roundtrip to Europe would probably cost you $10,000 or more, each, if you were paying for them, and think not only of the trips you usually make, but how your lifestyle would change if you could fly, free, any time you wished (one of the pass holders took 16 roundtrips to London in a 25 day period).

After enjoying a bit of day dreaming about such an amazing lifestyle, time for the bad news.  Such passes are no longer sold (although if you’re a senior airline executive or a pilot, you have pretty much the next best thing, especially if you get some sort of entitlement written into your employment contract and retirement benefits).

Here’s a fascinating story about people who had passes, and how the airlines have tried to worm their way out of allowing these unlimited benefits to continue.

World’s Best Airports

Skytrax has just announced its annual list of the world’s best airports.  No American airports made the top ten list, although Vancouver came in at number 9.

The top ten is :

1. Incheon, Seoul
2. Changi, Singapore
3. Hong Kong Intl
4. Schiphol, Amsterdam
5. Beijing Capital Intl
6. Munich
7. Zurich
8. Kuala Lumpur, Malaysia
9. Vancouver Intl
10. Central Intl, Japan

Question to the US aviation industry :  At what point will you stop making excuses and start to feel embarrassed at the dominance of Asian airports and airlines in surveys of the best airports and airlines?  Do you have any remaining pride and appreciation for excellence?

Here’s one interesting example of what one Chinese airport – in Dalian – is doing to improve passengers’ airport experience during flight delays.  This is the sort of ‘outside the box’ thinking that we used to pridefully term as American innovation; now it seems innovation is no longer an exclusively American prerogative – indeed, we have largely abandoned it, ceding it instead to Asian countries and enterprises.

Dallas Hotels Shoot Themselves in the Foot

It is a recurring surprise to many in the travel industry to discover how very price-sensitive some types of travelers are.  This is particularly the case of destination marketers who ‘drink their own koolaid’ and believe people are so motivated to come and visit their wonderful city or region that a few dollars more added to the cost won’t deter the potential visitors at all.

It is true that a few dollars up or down makes little difference for a couple planning their ‘trip of a lifetime’ to their dream destination – although even such motivated visitors as these will often respond to higher costs by downgrading their hotel, shortening their stay, or including fewer activities.  In other words, these types of visitors will spend more or less the same amount of money on their trip, they’ll just simply adjust how they spend it.

As for business travelers, if they have to go to, eg, Chicago for a meeting, they have to go there, whatever the cost.  They are indeed close to price insensitive – but the other side of that coin is that business travelers are unlikely to be influenced as to if they go to Chicago or not by any destinational promotion activities.  If they need to visit a customer or prospect, they go.  If they don’t, they stay away; plain and simple.

Perhaps the most price sensitive of all potential visitors are the MICE visitors and the people who determine where they go.  Nope, they’re not trained rodents.  They are people traveling to attend Meetings, Conventions, Conferences, and similar types of special events (there are several possible phrases that MICE is an acronym for, the concept is the same even if the words are different).

The people who plan these large-scale events are very price sensitive – both in terms of the cost of staging the event to themselves, and the cost of people choosing to attend.  If one location is too expensive, then they’ll decide to hold the event somewhere else instead – it is a simple commercial decision that they make.

So, with that as background, and to confirm it, hoteliers in many different cities have repeatedly demonstrated that if they increase their room rates, they lose business.  While this is true at a ‘micro level’ between one hotel and its competing hotel a block away, it is also true for a destination as a whole if all hotels raise their rates in concert – typically in the form of an increased room tax.  Most famously, perhaps, was the New York situation where the city raised the hotel tax rate, only to end up with lower total revenue due to a drop in rooms sold to guests.

How to understand the logic, therefore, of the Dallas hoteliers who agreed to have their room tax rate boosted up from 13% to 15%?

The extra 2% is to be used to increase the promotional budget of the city, particularly towards the MICE market.  Dallas wants to regain its position as one of the top five MICE destinations in the country.  The extra 2%, levied only on hotels with more than 100 rooms (ie your typical meeting/convention type hotels) is projected to raise about $10 million a year.

Newsflash :  This is risky and may have the opposite effect to that hoped for.  MICE business might decline rather than increase.

Carnival Cruise’s Paranoia

Carnival arranged for a popular diet guru and motivational speaker – a respected neurosurgeon from Tennessee – to be a featured speaker on a diet-themed cruise on its ship Carnival Magic.

After he boarded the ship, someone sent out a Twitter message saying ‘Security confiscated dynamite.  Talk won’t be as explosive as at PaleoFX.  Still have vial of Legionnaires for epic biohack.’

The doctor has no connection with the Twitter account.

Carnival also received a phone call from an anonymous caller saying the doctor was planning a bio-attack.

Carnival pushed their panic button, and the doctor was questioned by Galveston police, Homeland Security, FBI, and the Coast Guard.  Carnival security officers took him and his luggage off the ship, leaving it on the pier, and his computer, luggage, and the cabin he had briefly occupied were all searched.

The various security agencies came to the conclusion that the doctor was blameless and in no way associated with what they decided was nothing more than a hoax.  Needless to say, nothing of concern was found in the doctor’s cabin, luggage, or computer.

But the captain of the ship exercised his discretion and refused to allow the doctor back on board, and the ship sailed without him on later that day.

The next day, apparently the captain had a change of mind and agreed to allow the doctor’s return.  Carnival offered to fly him to Montego Bay to rejoin the cruise.  The doctor, quite understandably, refused.

The captain issued an utterly insulting statement trying to justify his paranoia :

Since the safety and well-being of my guests and crew is my number one priority, every security threat is taken seriously and fully investigated.  It is for this reason that I felt it was in the best interest of all my guests to err on the side of caution and not allow him to set sail as planned.

‘I felt it was in the best interest of all my guests to err on the side of caution’ is an overly wordy phrase.  Better to simply say ‘I erred’ and spare us the sanctimonious drivel.

How nauseating it is to see, yet again, idiots hiding behind empty phrases to cover up their idiocy, and hoping us to be even greater idiots and to accept their excuses at face value rather than to see through them.

One also wonders how the hundreds of guests who signed up for the cruise to hear Dr Kruse speak felt about how the captain set his number one priority for their well-being.  Dr Kruse’s statement is on his website, here.

Someone Orders Suspected Terrorist Off JetBlue Flight – an 18 Month Old Baby

We say ‘someone’ because it is unclear exactly who ordered the 18 month infant off the JetBlue flight at Fort Lauderdale, or why.

A JetBlue employee approached the infant (and her parents) after they’d settled into their seats, waiting for the plane to push back, telling them the infant had to get off the plane so as to be interviewed by TSA agents.  They were indeed met by TSA agents and spent 30 minutes waiting in the terminal for no clear reason, before being told they could reboard their flight (which they then declined to do).

When a local television station contacted JetBlue to find out what happened, the airline said it was an issue to do with the TSA, and that JetBlue and the TSA were jointly investigating.  But when the tv station called the TSA, the TSA said it was nothing to do with them – the fact the family got through security with valid boarding passes meant they were TSA cleared (this is only half true as anyone who has been detained on the jetway for a ‘bonus’ extra inspection knows only too well).

So who did what and why?  Alas, we’ll probably never know.  Some details here.

And Lastly This Week…..

Lastly this week, I was sent a perennial favorite from a friend earlier this week.  In a desperate attempt at making this timeless video topical, I guess we could say that unlike the Titanic and the recent 100th anniversary of its sinking, this video is about a ship that didn’t sink.  Indeed, according to the person being interviewed, all that happened was that ‘the front fell off’.

If you enjoyed that video (and who could possibly not), or if you’ve seen it before, here’s another interview about another oil spill at sea, this time the Gulf of Mexico/BP problem.  And – I like these so much, here’s another one.

Until next week, please enjoy safe travels, and may your own front not fall off

David.

Mr Jerry Meekins, the man at the center of the non-refundable ticket controversy last week

From time to time, a story ‘gains legs’ in the media, telling the sorrowful tale of some person who through terrible tragedy and no fault of their own, is unable to take the flights they had previously booked and paid for.

Such stories are made better if the person in question is elderly, in poor health, short of money, and either a veteran or a mother with (sick) young children, and they become unavoidably compelling if the airline involved is an unpopular airline.

So last week saw a ‘perfect storm’ of a story, involving a Vietnam Vet dying of cancer who was advised not to fly by his doctor, with the airline – Spirit Airlines, also being vilified in the news at the same time for initiating a $100 carry-on bag fee – refusing to refund his $197 non-refundable ticket.

Travel Insider readers were asked in last week’s newsletter if they felt that non-refundable tickets should be just that – as their name implies, non-refundable; or if they thought that sometimes such tickets should be refundable, or if all tickets should always be refundable.

There were three options for them to choose, which were defined/described as :

• No means no.  If a person wants a refund, they should have bought a refundable ticket in the first place.
• Airlines should make case-by-case decisions and rarely but occasionally give refunds in special situations.
• All tickets should always be refundable, no matter what.

Before sharing how readers voted, here is some commentary and industry background to the issue.

People Make Their Own Voluntary Ticket Choices

First, it is common with the sale of perishable items that the sale of the items be non-refundable.  It is not something that only the airlines do.  If you buy tickets to a concert and don’t turn up, you usually can’t get a refund for your tickets.

On the other hand, concert/theater tickets are usually transferable – you can give them (or sell them) to someone else to go in your place, whereas airline tickets are usually non-transferable.

Second, people almost always have choices and options when buying an airline ticket.  They can pay more for a partially or fully refundable/changeable ticket, or they can pay less for a more restricted ticket with greater penalties on changes or refunds.  No-one is ever forced to buy a non-refundable ticket.  Doing this is something everyone voluntarily chooses to do – presumably because they think they can beat the odds, and will end up being able to travel on the dates they have locked themselves into.

Third, people can also choose to buy travel insurance if they wish as an alternate way of covering the costs of changing or cancelling their tickets.  Some insurance companies offering ‘cancel for any reason’ insurance coverage, others have more restrictive reasons attached to their less expensive policies (see our three part article all about travel insurance for more on this).

Lastly, surely no-one is ever tricked into unknowingly buying a non-refundable ticket.  The rules are fairly obviously displayed, and the concept of non-refundable tickets is hardly startling or unexpected or new.

So every traveler has plenty of choices, including buying more expensive and more flexible tickets and/or buying third party travel insurance.

Non-Refundable Tickets Save All Passengers Money

Now for an interesting change of perspective.  The people who buy non-refundable tickets and can’t travel actually help to subsidize those of us who do travel.

Airlines know that a certain percentage of non-refundable tickets will end up not being used, and this is factored into both the number of tickets they sell per flight and also into the fare levels they need to set in order to break even and earn a fair return.

If airlines had to agree to refund all tickets, all the time, the average ticket prices would increase.  This might benefit a flakey traveler who sometimes cancels his travels, currently at great cost to himself, but it would hurt all the rest of us who can make definite plans and stick to them.

Shouldn’t Passengers Be Fairly Expected to Honor Their Contracts

One last point.  Where are the grounds for outrage if a person willingly and knowingly and voluntarily (is that enough adverbs?) buys a non-refundable ticket and subsequently his request for a refund is turned down?  Weren’t those the rules that were agreed to, in advance, by both the airline and the passenger?

Isn’t this analogous to a person placing a bet in a casino, and then asking for his money back when he lost the bet?

So, in case you haven’t gathered, in our opinion non-refundable fares are a good thing for all passengers, and airlines should not be compelled to refund fares that were openly sold as non-refundable.  We see that the mandating of refunds would not only be a grave and unwarranted intrusion of government regulation into the sanctity of contract, but would also increase airfares for all travelers, causing more overall harm than good.

Special Situations?  Special Considerations!

But life is seldom as black and white as we may wish it were.  How about the middle ground – airlines should sometimes make special exceptions to their no-refunds rule, on a case by case basis.

Let me tell you an interesting story to illustrate this point.  Some years ago I called in to the Special Services desk at an airline to ask for a non-refundable ticket to be refunded.  My agency had an ultra-preferred relationship with this airline which meant they would waive the no refund rule and fully refund any ticket we ever issued, no matter what the fare rules were.

What’s that, you say?  You thought a non-refundable ticket was always non-refundable?  Actually, airlines have always been willing to grant ‘waivers and favors’ to their most valuable clients – both high producing loyal travel agencies and key direct commercial accounts, as well as to specific individuals (typically elite level frequent fliers).

Anyway, back to the story.  I was chatting with the friendly agent at the airline while she was working through the paperwork to approve the refund, and mentioned ‘Oh, Mr Smith will be so appreciative of this.  He even came into the agency with a doctor’s note, because he has just had surgery and can’t fly’.

The agent interrupted and said ‘Oh, David, I wish you hadn’t told me that.  We’ve been told that we have a blanket ban on refunding any tickets, ever, for medical reasons, and now that I know this is a refund for medical reasons, I’m stuck with this blanket ban’.

I tried to understand how it was that the airline would refund any ticket any time I asked them to, as long as I gave no reason other than ‘just because’, but if I volunteered that it was due to a bona fide medical problem, they would slam the door in my face and refuse to help.

The explanation :  The airline had suffered so many fraudulent claims based on doctors’ notes that they decided just to turn their backs on any type of medical claim in the future.

A Fraudulent Medical Claim Supported by a Fraudulent Doctor

Let me now give an example of a fraudulent medical claim.

One time I booked travel for a young couple to go to Australia together for a ten day vacation.  A couple of weeks before they were due to go, the guy came in to the office and explained they had split up.  He still wanted to go, as a single, so we changed his hotel bookings, and moved his seat on the plane away from the girl he was no longer traveling together with.

A day or two later, the girl called, asking questions about her ticket and if it could be refunded.  She didn’t say why she was asking, and didn’t mention the split with her former boyfriend.  We explained it was a non-refundable ticket and we couldn’t refund it.

Another day or two later, she turned up in our office with a note from a doctor.  The note simply read ‘Please refund Miss Smith’s ticket to Australia.  In my opinion, she should not be traveling at this time.’

We pointed out to Miss Smith that the ticket was nonrefundable, and the rules did not say ‘except for people with a doctor’s note’.  Because we knew the real reason and were curious, we also- called up the doctor to ask what the medical condition was that was interfering with Miss Smith’s ability to fly.

The doctor invoked patient confidentiality and got a bit stuffy at us for daring to question his ‘professional opinion’.  The fact that his professional opinion was an out and out lie didn’t interfere with his seeking to claim the moral high ground for himself and his attempt to defraud the airline out of about $1000 (the cost of the nonrefundable ticket).

Do you really think that the same doctors who risk everyone’s lives by over-prescribing antibiotics to anxious patients, including those with viral complaints that don’t respond to antibiotics anyway, merely to shut them up (read this terrifying article about the implications to us all of such reprehensible irresponsibility), the same doctors who lavish addictive psychotropic drugs on anyone who asks for them, would think twice about writing a meaningless note instructing an airline to refund a patient’s airfare?  (My lawyer would probably want me to say that such doctors are doubtless only a very small part of the overall population of doctors, most of whom are honest and ethical.)

And, more to the point, how can an airline police such requests?  Airlines already get ‘blamed’ for asking for what seems to be onerous documentation to prove the death of a family member when someone is requesting a compassionate fare (something that used to be massively abused, although now some airlines will actually call the appropriate funeral home as an easy quick way of checking).

Where to Start and Stop with Special Exceptions

Would airlines have a list of official approved doctors who they trust?  A list of appropriate and inappropriate reasons for refunding non-refundable tickets?

And whatever the list – written or unwritten – of special circumstances, there’d be constant pressure for the airlines to then make special special exceptions for people who almost but not completely qualified for a ‘regular’ special exception, and so on and so on.

Instead of both airlines and passengers having the certainty of a ‘no refunds’ across the board rule, there’d now be great uncertainty and ongoing complaints about apparent uneven and unfair exceptions being made.

Summary of the Situation

Selling non-refundable tickets gives the airlines a way to sell some ‘top up’ tickets at lower than normal prices to people who probably wouldn’t otherwise fly.  If we are able to arrange our lives to make the downside risk of such tickets – ie a cancellation penalty of up to 100% – acceptable, we should go ahead and take advantage of the relatively bargain prices they are sold for.

If we have concerns about possibly needing to cancel, we should either buy trip insurance or a more expensive ticket with lower penalties.

If we end up cancelling a nonrefundable ticket, we have no-one to blame but ourselves.  For once, the airlines are completely blameless – even though they’re keeping all our money and giving us nothing in return (hey – couldn’t we at least get the frequent flier miles for the flights we paid for but didn’t take?).

What Travel Insider Readers Think

So what do Travel Insiders think?  Our readers are very regular fliers and generally savvy about ticket issues and the world/life in general.

To my slight surprise, almost a quarter of readers thought that tickets should always be refunded, no matter what the situation.  A slightly greater number of readers agreed that non-refundable should mean exactly that – no refunds.  And nearly half wanted to see airlines make special exceptions in special situations.

The Last Word – From Spirit Airlines

Amazingly, Spirit Airlines and its CEO Ben Baldanza, while showing themselves fearless in the face of criticisms of their carry-on bag charges, caved and refunded the $197 ticket to the dying vet.

Baldanza said

Every day we seek to balance customer service with customers’ demands for the lowest airfare possible. But sometimes we make mistakes.

In my statements regarding Mr. Meekins’ request for a refund, I failed to explain why our policy on refunds makes Spirit Airlines the only affordable choice for so many travelers, and I did not demonstrate the respect or the compassion that I should have, given his medical condition and his service to our country.

Therefore I have decided to personally refund Mr. Meekins’ airfare, and Spirit Airlines will make a $5,000 contribution, in his name, to the charity of his choice, Wounded Warriors.

We have worked hard to build a great company that makes air travel affordable while making our employees proud and customers satisfied.

All of us at Spirit Airlines extend our prayers and best wishes to Mr. Meekins.

Hmmm – very nice.  Do you think the airline got much more than $5197 of publicity as a result?

And that is probably the ultimate rule the airlines will always use to measure their actions – what will it cost us in negative publicity if we don’t do this, or what will we gain in positive publicity if we do?

An artist's impression of a proposed new underwater hotel in Dubai

Good morning

I had another burst of intense self doubt earlier this week.  Are airlines really as stupid as I say they are?  Or am I missing something so thunderingly obvious as to imply I’m even more stupid than I suggest the airlines sometimes are?

This was triggered by the confirmation that Delta is indeed buying an oil refinery, and was underscored by the near unanimous chorus of approval by the usual talking head commentators out there.  If I was to maintain my position, expressed in an earlier article a month ago, that this was not a wise move for Delta, I’d have to not only disagree with Delta, but with all the esteemed experts out there too.

However, I noticed an interesting thing.  The ‘expert’ enthusiasm was all based on their apparently unquestioned acceptance of Delta’s remarkable claim that its new oil refinery would make it $300 million in extra profit a year.  Of course, if this was true – a $250 million acquisition generating $300 million a year in profits, way into the future, it would be an uncharacteristically brilliant move on the part of Delta.

Most risably of all, one of the commentators even calculated what this would mean to us as travelers.  He worked out how much Delta would be able to reduce its airfares by as a result of its new refinery income.  An airline reducing its airfares because it was now profitable?  What planet does this ‘expert’ hail from?

Will this refinery actually make any money at all for Delta?  Is Delta selling us all snake oil, or did it end up buying some snake oil itself?  Please read the feature article, further down in the compendium of articles, for my analysis.  (Hint – don’t go expecting any discounted ticket prices any time soon!)

Also in the newsletter this week :

• Reader Poll – Should No Mean No?
• New $100 Fee to Carry a Bag Onto a Plane
• Airstrike on Takeoff Video Author Gets Official FAA Warning
• Helpful Hotel Tip
• Underwater Hotel (Deliberate, Not Accidental)
• The Titanic to Sail Again
• The Teatanic Too
• Putting on Weight During a Cruise
• Newark Terminal C Evacuated – But NOT the TSA’s Fault
• Stripping Naked for the TSA
• And Lastly this week…..

Reader Poll – Should No Mean No?

I’m sure we’ve all heard the line “Which part of ‘No’ do you not understand?  The ‘N’ or the ‘o’?”  One context in which it is often used is when people ask an airline for refunds on a ticket they purchased which clearly stated, at the time they were purchasing the ticket, that there would be no refund subsequently given, no matter what the circumstances might be that occasioned the refund request.

Keep in mind also that when a person chooses to buy a non-refundable airline ticket, they have choices to buy more expensive but partially or fully refundable tickets at the same time.  No-one is forcing a person to buy a non-refundable ticket, people make their own decisions and trade-offs between risks and ticket costs.

Here’s an article which bemoans airlines which refuse to refund non-refundable tickets.

What do you think?  Should airlines make good-will and compassionate exceptions to their non-refundable tickets, and sometimes give refunds to passengers in special situations?  Or does ‘No’ mean ‘No’ with no exceptions?

Please click the link which best describes your opinion.  This will cause an email to open with your answer coded into the subject line.  I’ll tabulate and report back the answers next week.

• All tickets should always be refundable, no matter what
• Airlines should make case-by-case decisions and rarely but occasionally give refunds in special situations
• ‘No’ means ‘no’.  If a person wants a refund, they should have bought a refundable ticket in the first place.

New $100 Fee to Carry a Bag Onto a Plane

Spirit Airlines, a pioneer in the fee game, has announced plans to increase its fee for carry-on bags which you store in the overheads from $45 to $100, as of November.

The fee does not apply if you stow the bag under the seat in front of you, and is less ($50 or $35) if paid prior to reaching the gate.  Strangely, the fee for a checked bag is lower – $45 at the airport, $30 or $35 if done in advance.  I say ‘strangely’ because a checked bag involves a lot more hassle and cost to the airline than a bag you carry on and off the plane yourself, saving the airline from any baggage handling expense.  A checked bag can also weigh considerably more than a carry-on bag.

$100 for a carry-on transcends anyone’s possible concept of fairness.

A bunch of other fees, by a bunch of other airlines, are also in the process of inching upwards.  More details here.

Airstrike on Takeoff Video Author Gets Official FAA Warning

I wrote last week about a passenger who ignored the rules on turning off electronics prior to takeoff, and as a result, happened by chance to catch a birdstrike on a Delta flight in the video he was filming.  Some parts of the video quickly made it to YouTube.

I wondered last week if he’d be charged with any violations of the ‘all electronics must be off’ policy.

We now know the answer.  He received an official letter of warning from the FAA, saying that the warning would be ‘a matter of record for a period of two years, after which, the record will be expunged’.

One wonders exactly what being a matter of record means, and for that matter, how a piece of internet history can be expunged after two years.  Some more details – but not answers to these questions – here.  Suffice it to say, in the video clip of his interview on CNN, the official FAA warning does not seem to have chastened him at all.

Helpful Hotel Tip

Here’s a helpful tip from ARTA, the best North American travel agency group.

Hotels are increasingly making their rooms shower only rather than the formerly traditional ‘shower over bath’ arrangement we’re mainly used to.  This of course cuts their costs and saves on space.  Marriott, for example, says its aim is to end up having three quarters of its rooms without baths.

This is no big deal for most of us, most of the time, but if you’re traveling with younger children who don’t like showers but are okay with baths, it is probably increasingly prudent to specifically request a bath in your room when booking.

Snippets of knowledge like this are another reason to include a professional travel agent in making your travel plans.

Underwater Hotel (Deliberate, Not Accidental)

Hotels love to come up with distinctive new twists or angles.  There are ice hotels and underground hotels, and hotels in unusual objects and structures and places, and even hotels over the water in places such as Tahiti.

Some hotels have offered rooms below the surface of the water such as this Swedish ‘hotel’ – I use the quotes because it is a one room ‘hotel’.  But only a handful of hotels plan to offer a true underwater experience, easily experienced by ordinary people (rather than scuba divers).  One in Shanghai and one in Istanbul have been promised for a number of years, and there is one in Fiji that looks like it may open at some time in the future.

The hotel that may well open first has just been announced in Dubai (where else!) – pictured at the start of this newsletter.  The 21 rooms will be 35ft below the surface.

Dubai of course is no stranger to extravagant hotel projects, but the last few years have seen most such projects shelved or cancelled.  It is interesting to see a reappearance of grand plans again, and with finance coming from a Swiss company, this seems to be one underwater hotel that is likely to get off the ground.

The Titanic to Sail Again

They’re not raising the now 100 year old wreck of the original Titanic – that is rusted way beyond repair.  Instead, an Australian mining billionaire has announced plans to build a replica of the Titanic – albeit not in Belfast, where the original was built, but in China.  Indeed, the ship seems to be going to be built in Nanjing – an inland city well up the Yangtze river, but perhaps the river is navigable by ocean liners that far up.  This would be the first time a Chinese shipyard has built a cruise ship.

The new Titanic, built to the same dimensions as the original, would have the same 840 staterooms and nine decks, and presumably more lifeboats than the original and no steerage quarters for third class passengers.  A team of historical researchers is helping to drawn up the plans for the vessel (I’d have thought that just about every square inch of Titanic has already been thoroughly researched, many times over).  The ship will even have four funnels, although the engines will be diesel powered rather than coal/steam powered.  Its cost is unknown, but expected to be several hundred million dollars.

The ship – the Titanic II – is projected to be completed in 2016, and would have as its maiden voyage, naturally, a sailing from England to New York.

The billionaire expects to add three more ships to his new shipping line, which he is calling the Blue Star Line (Titanic was owned by the White Star Line).  And when asked if the ship would sink, he answered with delightful Australian directness ‘Of course it will sink if you put a hole in it’ before going on to talk about all the features to reduce its risk of sinking.

The Teatanic Too

For those of us who can’t afford to build our own copies of the Titanic, there is this €13 item (worldwide shipping included) that might be of passing interest.

It is a tea bag holder, and of course, is called – what else – the Teatanic.

Putting on Weight During a Cruise

In other cruise news, some bad but hardly startling news for those of us who enjoy cruising.  We’ve all joked about putting on weight during a cruise, but did you know how much weight the typical person adds?

A survey of 1281 British cruisers found that the average cruise passenger puts on about one pound per day, every day.  That means 12-14 lbs over a two week cruise.

31% of people said they ate twice as much as when at home.  More surprisingly, one in six people said they ate the same as they did at home.

Newark Terminal C Evacuated – But NOT the TSA’s Fault

Here’s a news item that reads like another nonsensical TSA over-reaction.  The TSA overlooked screening a baby through the screening process – it seems the infant’s parents handed it from one to the other – from the unscreened to the screened parent, without the baby itself being screened.

Only later (more than 30 minutes subsequently), the TSA realized their error, and so they advised the Port Authority police, and – get this – recommended against evacuating the terminal, searching it for bombs, and rescreening all passengers.  They said it was a low-risk situation (and, besides which, who knows how many flights had already departed).

But the brilliant leaders at the Port Authority Police disagreed, so the entire terminal was emptied, checked, and passengers rescreened.

Congratulations, for a change, to the TSA for their burst of good sense.  What a shame the Port Authority Police weren’t likewise infected by common sense.

TSA Detect Land Mines in Carry On Bags – But Only Half the Time

The TSA weren’t quite so proud of discovering that an Army Engineer had two inert Claymore mines in her carry-on while she was going through Newark security screening.  Because – ooops – her fellow engineer, who had just successfully gone through screening ahead of her, had another one in his carry-on which was undetected.

One would think a Claymore mine is hard to miss.  It measures 8.5″ x 4.9″ and is 1.5″ thick; it weighs 3.5 lb and has 700 steel balls inside it with 1.5lb of C-4 explosive.

Details here.

Stripping Naked for the TSA

It isn’t yet mandatory, although some fear the day when this will be required is approaching – perhaps so the TSA can check for signs of recent surgery.

Nope, not a joke.  This article reports on a concern that terrorists may have bombs not just conveniently inserted in orifices, but surgically inserted in their stomachs.

How would the TSA check for that, other than looking for signs of recent surgery?  It seems like there’s no safety against such a bomb.  On the other hand, the good news is that the person’s body would absorb a lot of the force of the explosion.  But, on the third hand, any bomb maker with a modicum of skill would make a shaped charge device so as to direct the force of the explosion along a single axis, rather than evenly spread in all directions.

This is, of course, another reason why our security needs to step back from obsessing over passengers at airports with pocket knives and bottles of water, and to more aggressively go back up the chain to find terrorists in their training camps, their command cells, and so on.

However, not to waste a good headline, a couple of weeks ago, a frustrated traveler at Portland (OR) airport did exactly that (strip naked for the TSA) – and voluntarily.  His clothing tested positive for explosives, and so the high-tech worker, annoyed at the laughable suggestion he was concealing a bomb, said words to the effect of ‘I’ll show you there’s no bomb’ and took all his clothes off at the screening point.

He subsequently refused requests to get dressed again, and was arrested, jailed, and charged with disorderly conduct (charge subsequently dropped) and public indecency.

Rather than accept a minimal court censure for this misdemeanor, he has asked for a trial and is pleading not guilty, saying his actions were him exercising his constitutional right of protest.

More details here.

And Lastly this week…..

Texting and driving.  Many of us have done it, right.

But look at this interesting video of what happened when a group of driving students in Belgium were tricked into believing that a new part of the driving test would require them to prove their competency at texting and driving at the same time.

It is the Cinco de Mayo on Saturday, something you’re probably already very aware of.  That day each year when all of Mexico and much of the rest of the world erupts into the annual celebration of – actually, what is it celebrating?  Do you know?

For the surprising history of this event – an event almost completely ignored in Mexico itself, here’s an interesting article.  But don’t let it interfere with enjoying some cheer this Saturday.

Until next week, please enjoy safe travels.

David.

The Nook Tablet eBook Reader from Barnes & Noble

Earlier this week we heard what seemed like interesting, unexpected, and exciting news from beleaguered Barnes & Noble and their epic struggle to make second place a viable place, with their Nook battling against mighty Google’s Kindle.

Here’s a typical cheerleading article about this.

But is there a darker underlying truth to this?  Quite possibly so.

First, to put this into context, let’s take a quick recap on the situation prior to the announcement.

The Evolution of the Nook

Amazon’s online bookselling has been threatening B&N’s bricks and mortar stores for some time.  The release of the Kindle in November 2007 added a new element of threat – eBooks by their very nature were completely detached from any type of underlying bricks and mortar type presence.

After Amazon proved the viability of eBook selling, B&N decided to copy, releasing its first Nook competitor exactly two years after the Kindle came out (ie November 2009).  The first Nook was an eminently forgettable disappointment.

Barnes & Noble learned quickly, and in little more than a year, it released the Nook Color – a device which was better than the monochrome Kindle devices then being sold by Amazon.

Amazon played leapfrog, and a year later, the Kindle Fire was released (November 2011).  It was comparable in many ways to the Nook Color (albeit a bit smaller and lighter), and it had a significantly better price point – $199 compared to $249 for the Nook Color.

B&N scrambled to catch up to the Kindle Fire, and quickly announced a new competing product, the Nook Tablet.  Unfortunately this was priced at $249 to start, giving Amazon (and its much larger marketing clout) the ability to clean up in the pre-Christmas sales season with its sub-$200 Fire, which is believed to have outsold the Nook Tablet probably by a factor of two to one, maybe even more.

In February B&N came out with an 8GB version of their Tablet (the original had 16GB) which it priced at $199, the same price as the Fire.  The earlier Nook Color was dropped in price to $149, giving B&N a color reader at a lower price point than the Kindle Fire.  (Both companies also have lower priced monochrome units – at the lowest price points, there is a Kindle for $79 and a possibly slightly superior Nook at the same price.)

And now for the amazing dichotomy.  Amazon is believed to be selling their Kindle Fire for cost price and no more, but have been reporting improved earnings based on large part to the success of their Kindle product range.

Barnes & Noble, on the other hand, have been reporting diminished profits due to the impact of their Nook readers and the huge development and marketing costs associated with them.  They reportedly lost $233 million on their Nook program in the last nine months alone, and are projecting a full twelve month loss on their entire business (their fiscal year ends 30 April).

Now it is time to introduce Microsoft to this storyline, and you can then decide if Microsoft’s appearance, center-stage, presages a marriage made in heaven, or a shotgun marriage from hell.

The Nook Color and Nook Tablet both use Android as their underlying operating system (as does the Kindle Fire, too).  At the time, this seemed a good move on B&N’s part.

Enter Microsoft

But – and it is a big but.  Microsoft has asserted patent rights over elements of the Android operating system, and has been successfully bludgeoning Android phone manufacturers into paying as much as $15 as a licensing fee for every Android phone they sell.  Some 70% of Android phones sold now return Microsoft a license fee, and we estimate these fees are returning Microsoft the better part of $2 billion in additional bottom line annual profit.

Microsoft has its own massively lack-luster phone operating system that has been greeted with marketplace apathy, so it is actually making more money from the sales of competing Android phones.  (Does it even make sense for Microsoft to promote its Windows Phone 7 software when the Android money is so easily obtained?)

Microsoft trained its legal guns on B&N, and last year sued them, claiming the Nook Android devices were infringing on five of Microsoft’s patents.

It has now apparently reached a settlement with B&N, and has agreed to withdraw its suit, in return for which B&N splits off its eBook business (both hardware and eBooks) into a new venture, with Microsoft getting one sixth of that business (as yet unnamed).

To show that Microsoft is all heart, it is both dropping its suit, and also giving B&N a $300 million payment.  But in return, not only is it getting one sixth of the new company; it also will be getting a license fee on all future Nook Android based eBook readers.  With something like two million devices being sold a quarter at present, and perhaps an increase in this number in the future, Microsoft could be looking at over $100 million a year in license fees alone if all future eReaders remain Android based.

However, the new joint venture will also be releasing a new eReader that will be based on some type of Windows 8 (perhaps the phone version rather than the regular version).  Of course, Microsoft is in a happy ‘heads it wins/tails it doesn’t lose’ situation – it will get license fees from Android based Nook readers and also from Windows based Nook readers too.  Plus it gets entry into a new part of the marketplace – the burgeoning market for eReaders, something that until now it has had no direct slice of at all.

Well done Microsoft.  It wins on every part of this.  But what does B&N get?  A resolved lawsuit, an unexpected partner, plus an imperative direction to now develop a Windows based eReader, something that may or may not be a great idea.

So – you decide.  Fairytale wedding made in heaven?  Or horror story shotgun wedding from hell?

No-one likes email spam, and texted spam to your cell phone is even more objectionable.

I’ve recently been getting junk/spam type text messages on my cell phone.

This felt way more intrusive than regular spam emails and unwanted phone calls.  Text messages are typically ‘interruptive’ type events – you stop what you are doing to look at the message, whereas with email you can choose when you check your email.  And, of course, depending on your phone and messaging plan, you might find yourself paying for the cost of receiving the unwanted text message, too.

In one of life’s little unfairnesses, not only might you have to pay to receive the unwanted spam text message, but the spammer may have sent it for free by simply sending an email to your phone which gets converted to a text message.

All wireless companies provide an email to text gateway so that people can send an email to your phone’s email address, and they will convert it to a text message and send it on to you ‘for your convenience’ (and for the generation of a text message fee for them too, of course!).  You might not have even known that your phone had a text message conversion email address – if you contact your carrier, they will tell you what it is, and some will agree to turn the service off or change it to a different number or a character string instead.

If you get unwanted text messages, here are some things that can help.  And if you don’t – yet – get unwanted text messages, putting in place the protection recommended below can help keep them away into the future.

Do Not Call List Works For Mobile Phones and Text Messages Too

Here’s a bit of great news.  The national ‘Do Not Call’ service has been enhanced since it first came out many years ago.  It covers cell phones and text messages as well as home phones and soliciting sales calls, and numbers placed on the list now stay on the list forever (or until such time as you give up the number).

So you should be sure to sign up all your phone numbers.  You can do this either from their website, or by simply calling their toll free number (888)382-1222 from each phone number you wish to register.

More information on the types of communications which are and are not permissible can be found on the FCC’s site here.

What to Do if Unwanted Messages/Calls Received on a Do-Not-Call Registered Number

When you register a phone number on the Do Not Call list, you are required to wait patiently for 31 days in order to ensure that all telemarketers get your number included in their updated lists.

But from that point forward, any unwanted text messages or calls are prohibited.  If some still sneak by, you can complain to the FCC, using their online complaint service here.  You can also phone them at (888)225-5322.

You should also complain to your wireless carrier.  Many of the carriers have a number you can forward offending text messages to, and presumably if they get enough valid complaints, they’ll prevent the spammer from accessing their network.

Between the Do Not Call registry, FCC enforcement, and getting your wireless carrier on the case too, you should quickly find unwelcome intrusions into your text messaging go away very quickly.  It has certainly worked for me.

Did Delta just buy a $5 billion asset for $250 million? Or was it just taken for the $250 million?

We wrote a month ago about Delta being rumored to buy a closed down loss making oil refinery in the Philadelphia area.  Although we had no exact data on the claimed benefits to Delta or clear reasons why it might consider such a strange diversification, we were still able to reach a clear conclusion – it would make no sense at all for Delta to buy the refinery.

The rumors have now been proven true, with Delta’s purchase of the Trainer refinery now publicly confirmed, for $180 million (less a $30 million package of assistance from PA state).  Delta will also spend an additional $100 million to enhance the refinery’s ability to get more jet fuel from its refining operations, making a total net cost to Delta of about $250 million, and a total net receipt to ConocoPhillips (the seller) of $180 million.

The usual talking heads (as opposed to talking brains) are ecstatic about Delta’s decision, probably based on uncritical acceptance of Delta’s claim that buying a loss-making refinery will somehow enable the airline to now save $300 million a year.

Some of the other claims in support of Delta’s purchase are technical in nature and require complicated consideration to analyze.  So let’s concentrate on this biggest claim of all – Delta stands to save $300 million a year by buying the refinery.

No Logical Sense

This would only make sense if the refinery was previously making a $300 million a year profit.  But it wasn’t.  It was almost certainly losing money.  Its previous owners – an oil company, not an airline – closed it down because it was unprofitable.

In other words, the refinery was unprofitable because it was selling its products for below cost.

How can a non-oil company with no competencies or synergies in the oil industry magically transform a loss making refinery into a $300 million a year profit center?

Folks – this just isn’t possible.  If there was a way the refinery could have switched from most years losing an uncertain amount of money (but probably in the tens or hundreds of millions of dollars) to making $300 million a year in profit, don’t you think it would have already done so?

This simple piece of logical analysis should be all that is needed to clearly and vividly explain the nonsense in this purchase.

To put it another way, it is as likely that an airline could make an oil refinery profitable as it is than an oil company could make an airline profitable.

No Financial Sense

But enough of logic alone.  Let’s also take a look into the details of the numbers.  Delta says its $250+ million investment will bring it immediate savings of $300 million a year because it won’t have to pay the refinery’s ‘profit margin’ on its jet fuel purchases.  If we are to accept this, we’d have to ignore the fact that the refinery’s ‘profit margin’ is not $300 million a year, but rather has been some substantial loss, consistently for just about every year over the last decade or more.

Nonetheless, and putting that thought to one side, let’s look at the possibility of a $300 million a year saving.

Let’s express this as what the alleged profit margin on the price of each gallon of jet fuel from the Trainer refinery would have to be, which in the last year, after a 28% increase over the year before, averaged Delta $3.06/gallon.

We earlier estimated that, based on its daily capacity of 185,000 gallons of crude, the Trainer refinery is capable of producing about 700,000 gallons of jet fuel a day.  We’d also said it makes no sense that Delta should consume all this, due to the extra costs of tankering the fuel to far away locations where it would be needed (Delta’s minimal operations out of Philadelphia would consume only a tiny fraction of this).  But let’s assume Delta takes the entire production of the refinery.

Let’s also say that the $100 million investment that Delta will make in the refinery will increase the jet fuel share of the output of the refinery by 20%, up to 840,000 gallons a day.  In a year, assuming say 350 days of production, that would be 294 million gallons of jet fuel.

Now if we round that guesstimate figure up to 300 million, there is an interesting coincidence.  The refinery can produce about 300 million gallons of jet fuel and Delta is saying it will save $300 million.  Do you think someone did the same calculation we just did, and decided to pick on a nice round $1/gallon saving.

How realistic is it that there is a $1 profit in the $3.06 per gallon that Delta has been paying for jet fuel?  Which oil company do you know of that reports a 33% profit margin?

Although the oil companies have an undeserved reputation for making unfair profits, the reality is very different.  For the first quarter of 2012, ConocoPhillips itself reported $58.3 billion in gross income and $2.94 billion in net income ($2.6 billion before onetime items).  This is either a 5% or a 4.5% net profit across their entire operations, not a 33% profit as Delta’s calculation implies.

It is difficult to see exactly how much profit ConocoPhillips makes from its refineries.  Its most recent annual report, the 2011 report, lumps together refining and marketing, and refers only to the profit contribution from such activities, without disclosing what sort of gross income and net profits and percentages the activities generate.  It did however say that it had idled the Trainer refinery as part of their policy of divesting low-returning assets, which is a polite way of confirming that Delta didn’t exactly pick out the crown jewel from ConocoPhillips’ holdings.

But there is a clue to what we need.  For 2011, their refining and marketing operation made a net profit of $2.617 billion, and they were selling 3.128 million barrels of product a day.  This means they were making an average of $2.30 on each barrel of product sold.

A barrel of petroleum products is 42 gallons.  So ConocoPhillips, in 2011, was averaging a profit of just under 5.5 cents on each gallon of product it sold.

Now, this is an average of 5.5c, and for sure some products would sell more profitably and some would sell less profitably.  Let’s just say that jet fuel is twice as profitable as gasoline and diesel, which represents the largest component of the refinery’s production (although there’s no real reason to believe this is so).

How can we reconcile these two figures, then :

(a)  On average ConocoPhillips makes in the order of 11c/gallon profit for the jetfuel it sells (and probably less from the Trainer facility)

(b)  Delta expects to save $1.00/gallon by owning the refinery itself – nearly ten times as much

What About the Rest of the Refinery’s Production

We’ve been viewing this narrowly through the lens of the jet fuel component of the Trainer refinery’s production.  This will probably be only about 12% of the refinery’s total production.  We can’t just ignore everything else the refinery produces – or can we?

To explain the irrelevance of the rest of the refinery’s products produced, we circle back to the fact that the refinery has not been making money, and has been so chronically unprofitable that if ConocoPhillips didn’t sell it to Delta, it would have happily just left the plant idle and inoperative.

Furthermore, think about this :  Delta is saying there is $300 million in potential profit from the jet fuel side of the refinery’s operations.  If we force ourselves to accept this as truth for a minute, and if we also accept the refinery as a whole lost money, what does that tell us about everything else the refinery produced and sold?  Yes, rather than presenting as additional profits, everything else was losing huge amounts of money for the refinery.

If this is the case, the losses from the sale of everything else the refinery produces will remain in place the same as before, and Delta will have to fund such losses.  Poof!  There goes its $300 million profit.

So, we suggest two things :

(a)  There’s no way that the jet fuel produced at Trainer represents a $300 million a year profit opportunity for anyone

(b)  Everything else produced by Trainer would seem to represent offsetting losses

The more we look at the overall picture, the worse it seems.

Another Perspective On This Impossibility

Most of the enthusiasm expressed by industry commentators starts off from passively accepting Delta’s claim it will make $300 million a year net profit from its refinery purchase.

These commentators managed to suspend their disbelief at the implication that this would make it the only established industry in the world that has a P/E ratio of 0.83.  To compare this with the real world, the Dow Jones utility index currently has a P/E of 16.7.  In other words, if there is $300 million a year in profit represented by the Trainer facility, its valuation should be more like $5 billion, not $250 million ($180 million purchase, less $30 subsidy, plus $100 investment).

Did Delta really manage to snatch up a $5 billion asset (which, ahem, no-one else seems to want to buy at any price) for only $250 million?

To ask a similar question, would ConocoPhillips have closed this refinery down if it had such a huge profit potential and capital value?  And, if there was anything like this value present, why was no-one else expressing any interest in buying it (or the other closed down refineries alongside it)?

Still More Nonsense

There is another line of specious reasoning though which some commentators have tripped themselves up with.  For example, the first Q/A in this article says

By owning a refinery, Delta is ensuring itself a steady supply of fuel and possibly more control over sudden price swings

That is nonsense.  The largest factor in price swings is the underlying cost of the crude oil.

One more thing.  Let’s look at the reason that ConocoPhillips (and other oil companies) are closing down their refineries around Philadelphia.  This is because they can’t compete with lower priced products (ie jet fuel) that have been refined offshore and shipped in.

A good analogy for this is a retail store buying a shoemaker in the US so as to get more margin on shoe sales, but failing to realize that its problem isn’t the shoemaker it has now bought taking too much of the profit; its real problem are the offshore shoe makers in Asia that are producing shoes for below the cost of the US shoemaker.

All the retailer has done is lock in a suppler and pricing at the above market levels.  They would have been better advised to contract directly with offshore shoemakers or to buy an offshore company.

Why didn’t Delta do the same?  The question is important, but a sensible answer seems impossible to obtain.

Is Delta now seeking to trade in crude oil, or in snake oil?

Alice Aycock's 1993 Star Sifter Sculpture at JFK's Terminal 1 - Also a Passive Security Measure

Good morning

‘Waste not, want not’ has been my motto for a long time now.

It is amazing how many experiences can become Travel Insider articles – it seems a shame to waste an interesting or learning experience so I try to write about them whenever possible.  Our feature article this week about in-car emergency kits arises from one such experience a week or so ago.

Hopefully after reading the article you’ll be spared the inconvenience I experienced.

Also in this week’s roundup :

• Korean Tour Third Bus Challenge
• Airline Winners and Losers
• US Airways Beats its Chest in Public.  Unions Impressed.
• Southwest Loves AirTran’s Fees
• United Likes Fees Too
• A Third Airport for Chicago?  Maybe.
• Bird Strike Caught on Illegal Passenger Video
• Hotel Price Statistics
• Good Value Hotel Booking Site
• Embarrassing Website Mistake
• Travel Agents Continue Their Return to Popularity
• This Week’s Security Horror Story
• A Statue As Security?
• Life Saving iPhone Apps?  So Says USA Today.
• And Lastly This Week…..

 Korean Tour Third Bus Challenge

We have 37 people confirmed on our tour of North Korea in September (with optional pre-tour time in South Korea and Beijing).  I’ve secured agreement from the tour operator that if we can grow to 41 people, they will give us three coaches and six guides, giving us a huge amount of flexibility and an extraordinary ratio of guides to ourselves.  We’ll no longer just be a simple tour.  We’ll be a full-on expedition!

Can you help us grow from 37 to 41?  Two more couples, or four more singles is all we need!  Interestingly, we have more singles on this tour than ever before – so if you’re a solo traveler, you’ll have an instant group of friendly fellow singles to mix with.

Please visit our page that explains all about this truly unique tour of North Korea, and please do consider coming with 37 fellow Travel Insiders on an opportunity to challenge your preconceived ideas about North Korea (rather than a chance to confirm them) – a chance to open your mind rather than to close it.  For sure, you’ll find the experience thought provoking and enhancing, and hopefully, as part of a positive group of like minded travelers, enjoyable and interesting too.

Airline Winners and Losers

First quarter results are coming out, and as always, there is a large spread between the airline winners and the airline losers.  So, as always, it again shows that airline profitability is seldom a function solely of external uncontrollable market forces, but more commonly, is a function of individual airline management.

Delta Airlines reported a $124 million profit for the quarter, narrowly rescuing itself from a loss by virtue of a one-time $151 million gain on fuel hedging contracts.

US Airways also narrowly squeaked in a profit of $48 million for the quarter, thanks to a one-time receipt of $73 million as part of selling landing rights to Delta.

Both DL and US lost money in the first quarter last year.

Southwest posted a $98 million profit, and it too was spared from the embarrassment of what would otherwise have been a very rare loss by one time profits boosting it from an otherwise $18 million loss up to an actual $98 million profit.

JetBlue had a good quarter, ending up with a $30 million profit, up from $3 million last year.  Extra flights helped contribute to a 19% growth in revenue, and higher fares had them earning about 6% more per passenger ticket than last year.

Now that there are fewer ‘big’ airlines, some of the smaller ones become of greater interest.  One of the small but very successful airlines is Las Vegas based Allegiant, with a quarterly profit of $21.7 million, up from $17.2 million last year.

On the other side of the fence, United admitted to a $448 million loss, compared to a loss of $213 million for the first quarter last year.  One wonders how much of that relates to their ‘month of misery’ in March subsequent to the 3 March computer system conversion.  United, of course, is blaming their loss not on their appalling management messup of the computer conversion, but rather on ‘the usual suspects’ – ‘revenue challenges’ (whatever that means) and, of course, rising fuel costs.

And American Airlines?  Oh, they enjoyed a $1.66 billion loss for the quarter.  But the airline would like you to know that if it weren’t for one-off and bankruptcy related costs, it would have lost ‘only’ $248 million, which would have actually been an improvement on its $405 million loss in Q1 2011.  Chairman/CEO Tom Horton said he was encouraged by the notionally smaller loss.

Perhaps one reason for his encouragement is that notwithstanding enormous losses of $2.5 billion in the four months of bankruptcy so far, AA now has $5.6 billion in cash and short term investments as of 31 March, compared to $4.8 billion after filing bankruptcy in early December.

I wish my accounts were like that – huge losses, but increasing cash!

US Airways Beats its Chest in Public.  Unions Impressed.

US Airways took to the airwaves rather than airways last Friday to announce its plans to buy out American Airlines.  In particular, it triumphantly crowed about having reached agreements with several of AA’s unions to a buyout.

But – the unions have no say in the process.  The unions are of course desperate to protect themselves from AA’s current deep attack (it plans to cut its staff by 17%) into its employee numbers, and US Airways is doubtless promising anything it needs to in order to get the support (albeit irrelevant and meaningless) of the unions for its bid.

It seems bizarre that US Airways, a company that has yet to complete sorting out its own union mess subsequent to being bought by America West seven years ago, would claim to be able to easily integrate the AA unions into its current unhappy and fractious family.  Furthermore, the problems of too-high labor costs at AA will remain problems, no matter who owns the airline.

US Airways did say that there would be $1.2 billion in ‘new value’ (what is ‘new value’, I wonder?) if it merged with AA – that would happily be enough to cover most of AA’s proposed cost cutting measures; but what management would ever responsibly agree to spending a billion a year in unnecessary costs (well, other than the passive AA management that looked the other way for years if not decades of what they are now telling us are unnecessarily inflated staff numbers).

The bottom line is that AA’s current management still has an extended period of exclusivity until September during which only it can present plans to exit Chapter 11 to the bankruptcy court.  Current management does not have to fear getting into a bidding war for ownership of the company, it is free to choose whatever future it wishes, with or without US.

AA’s real interest in partnering with another carrier continues to lie with BA rather than with US; an interest which seems mutual.  BA’s parent company IAG has now retained US attorneys to help it ‘understand’ the Chapter 11 process.

Southwest Loves AirTran’s Fees

Southwest has gone out of its way to promote itself as the no-fee airline, although in truth it does charge fees for various things, just not as aggressively or egregiously as other airlines.  Most of all, it has continued to allow passengers to check two bags for free, and doesn’t impose change or cancellation fees.

When Southwest bought out AirTran, it found itself owning an airline that happily charged the usual long list of fees for all the usual things.  So has it rushed to end the fees AirTran formerly charged on its flights?

Southwest’s buyout became unconditional and complete almost exactly one year ago (2 May 2011) and a single operating certificate for the combined airline was issued on 1 March this year.

But Southwest says it will continue to operate AirTran flights and charge AirTran fees until some time in 2014.  Airlines and fees is a bit like politicians and ‘temporary taxes’, isn’t it.

One can hope, however, that by taking so long to complete the merger, Southwest will ensure that the final cutover occurs with fewer problems than when United and Continental merged their computer systems in March.

United Likes Fees, Too

That’s hardly a surprising headline.

But here’s an article in which UA CEO Jeff Smisek hints at new fees to be released this year.  Unsurprisingly, he portrays them in a positive (albeit vague) light, and is quoted in the article as saying

We also, of course, are expanding the ancillary products and services we will sell that customers will buy.  We’ve held in abeyance a lot of that [during the CO merger].

I’m not allowed to talk about it, but they’re going to be good and they’re going to be cool.

Good fees?  Isn’t that an oxymoron?  And ‘cool’?  How cool do you find it to pay up to $400 each way for a checked bag (yes, it can cost up to that much at present).

Something for us all to look forward to.  Not.

A Third Airport for Chicago?  Maybe.

A ceremonial ground breaking, presided over by US Rep Jesse Jackson jr, was held this last weekend to mark the start of development for Chicago’s third airport, to be located in Peotone, about twice as far south of the city as O’Hare is west.

But other than Mr Jackson and a group of developers bankrolled out of Canada, no-one else seems to want the airport, including such groups as United Airlines and Chicago Mayor Rahm Emanuel and what seems to be most other local/regional politicians.

Of course, it is easy to understand why United doesn’t want a third airport.  With O’Hare currently capacity controlled, and United having a huge chunk of the airport’s capacity and doing all it can to keep other airlines out, another airport could threaten its position and bring more competition in to the region.  It is harder to understand why Chicago’s mayor is opposed – surely cheaper and more flights would be a benefit to his city’s citizens?

In reality, it seems unlikely that a medium sized airport at Peotone would challenge O’Hare’s supremacy any much more than has Midway Airport, or any more than London’s satellite airports challenge Heathrow.  It probably is, as some opponents said, an ill considered scheme and a political stunt.

Bird Strike Caught on Illegal Passenger Video

You may have heard about the Delta flight last week that ingested a bird into its right engine shortly after taking off at JFK, disabling the engine, causing the captain to declare an emergency and return straight back to JFK.

Fortunately, only one engine was lost, so the plane wasn’t in grave peril at any time, but it was still doubtless an extremely scary experience for the people on board.

Interestingly, one of the passengers – Grant Cardone – seems to have not heard the requirement to turn off all electronics prior to departure, because he was videoing the take-off and captured the bird strike on his iPad movie.  He also had his phone on, because he says his first reaction was to immediately text his wife.

He also seems to have forgotten to turn the devices off prior to the emergency landing, which he also captured on film.

Here’s a story with links to some of his footage, and an interesting recording of the communications between the pilot and the tower.  And here’s a link to the footage of the bird strike video.

There was apparently another video of Mr Cardone narrating the experience between bird strike and landing, but (I’m guessing) he may have subsequently decided that his (as elsewhere described) somewhat panicky narration didn’t sit well with his public persona as a sales trainer and super-cool guy, and that video seems to have now disappeared.

Question – will Mr Cardone be charged with any violations of the ‘all electronics must be off’ policy?

Hotel Price Statistics

One sees lots of statistics about the cost of travel, but many of them are of dubious accuracy, due to how/where they were sourced.  Freshly out is the hotels.com annual Hotel Price Index which is surely one of the most authoritative sources of information on hotel costs, because it bases its analysis on the actual real prices that it sees hotel room nights sell for on its site.

They even have a special website dedicated to analysing all their data and reporting on it – www.hotel-price-index.com – and it is indeed full of fascinating facts and figures.  Well worth a visit.

Good Value Hotel Booking Site

Talking about hotel booking, there’s a relatively new website out there with the ugly name of Yuupon.com – clearly trying to cash in on the hype surrounding Groupon.

Their rates seem to be at the keenest values for hotels in US, Mexico, Caribbean and Europe.  Sometimes rates are the same as other booking sites, sometimes a bit lower.  I also noticed an interesting thing – repeatedly, while checking it out, I’d find hotels on Yuupon with the identical room rates as on other sites, but also with an additional category of room type which none of the other sites offered, at a lower rate.

My guess – this is their way of observing requirements to sell rooms at the same prices as other sites; by simply creating a fictitious additional room type which they can then sell at lower rates.

It seems that sometimes Yuupon’s terms and conditions might be more favorable too (ie none of their rates are non-refundable rates).

In a few cases, I saw good savings.  Worth keeping in mind next time you’re looking for a hotel.

Embarrassing Website Mistake

A UK travel website, Hotels4U.com, had a special promotion offering £50 off hotel bookings if they were made on Christmas Day, 2011.  It promoted the deal on Facebook and Twitter.

As best I can gather, you could get the £50 off any hotel booking, even if the booking was only for £60, making it potentially a very good deal for travelers.  And, trying to understand the thought process behind the promotion, it seems that in 2010, 25 December was an extremely slow day – the site only processed 57 bookings all day.  So maybe the company thought ‘We’ll get a lot of buzz and publicity about this tremendous deal, but not many people will take advantage of it because it is on the slowest day of the year when people are too busy opening Christmas presents, eating big meals, and doing everything else other than booking travel’.

The company projected perhaps as many as 570 bookings in total might qualify for the £50 rebate.  While that would seem to imply a cost of £28,500 associated with it, the company probably hoped that most people would be booking multi-night hotel stays costing some hundreds of pounds, so much of the rebate would come out of the booking profits rather than out of their pocket.

Well, by 6.30am on Christmas Day, the site had already taken more than 2600 bookings, at an average booking value of a mere £60 before the £50 discount.  In other words, what the company had hoped would be close to a zero cost promotion, generating some buzz and goodwill, had already, by 6.30am, cost them about £120,000 in real money.  Ooops.

The company turned off the promotion for a while, then bravely turned it on again at 11am, experiencing another 1000 bookings in less than an hour, at which point it turned it off completely.

This all came to light when 19 people complained to the UK Advertising Standards Authority about the offered deal not being available as promised.  More details here.

Travel Agents Continue Their Return to Popularity

After these stories of online travel experiences, it is relevant to note this interesting article in the NY Times about the resurgence of travel agents and the ways in which they nowadays work with customers and add value to bookings.

After reading the final paragraph of page 4 of the article, I’m highly tempted to return back to becoming a travel agent again.  The motiving thing?  Learning of a travel agent who charges a $100,000 joining fee for people to become his client, and a $25,000 annual retainer.  I read elsewhere that possibly he has 500 clients.

Wow.  I think I’ll limit myself to only 50.  So rush to sign up…… 

This Week’s Security Horror Story

Please see also the separate article, included later in this compendium, about how the TSA is even-handedly terrorizing people from 4 and 7 yr olds to 85 and 95 yr olds, and to prove it shows no favoritism, groping US Congressmen with as much enthusiasm as it does 85 yr old ladies (one doesn’t know whether to be outraged or saddened for her when reading her delightful understatement ‘I was touched in places I’ve never been touched before’).

One of the recurrent themes of TSA misadventures – and truly, I seldom even both referring to such events any more – is dishonest TSA employees.  Now, of course, in theory, you can understand how any group of 50,000+ employees will have a few bad eggs among them, but there are two things to consider to offset this passive acceptance.

First, these are the people we are trusting to protect us from terrorism.  They aren’t 7-11 clerks who might sometimes short-change us and cheat their employer too, they are the people who are the main line of defense against terrorists.  If a person is sufficiently dishonest as to steal from passengers, potentially they could also be sufficiently dishonest to imperil those same passengers by colluding with terrorists in return for bribes.

Secondly, all TSA employees are supposed to be rigorously security screened and also to have their criminal records checked prior to being employed.  Bad people shouldn’t get through this security screening – if they are (as indeed they are) there is something wrong with the current vetting procedures.

Now, with that as background, think about these two new items.

Firstly, I’ve said (as recently as last week) how if TSA baggage checkers can steal stuff out of your checked luggage, they can just as easily put bombs into your bags too, just before they are loaded into the plane.

But how about smuggling guns and bombs into the passenger compartment of a plane?  How would a crooked TSA officer do that?  Very easily, it seems.  Read this indictment and substitute, wherever it says cocaine, the word ‘gun’ or ‘bomb’, and note that we are talking about almost 12 lbs of cocaine – that could also be 7 loaded pistols or a huge plane destroying bomb.

If drug smugglers can turn TSA agents into their accomplices, what about terrorists?  Maybe even a terrorist could become a TSA agent in the first place?

Which leads to the second half of the horror story.  At least we have the rigorous TSA background checking of people before they hire them as agents, right?  Even if maybe one or two criminals slip through their checks, surely they’d at least pick up on terrorists, wouldn’t they?

Alas, the question is currently hypothetical only.  Because, as this article reveals, the TSA has temporarily given up on pre-screening its employees, due to having too large a backlog of cases to clear.

You might think this to be appalling.  But being as how the screening doesn’t really seem to work even when it is conducted, perhaps it makes no difference.  Alas.

A Statue as Security?

When you realize that TSA agents could well be terrorists, perhaps it does indeed make sense to use inanimate objects as security measures.  A wooden log or a strange metallic structure could hardly be any worse than a TSA agent, could it?

Here’s an interesting story of a work of art in JFK’s Terminal 1 that was commissioned as a discreet security measure.  I bet you never knew.

Life Saving iPhone Apps?  So Says USA Today.

Our feature article this week is about emergency items in your car – some of which could conceivably save your life, although we’re a bit muted in making such an extravagant claim.

Much bolder is this item in USA Today, which lists five travel apps for your iPhone which it says ‘could save your life’.

Well, maybe they could, but more likely, they won’t.  But have a look at the strange compendium of apps they’ve selected, and with the apps being happily low priced, if you feel your life currently being threatened in a way such that one of these apps might save you, why not download the app and enjoy the piece of mind and possible safety you’ll get as a result.

And Lastly This Week….

Please enjoy this Youtube Video musical commentary about going through TSA security.  Many a true word spoken (or in this case, sung) in jest.

Until next week, please enjoy safe travels

David.

Some of the things you should keep in your car emergency kit are shown here

I nearly died of exposure a week or so back.

Well, okay, so I’m exaggerating somewhat.  What happened was my car broke down and I had to park it perilously close to fast traffic zipping by.  The car’s problem was a failed alternator, which resulted in a dead battery and subsequent engine failure, so I couldn’t even turn on the emergency hazard flashing lights to hopefully help make the car more obvious and to encourage other vehicles to keep clear.

So, and in fear of being clipped by one of the cars or trucks rushing past, I left the car and stood on the side of the road for greater safety, while waiting an hour for the tow truck to arrive.

I was wearing only a short sleeved shirt, and the weather was cold and windy, and I was a very miserable motorist by the time the AAA tow truck finally arrived and I could eventually clamber into its nice warm cab for the drive of shame back to the dealership.

Sure, I had a first aid kit in the trunk of the car, and a flashlight somewhere too (I think).  But neither flashlight nor bandages would keep me warm or dry in a case like this.

As I shivered on the side of the road, I had plenty of opportunity to dwell on what was not in the car, and what should be in the car, resolving not to be caught out again next time.  And so now, here’s an article on the topic of creating an emergency kit for your car, including a checklist of items for you to consider including in your vehicles.

Does this angelic 4 yr old look like a terrorist to you? She did to the TSA.

While the TSA continues to blindside itself by overlooking enormous vulnerabilities in airport and aviation security, and while it seeks to expand its role to stopping ordinary cars driving on ordinary highways for random searches (goodbye, Fourth Amendment rights), it hasn’t lost sight of its prime mission :  The ludicrous hassling of  ordinary Americans wishing to fly; people who are 100% obviously not any threat of any sort at all.

Look at these appalling examples of the TSA totally out of control and abusing US citizens with no underlying reason at all :

• TSA screeners allege a grandmother passed a handgun to a 4 yr old girl during an airport hug – details here
• TSA screeners detain and pat down 7 yr old girl with cerebral palsy causing her to miss her flight – details here
• TSA screeners repeatedly intimately search Congressman Canseco (R-TX) – details here
• TSA screeners pat down 95 yr old, force him to give up $300 which goes missing – details here

What is the point of obsessing over and terrifying a four year old when their own staff remain free to steal from or hide things inside passenger suitcases?

Although the TSA has repeatedly stated it will ‘modify’ its search procedures for the very young (and more recently for the very old, too) why is it harassing four and seven year olds, and also 85 and 95 year olds?

Is it really necessary to inflict intimate body searches on US Congressmen?

The TSA say they have a zero tolerance approach to allegations against their staff (in this article); where is that policy when it comes to a 95 year old vet saying the TSA screeners stole $300 from him?

The TSA say they might need to cut their airport staff by 41% next year due to claimed budget cuts (but in reality due to them preferring to expand their mission into harassing ordinary motorists and other new extensions of their self-claimed powers).  This seems like a bad thing, but if it means they no longer have the time to harass travelers that no sane person would ever dream of viewing as potential terrorists, perhaps it is a good thing to see their airport staff cut back.

It is hard to think of five people more unlikely to be terrorists than the people in these four articles.  Yes, we should have security, but this is not security.  This is capricious subjugation and – to use a term applied elsewhere, it is nothing other than state sponsored terrorism – but it is sponsored by our state, and it is us who are being terrorized.

We are not made safer by such acts, we are simply made less free, and the misallocation of resources to terrorize innocent children and harmless retirees means that greater vulnerabilities are going unprotected.

The ultimate video game? I certainly thought so. See our discussion below on boys and their toys.

Good morning

Happy 60th birthday this week to the illustrious Boeing B-52, still operational as a heavy bomber, sixty years after it first took to the skies on 15 April, 1952.

744 of the planes were built, including 102 of the final B52-H model, of which 85 are still in active duty and another nine are in the Air Force Reserve.

Current projections suggest the planes will continue in service until perhaps 2040.  The plane has already outlived many other bombers, including the B-58, the XB-70 and the FB-111.

There are some great things, both in the feature article and below, so make yourself comfortable and settle in for the read.

• Reader Survey Results
• The Incredible Shrinking Aairline
• A Future Alternative to Air Travel?
• New Attack on TripAdvisor
• This Week’s Security Horror Story – More TSA Mission Creep
• TSA Zero Tolerance Policy – For Allegations?
• The Curious Case of the Disconnected ID Checking Machines
• The Ultimate Boy’s Toy
• Slightly Strange Things
• And Lastly This Week

Reader Survey Results

Last week I asked if you felt that airline service had improved, stayed the same, or got worse over the last year or so.

I made the request after reading an article that claimed airline experience had actually improved last year.  I was dubious, so asked you for your opinion.

Many thanks to all who answered.  I’ve analyzed the results two ways.

First, here are the aggregate results.

As you can see, only 2% of Travel Insiders feel  that air travel has significantly improved, while another 14% feel it has slightly improved.  Almost half (44%) feel it has remained about the same, and two and a half times as many people feel it has got worse (40%) than those who feel it has got better (16%).

It seems clear from this that, at least based on our sample, the air travel experience has struggled to stay about the same and probably has slightly deteriorated for most travelers.

But wait, there’s more.  I also asked you to categorize yourself as to if you are a frequent, moderate, or infrequent traveler, and I did a second analysis, splitting the perceptions by type of traveler.  There is an appreciable difference in perceptions among the three different types of travelers, as you can see from this second chart.

As you can see, the most frequent fliers are more than twice as likely to give thumbs up to improved airline service (but even so, more of the most frequent fliers still give thumbs down than give thumbs up) than are the least frequent fliers, and the moderate fliers fit more or less neatly in the middle.  How to explain this divergence of opinion?

My guess is that many of the changes we’ve seen implemented over the last year or so have had disproportionate effect on the infrequent fliers.  Frequent fliers don’t need to pay extra for early boarding, for luggage, or for a nice seat, because they get all these things for free as part of their elite level frequent flier perks.

It is the infrequent fliers who suffer the full burden of each extra fee the airlines impose.  Hence their harsher criticism of the deterioration in air service experience.

Probably airline executives could care less about how infrequent fliers feel.  But they should be concerned that their core constituencies – moderate and most frequent fliers, feel that the air travel experience is continuing to deteriorate (by almost exactly a 2:1 margin).

The Incredible Shrinking Aairline

American Airlines has announced its latest job cut plans.  It seems that in total about 14,200 jobs will be eliminated, representing about 16.5% of their total workforce – one in every six employees.

I have no opinion as to if this is fair and appropriate or not.  But it does beg the question – if the airline can get rid of a huge 16.5% of its staff now, why didn’t it do so last month, last year, or last decade?  Who was asleep at the switch allowing the company to be saddled with such an extraordinary surplus of staff?

Which CxO level officers will be held accountable for this gross mismanagement that represents probably $750 million a year in unnecessary staffing costs for as many years as you care to count?

How do AA’s shareholders feel at learning the airline has been carrying a $750 million a year unnecessary cost burden?  Where is the shareholder outrage and revolt?  Where are the lawsuits?

And also – why is no-one else asking this same question?  I’m not just being glib or facetious.  If these staff are truly not needed, why were their positions created in the first place and allowed to exist for so long subsequently?

Of course, the flipside to that is that if these truly were essential staff in the past, what magical event is occurring now that makes them no longer as essential as they were prior to the layoff notices?

A Future Alternative to Air Travel?

Here’s an interesting article about a fascinating alternative to air travel – what is termed Evacuated Tube Transport.

Six person capsules would travel through tubes at incredible speeds of up to 4000 mph, and would do so very efficiently due to the air having been largely pumped out of the tubing, with fuel/energy efficiencies 50 times greater than electric cars or trains.

That’s 45 minutes from coast to coast.

As for the tubes themselves, it is said the cost to build them would be a tenth the cost of building high speed railway lines.

Wow.  What’s not to like about this?  Well, there are a couple of challenges.  The first is that these systems would seem to be largely landlocked, and wouldn’t be as practical in the depths of the oceans, and would need to be built (and maintained) to incredibly tight specifications – the slightest mis-alignment would surely cause spine shattering jerks to the passengers.

And the second challenge is that if we can’t agree on building ordinary simple oil and gas pipelines, what chance do we have of agreeing on building these rocketship-speed tube systems?

But do read the article and dream about what could be.

New Attack on TripAdvisor

TripAdvisor continues to ruffle feathers, giving both validly irate people a chance to vent their frustrations with hotels and other travel service providers, and also unfortunately sometimes falling victim to fraudulent reviews that are either inappropriately positive or negative.

Clearly however, it is becoming an increasing force in the market, and has some hoteliers running scared.  I’ve written before about how a group of British hoteliers are creating a secret black list of guests – if a guest writes a negative review about one participating hotel, then the other hotels will probably refuse to allow that guest to stay with them, no matter if the review was fair or not.

A new wrinkle this week touches on another growing phenomenon – accommodation providers that contractually seek to ban you from publishing any negative reviews as part of your accommodation contract.  Here’s a story about a vacation rental property owner who unilaterally deducted a $500 ‘fine’ from his recent guests’ credit card after they wrote a negative review of their experience.

Don’t you think it would simply be better and maybe even easier for hoteliers to respond to guest complaints and to provide an honorable and honest experience to their guests in the first place?

Still, we should be grateful.  At least we can complain about hotels, and hoteliers clearly take notice of our complaints, and at least we have plenty of hotels to choose from.

But airlines?  There’s precious little point in TripAdvisor having an airline section, is there!  The airlines don’t care, and we have almost no choices, other than between airlines that are essentially equally bad as each other.

This Week’s Security Horror Story – More TSA Mission Creep

Okay, on a good day, I can maybe understand some of the expansion of the TSA out of our airports and in to the rest of our lives.  Looking after shipping security is something that someone should do, and while you might say ‘Why not the Coastguard’ the answer to that is perhaps in part to be found in the fact that both the TSA and the Coastguard are now branches of the Homeland Security Department, so it is almost a six of one and half a dozen of the other issue, although the Coastguard (and mercifully not, at least so far) the TSA get to deploy neat weapons on neat ships and boats.

But there are some things that surely should be – surely must be – totally off limits to the TSA.  Where should the TSA’s authority start and finish?  They are, of course, a federal agency, and so it seems reasonable to apply one limit to this federal agency – interstate transportation infrastructure is something they could perhaps get involved in, but not transportation that is limited within a state, and doubly not transportation that is limited to a region, and trebly not transportation that is within a single city.

I’m thinking in particular of city buses.  Surely city buses are way down on any terrorist’s list of targets; if a terrorist is to go after road transportation, you’d think he’d start off with tankers full of inflammable liquids or poisonous chemicals/gases.  Or, alternatively, a massive huge fully laden 18+ wheeler that could be used to drive into bridge supports and other somewhat vulnerable things close to roads.

Sure, a bus might have as many as 50 people on it, but if we are to set our terrorist risk threshhold so low that any grouping of 50 people in one place justifies TSA involvement, we should start to expect Xray screening when we go into movie theaters, malls, and many other places.

So, back to the buses.  It is perhaps understandable how the TSA could interpose itself on interstate buses, as a federal agency; but city buses?  Can someone tell me how it is that the same TSA which claims it can’t afford to fully staff its airport checkpoints next year and will cut them by 41% (see ‘DHS Might be Growing, But TSA is Shrinking’ in last week’s newsletter) is now riding buses in Houston?

Here are two articles discussing this – one in the UK’s Guardian newspaper that is a somewhat more wideranging discussion of TSA mission creep, and one from a US source that some people might reject, but which is simply reporting the facts.

Our freedoms – the freedoms that made the USA what it was – are slipping through our fingers.  How can we reclaim them?

TSA Zero Tolerance Policy – For Allegations?

On the face of it, here’s a positive act on the part of the TSA.  A TSA baggage inspector has been arrested and charged with the theft of iPads from passenger luggage at DFW.

With chests fully puffed out, the TSA issued a statement describing the man’s arrest as part of a ‘zero-tolerance policy for allegations of misconduct or theft’.  Bravo.

But.  Ooops – let’s think about this a bit.

First, the TSA employee had been stealing iPads for eight months that we know about.  It took the TSA eight months (and a lucky break) to find this guy.  That’s not a very secure environment, is it.

Remember, always, that if it is possible to take something out of a passenger’s bag without being detected, and to then smuggle it out of the airport, it is similarly possible to smuggle something in to the airport and put it into a passenger’s bag.  Can you say ‘bomb’?

How is it we can’t take the smallest penknife onto a plane, or more than 3oz of liquids, but TSA employees (and other non TSA baggage handlers too) have free access to our luggage, and are able to secrete much more than 3 oz of liquid in a suitcase just before it goes onto a plane?

And now, what about the zero tolerance policy on allegations of misconduct?  What is with that?  Quite apart from zero tolerance always equating to zero sense, is the TSA saying that it will arrest its own employees on the basis of allegations rather than facts?  If that is so, can I point them to a lengthy list of allegations of employee misconduct that have been leveled against their staff, which almost always without exception have been met with passive inactivity by the TSA.

Imagine, next time you’re upset by a TSA employee’s behavior, you ask to see their supervisor and say ‘You have a zero tolerance policy towards allegations of employee misconduct.  I allege that this person committed an act of misconduct, and I demand you arrest him immediately’.  How far do you think that will get you?

Indeed, here’s a lot more than just an allegation of misconduct.  Here’s a US Judge referring to misconduct by Customs & Border Patrol officers (another part of DHS and so presumably also with a zero tolerance policy towards allegations of misconduct) :

Its mission statement—which none of the officers could recall at the trial—is to serve the American public with vigilance, integrity, and professionalism. They displayed none of these. The agency says that integrity is its cornerstone; that its officers are guided by the highest ethical and moral principles. A gang of armed security officers bullied this family—a family who cooperated with the officers to their detriment. Our homeland will not be secure by these rascals. They played agency games, abused the people they are to serve, and violated their oaths to support the Constitution.

That’s a scathing verdict by a US judge.  It is a lot more than an allegation of misconduct.  So which of these officers is being suspended or terminated?

 The Curious Case of the Disconnected ID Checking Machines

You probably know the first step of going through airport security – you shuffle in line until reaching a desk where a TSA officer looks at your ticket and ID, then stamps your ticket and gives you both back, allowing you to wait in line to get X-rayed.

The TSA is now trialing a new system that will sort of automate the process.  A machine will scan the boarding pass bar code and also your identification, and make sure the two match up.

So far, so good.  The machine might even detect some forged IDs.

But – see if you can guess what the obvious thing is that the machine should do, but doesn’t do?  You’d expect the machine would also verify your ID against all sorts of watch list and do not fly type databases.  That would make sense, wouldn’t it.

But, ummm, no.  The machine doesn’t do that at all.  It simply checks that the name on the boarding pass is the same as the name on the ID.  It doesn’t check any external databases at all.

If you’re wondering then about the purpose of the doubtless expensive machines that neither add security nor save staff (everything is still administered by a TSA officer), then you’re not the only one.  Remember this is the same TSA that is struggling with a tiny budget reduction and threatening that it will have to reduce its airport staffing by 41% as a result.

The Ultimate Boy’s Toy

Many of you have probably had fun playing with Microsoft Flight Simulator, or one of the many other flight simulation games out there.  Microsoft’s incredibly realistic product, which sadly seems to have been frozen in place with its development team closed down in 2009, has long been one of the drivers of PC upgrades for many of us – the game would successively be more and more sophisticated, requiring faster and faster processors, and bigger and better screens.

There have also been very many accessories marketed to enhance the experience.  Feedback joysticks which respond with backpressure and even shaking, additional control columns and clusters, rudder pedals, super speaker systems, and even special chairs and desks to imitate more closely the cockpit experience.

There have also been a few ‘over the top’ implementations of this that leave normalcy well behind.

A guy in Australia is said to have spent almost US$250,000 on building a full motion 747 simulator over a ten year period in a warehouse – as proudly shown on his website here.  That might seem like a lot of money, but it is nothing compared to the cost of a ‘real’ full motion simulator, which can run well over $25 million a piece (like the 777 simulator I am pictured in, in the top picture).

Another approach has been revealed by a gentleman in California, who purchased the nosecone of an old 737-100 and re-equipped it with the latest avionics, all located inside his garage at home.  His 737 simulator has apparently cost him about $150,000 (so far) but unlike the Australian example, has no motion.  I guess that is next on his list.

Slightly Strange Things

Talking about boy toys and simulated flying things, here’s an interesting article about a previously mooted and possibly to be revived new project in Las Vegas – a full size model of the Enterprise spaceship of Startrek fame.

Still on the topic of slightly strange things, how about these four weird hotels, one of which is built inside an old 747.

And talking about hotel weirdness, did you read about the guy who was robbed during his hotel stay in Salt Lake City?  Mr Philip Clawson has now filed a suit against the hotel seeking $150,480 for damages and emotional distress, but one wonders if there isn’t some contributory negligence on his part.

Because, you see, he wasn’t just robbed once.  Or twice.  He was robbed four times during this stay.  And each time by the same person.  More details here.

And Lastly This Week…..

Lastly this week, bathrooms.  On planes.  And things to do inside them – particularly while on 14 hour flights between San Francisco and Auckland.  No – it isn’t what you are thinking – this is something you can do yourself.  And – No!  It isn’t that, either.

Click for a fascinating photo story.

Until next week, please enjoy safe travels

David.