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David Rowell

David Rowell

You can see an extensive mini-bio about me here http://www.thetravelinsider.info/info/about.htm And here's a Google Plus link : Google

Mar 092017
 

One of Uber’s experimental self-driving cars. Will they transform Uber’s business model and profitability?

Who doesn’t love Uber?

Who doesn’t love their astonishingly inexpensive rides that can be arranged from our phone with just a few taps of our finger.  Who doesn’t love the simple cashless transaction with no angst over how much to tip, a nice nearly new clean car with friendly driver that quickly arrives and pleasantly takes us to our destination.  (While we think these happy thoughts, let’s try to overlook their ‘surge pricing’ and occasional non-availability of cars, and the impossibility of talking to a real person in a real customer service department if we have a problem.)

Our love as passengers has been matched by lots of love from investors, too.  The company, which started from an initial $200,000 seed investment in 2010, is now generally considered to be worth in the region of $70 billion.  Being private, its valuation is somewhat theoretical, but based on earlier rounds of funding received, this seems to be what it was valued at the last time it went to the market.  Since then, who knows, but some observers believe Uber is waiting until it command a $100 billion valuation before conducting an IPO.

Whether we’re talking $70 or $100 billion, either is an astonishing value for a company that owns no tangible assets and which loses prodigious money every year, in what are apparently larger amounts with each passing quarter.  It seems that 2016 ended up with another $2 billion lost, maybe even more.

It is hard to understand how they anticipate their value to continue growing in that scenario, but no harder to comprehend than the concept of their commanding a $70 billion value currently.  One also has to note that the list of companies ascending all the way to sustainable $100 billion valuations is much shorter than the list of companies that peaked at whatever enormous number, and then watched as zeros were successively removed from their valuation, plunging down to almost nothing and renewed obscurity.  How many companies waited too late before cashing in, only to find that their financial prominence was evanescent?

Talking of the future, one also has to love Uber’s focus on the future, right?  Its aggressive research into driverless cars, passenger drones, and other futuristic potentially transformative travel technologies.  Whatever the future might hold for us, it seems that Uber will be in the forefront of driving that future to us as quickly and as best possible.  Yay for Uber.

It is also wonderful to see Uber –  ‘the little guy’ and underdog – fighting so assiduously against the vested interests of taxi companies and the city and state authorities that taxi companies have lobbied effectively to oppose Uber’s innovation, right?  It makes us all feel like we’re protesting against evil forces resisting change every time we enjoy an Uber ride, doesn’t it!  Yay again.

But how much of this is reality, and how much is hype?  Sure, it is hard to imagine a worse or more expensive travel experience than that offered by a regular taxi, much of the time, and that encourages us all to eagerly search out any sort of alternative.  But will Uber really fulfill the bold promises it is extending?  Can it truly transform the way we all travel short distances?  Or is it yet another example of a ridiculously overhyped concept with no sustainable business model at its core?

Positive perceptions notwitstanding, Uber has also attracted a lot of negative attention of late.  Few sins are as gleefully greeted as hubris, and Uber is definitely guilty of plenty of that.  This article reports on some of Uber’s recent bad press, and there’s plenty more where that came from, including lots linked from within the article.  In particular, the brilliant article written by former employee Susan Fowler makes for compelling reading.  Sure, her commentary doesn’t invalidate Uber’s core business model, but it does show a company that is far from holding the moral high ground.

Indeed, Uber’s core narrative of being the good guy and traditional taxis being the enemy is a questionable one on many fronts.  But do we (or even should we) care, as long as we get rides when we need them, the ride experience is positive, and the cost bargain-priced?

Some people might suggest that Uber’s current actions are akin to illegal ‘dumping’ of product into the market.  In our earlier look at Uber, we suggest Uber’s business model is unsustainable.  In the seven months since that article, the only thing that seems to have happened is that Uber’s cash-burn has accelerated, and its losses have continued to accumulate.  What would happen if after Uber destroys the traditional taxi industry, it then burns out, itself, too?

A recent disclosure suggests that one of Uber’s hoped for transformations may not be as valuable as it had expected.  Uber has been pushing as hard as it can to eliminate the drivers in its cars.  On the face of it, if you no longer have to pay a driver, then the cost of the ride surely must go down, right?  That seems to be an unchallengeable assertion, but the problem comes when you try to quantize exactly how much Uber’s costs would reduce.  When you consider that drivers are often netting substantially less than minimum wage, working enormous hours and even sleeping in their cars, clearly the saving isn’t going to be as massive as would be the case if drivers were being paid the same gold-plated salaries with generous benefit packages that Uber’s administrative staff (now some 10,000 in number) enjoy.

An internal Uber study has now been cited suggesting that driverless cars might only ‘increase profits by about 5%’ (a curious phrase for a company that has never seen a profit to increase – if you increase profits by 5% for a company making a $3 billion loss, what does that actually mean?).  The study is cited two-thirds of the way down this article, a subscription is required to read the originating article.

Is it overly simplistic to say that Uber’s entire business plan boils down to ‘selling services for less than they cost us’ – a concept that will never scale its way to anything other than ever larger losses?  What will happen to the public’s love for Uber when Uber finally starts to charge for the services it provides at a necessary level to break even and to start to earn some money back for its investors?  Most of all – is its promise of revolutionizing future transport options realistic?  Is the new ‘gig economy’ it is based upon going to prove to be as insubstantial as ‘the emperor’s new clothes’?

Uber founder and CEO Travis Kalanick has joined in the currently popular idea of crying on stage in the hope that this demonstrates strong leadership and a universal panacea for all the ills that Uber suffers from.  More substantial is his promise to now hire a COO and to take some leadership/management lessons.  But if Uber becomes more corporate and no longer revels in its ‘bad boy’ iconoclastic image quite so much, will this hasten a move to profitability, or a move to failure?

Our observation and conclusion in our earlier article remains unchanged.  Uber is essentially a generic supplier of a generic transportation service in an industry that will be marked by successively lower cost of entry for new competitors (for example, Via in New York), and a service which evokes no more loyalty among its clientele than do airlines or brands of milk.  The only loyalty you have to your preferred airline is almost surely one that the airline has bought, by way of frequent flier benefits, possibly boosted by the convenience of their schedules and routes compared to other carriers.

What affordable loyalty strategy can Uber come up with to differentiate itself from Lyft and all the other Uber-like services out there?

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Feb 242017
 

What’s wrong with this picture of what is prominently labeled all over as a Boeing 737? See final item.

Good morning

What was to have been the ultimate part of my ‘new era of transportation’ series proved to actually be the penultimate part.  There’s enough left for one more article, next week – maybe more!  But for now, I hope you’ll enjoy what was a curious shift in writing style for me – to switch from critical mode to optimistic and positive mode.  I hope I didn’t overdo it – you can decide for yourself when reading it, after the roundup.

Meanwhile, I see that Tesla have had their year-end conference call and are doubling down on their undertaking to commence production of the Model 3 in July and to meet their extraordinarily ambitious production projections, rolling out 5,000 vehicles a week in the fourth quarter.  They’re talking of the need to build maybe three more ‘Gigafactories’.  Let’s hope all goes well – we’ll all be winners if Tesla does indeed make electric vehicles more a mass market phenomenon.  That’s not to overlook the GM Bolt (which it is thought might have 30,000 – 65,000 units produced in 2017), but if Tesla does reach its production levels, it will be outselling the Bolt many times over.

There continues to be such an ongoing high level of activity with promises of new ‘Tesla killer’ vehicles; if even one tenth of everything promised comes to pass, the auto world in 2020 will be totally different to what it is today (and, my gosh, we’re already into 2017).  As I have said several times before, now is not the best time to make a major investment in a brand new expensive car, because the chances of it being obsolete within perhaps five years goes up almost daily.

Enough of cars.  Also this week, please see :

  • The Best-selling Airplane in the World?  Yes, but…..
  • The Cheapest – and Most Profitable – Airline in Europe
  • If You Can Lift It, You Can Take It
  • Time is Money
  • Some Sense from the TSA
  • The Enemy of my Enemy is my Friend
  • The World’s Most Congested City
  • And Lastly This Week….

The Best-selling Airplane in the World?  Yes, but…..

Sure, Boeing can fairly boast that its 737 is the best-selling airplane in the world, ever.  But, in our world of (at least) 50 shades of grey, even something as absolutist as a claim to be the best-selling airplane ever needs interpretation – not the least of which being to qualify the claim as ‘best selling passenger jet airplane’.

First, it is relevant to note that the 737 is also quite possibly the longest selling plane in the world, and without the need for any qualifiers.  The plane started its life back in 1964, 53 years ago, although of course the plane you fly in today is very different to the 737-100 that first flew in 1967.  Boeing’s total of 9,365 deliveries and 4,430 orders yet to be delivered, as of January, has to be seen through the lens of this 53 year period.  Should Boeing really boast of a 53 year (and still extending) life for a plane?  It seems probable the plane will reach 60 years and still be in production.

There are two other things to consider.  The first is that since the competing A320 was launched by Airbus (in 1984), Airbus have sold more A320s than Boeing has sold 737s.  Boeing’s claim to fame is entirely due to its unwillingness to retire the plane and replace it with something new, and its 20 year head start on sales.

Indeed, the Airbus lead over Boeing continues to grow, and this article awards Boeing a mere 39% market share of the latest generation A320neo vs 737MAX narrow body product line up (Airbus has 54% and COMAC/Bombardier share the remaining 7%).

The article also points out something that was news to me.  These days, there are more A320s still in commercial service than there are 737s still in service.  One of the things Boeing loyalists used to insist on was that Boeing planes were built to last, whereas Airbus planes had short service lives.  Apparently that is incorrect, and the A320s are outlasting the 737s.

On the other hand, while Boeing is doing well with its 737 line, not all its other planes are selling quite so well.  For example, the new 787-10 plane, which President Trump rapturously cited as an example of American success when officiating at the roll-out of the first plane, while overlooking the distressingly small amount of US content within it, has only sold 149 units so far.

It continues to seem that Boeing will indeed set a record with its 787 line of planes, though – the most expensive and loss-making airplane model that ever entered commercial service.  No-one is quite sure, but it seems certain that by the end of the 787 series production, there will be a net loss of $6 – 7 billion overall, and possibly considerably more.

The Cheapest – and Most Profitable – Airline in Europe

Ryanair – an airline that one would formerly invariably introduce apologetically as ‘the airline that passengers love to hate’ no longer qualifies for that title.  Astonishingly, it no longer makes a virtue out of being customer unfriendly, and has softened the harsh edges of its image.  Indeed, it seems a very long time since CEO Michael O’Leary last threatened to remove all toilets from his planes, and/or to make them into pay toilets.

What Ryanair has been very busy at doing, however, is growing and making money.  Its growth trajectory has brought it to probably the fourth largest airline in the world in 2016, based on passenger numbers, and if it continues, it might become number one in 2020.

Here’s an interesting article that looks at some of the underlying metrics of Ryanair.  I found two things of particular interest.  First was the disclosure that while Ryanair has no intentions of making good on O’Leary’s occasional and transparently insincere statements about plans to start flying to the US, what it is doing is partnering with Norwegian, to provide feeder service between Norwegian’s European hubs and other points in Europe.  That greatly strengthens the reach of Norwegian’s service, and its continued low cost.

The other interesting thing is the comparison in figure 6 between Ryanair’s costs and those of Southwest.  Per passenger, Southwest pays nine times as much in staff costs.  Nine times!  Southwest is something close to ‘low cost’ in the US, but Ryanair, paying European wages, is nine times cheaper.  Southwest also pays three times as much for the owning and care of its planes, and six times as much on sales and marketing.

My point is simply this.  Ryanair’s total costs per passenger come to €28; Southwest’s total costs come to €92.  I think both costs might omit the cost of fuel.  But – and here’s the thing – what would happen to the US market for air travel if a carrier came into the market with costs a mere one-third of Southwest?  Would you fly more frequently if air fares halved?  Would you pay twice as much to continue flying your ‘preferred’ US carrier over flying Ryanair?

If You Can Lift It, You Can Take It

One of the most stressful moments for me, on any flight, is when checking in with an airline that imposes a ridiculous weight limit on carry on bags.  Some airlines (Air NZ, Emirates, Qantas, Qatar, and very many others) restrict the weight of your carry-on bag to as little as 7kg (15.4 lbs) and a few insult us with a 5kg/11 lb limit (Aerolineas Argentinas, Air China, Air Tahiti, XL Airways France, and a number of others).  Sometimes there’s ambiguity as to if that is the weight for just your official carry-on bag, or the weight of your official carry-on bag plus your ‘one other smaller item’.

My carry-on bag weighs almost 7 lbs, empty, and roll-aboard bags can weigh as much as 10 lbs, empty.  Add a 5 lb computer, a power supply, other bits and pieces, and you’re very quickly way past 15 lbs.  The stressful part of this is that I really don’t want to have to transfer my laptop – my life – to a checked bag and risk its delay or damage or loss – all being things the airline would refuse to reimburse me for, saying ‘we refuse to cover valuable and fragile items in checked baggage, you should carry such things onto the plane with you’.

It is true that, many decades ago, the overheads were designed for hats and coats and nothing much else.  They weren’t really strong enough to carry a densely packed series of heavy bags, but these days, they are all realistically designed to carry whatever we can fit into them.  There is no reason for this weight limit, other than trying to force you to shift weight to your checked bags and pay a greater weight based fee.

With the ever greater focus on extracting every possible penny from passengers, this is a problem that one worries is likely to only get worse.

So it is with enormous appreciation that I record Air Canada’s change in policy.  They’ve now abandoned their weight restriction on carry-on items entirely, and say “If you can lift it, you can take it”.  Bravo, ehh.

Time is Money

Sometimes when I’ve been engaged in competitive and complex activities that in total span a considerable time, my fellow team members have not always fully understood my obsession with short seconds.  What is a second here or there, they wonder, for a total task involving half a dozen repetitions of a 15 minute process – 90 minutes or 5,400 seconds in total.

But as you know yourself, any sort of race or competition often ends up with only a second or two between the winner and the losers.  An obsession with seconds is an essential part of winning.

A case in point is cited in this article.  It says that if you can shorten the gap between planes coming in to land by a mere 6 seconds, an airport could handle another 11 landings an hour.  If you were the manager of Heathrow airport (and with landing slots valued at tens of millions of pounds), surely the ability to add another 11 landings an hour – say 150 extra a day, is something you’d want to obsess over.

A new process that allows for tighter airplane spacing would also allow for better routings along a journey, shortening travel time and reducing fuel burn.  NASA developed the technology and handed it over to the FAA in 2014.  The FAA will begin deploying it in 2019.

Yup, time is money if you’re an airline or airport, both of which are keen to obsess over a few seconds.  But apparently not so much if you’re the FAA, where the seconds blur into lazy years of inactivity.

Some Sense from the TSA

Earlier this week, eleven passengers walked through an unattended checkpoint at JFK.  Three of them even set off the metal detector, but of course, with no TSA staff present, they then proceeded to their gates and to their flights.

This is not the first time such things have happened.  Some sort of slip up results in one or more people bypassing the screening process.  Until now, the normal response has been to push the big red ‘Panic!’ button, and evacuate the entire terminal (or terminals), rescreen all passengers, and search the terminals to make sure that no weapons have been hidden anywhere.  This results in hours of delays, missed flights, and general chaos and confusion.  No terrorists are ever detected.

This has always been a nonsense response.  What are the odds that a random oversight by the TSA caused the first ever terrorists since 9/11 to slip through our screening?  They’re as close to zero as anything ever gets.

Astonishingly, someone at the TSA has now realized this, and so when it was realized that 11 people slipped through, unscreened, including three who sounded alarms, the TSA yawned, said that s**t sometimes happens, and went about their business.

Sure, the TSA did review security camera footage to try and find the 11 passengers, but by the time they had traced what happened to the three who sounded alarms, they were already on their plane and the plane was in the air, on the way to San Francisco.  The other eight passengers were never identified.

But, try as they might, the TSA has yet to eradicate all of their idiocy.  The three passengers on the flight to San Francisco were screened – after they had landed in SFO.  You’ll be unastonished to learn that nothing dangerous was found on them.

The Enemy of my Enemy is my Friend

Here’s an interesting example of the inroads electric-powered vehicles are making.

Until now, the biofuel and oil industries have seen themselves as on opposite sides of most issues.  But now they both feel threatened by the present and increasingly prominent future impacts of electric vehicles, and so they are joining together to coordinate their lobbying efforts on such issues.

Details here.

The World’s Most Congested City

As a relevant side-bar to my current article series on alternative means of transportation, a new study has been released that shows Los Angeles to be the world’s most congested city.

In addition to all the time Los Angelenos spend driving in whatever passes for ‘normal’ traffic, they spend 104 hours each year in congested traffic.  The second worst city is Moscow (91 hours) and third is New York (89 hours).  San Francisco, Bogota, Sao Paulo, London, Atlanta, Paris and Miami rounded out the list of the ten worst cities.

Being stuck in congested traffic costs the average US driver $1400 a year, and $300 billion for all drivers in the US in total.  Congestion got worse last year.

You might think “$300 billion!  Why can’t the government spend that on road/transportation improvements?”  But the problem is this isn’t a direct cost the government is suffering.  It is a largely notional cost of the value of the time we are wasting in traffic, so it doesn’t really directly cost any of us much in the way of cold hard cash.  And for the government to address the problem, they would have to spend ‘real money’.  So it isn’t going to happen.  Alas.

And Lastly This Week….

A Boeing subsidiary, ILS, posted an ‘infographic’ on their website this week, boasting of Boeing’s long and storied history.  The ‘hero shot’ at the top and bottom is apparently of a Boeing 737 (see the image at the opening of this newsletter, and here’s the entire infographic).

Or is it?  Actually, no.  Someone was clever enough to Photoshop the Boeing 737 labelling onto the plane, but sufficiently stupid as to do so onto the image of an Airbus A321.  Details here.

We often count our blessings, when traveling the world, for having been brought up in an English-speaking nation.  So much of the rest of the world speaks English as a second language, making it possible for us to travel conveniently without knowing much of other languages at all.

For example, pretty much everywhere in Europe, English is the second most common language spoken, and certainly in places such as Germany and Austria (and even, although the French would like to pretend otherwise, in France too).

Or is it?  While indeed, France, Italy, and many other countries have English as the language most likely spoken after their native tongue, that is not the case in Germany and Austria.  Here’s an interesting map of the world showing the most common second languages, country by country.  In Canada, it is French, in the US, it is Spanish.  In Britain, it is Polish.  In Australia, it is Mandarin.

And, as for Germany and Austria?  Überraschenderweise ist es türkisch.

Until next week, please enjoy safe travels (or, for those of you reading this in Germany and Austria, Lütfen güvenli seyahatlerin tadını çıkarın)

 

David.

 

 

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Feb 232017
 

Part 5 :  The Totally Transformational Possibilities Offered by Hyperloop Technology

This is a further part in our article series on how we have a new opportunity for the United States to once again take a position of world leadership in transportation.

In part one, we looked back at three previous periods of American greatness, and in part two, we looked at how we allowed ourselves to be blindsided by the extraordinary developments in high-speed rail in Europe and more recently in China.

Part three became more positive again, introducing a new technology – Hyperloops – that promises to give us faster speeds than planes and less cost to develop and operate than high-speed rail.  The best of all worlds.  We then took a bit of a detour and looked at how private car ownership seems destined to become a thing of the past.

Which brings us now to the happy future of high-speed low-cost transportation.  That’s a total paradigm breaker, and we consider the implications in this article.

Breaking Out of the Constraining Faster/Further = More Cost Paradigm

The former unbreakable relationship between time, distance, and money, is now being shattered.

To date, it seems the faster we travel, the most it costs.  There is a natural law impacting on this – friction (in the form of wind resistance)  – something that increases at a more rapid rate than speed – sometimes at the square of the speed, sometimes at even higher powers, so going twice as fast might require four times as much energy.

There are additional cost issues too.  A road needs to be constructed to a higher standard for fast traffic than for slow traffic – for example, a smoother stronger surface, wider lanes, more gentle turns.  High speed train track similarly needs to be laid to a very much higher standard than regular freight track.

As for the distance component of travel, it is easy to understand that traveling somewhere twice as far will take about twice as long and cost about twice as much.

We’ve always had to make trade-offs between time, distance, and expense, so much so that it has become instinctive and unquestioned that of course traveling faster and/or further is more expensive than traveling shorter distances and more slowly.

The Hyperloop concept changes this.  Yes, longer distances will always take more time, and unavoidably some more cost, but Hyperloops promise to make all journeys appreciably quicker, and massively less expensive.  When we can travel three or four times further for the same time and dollar cost as we can currently with existing transport technologies, that opens up our horizons enormously.

The distance we can travel for a weekend break increases, and/or the time it takes us to get there diminishes.  A one day business trip no longer will require getting up so painfully early in the morning and returning home so late.  Discretionary travel of all types becomes easier to undertake, and location issues are no longer such an important factor in all our thinking.

Redefining and Resolving the ‘Last Mile’ Problems Too

In part three of our series, we noted that Hyperloop travel becomes practical for distances greater than about 100 miles.  For shorter distances, the ‘last mile problem’ makes travel by private car more convenient.  (By ‘last mile’ we mean the final relatively short distance between where the Hyperloop starts and finishes and the actual place we start and end our travels at – home or office or wherever.)

Both our ‘last mile’ and also ‘local commute’ problems are being transformed too, by new technologies.  As we explained a week ago, the end of the private car as we know it seems almost upon us.  But this is something to be welcomed, not feared.

For the Hyperloop, one easy last mile problem is to allow us to drive our cars onto the Hyperloop.  Rather like a ferry, we’d simply drive onto the Hyperloop at one end, probably then stay in our vehicle for journeys of up to an hour or so (ie 500 – 650 miles), and simply drive off again at the other end.  Our own car gets us to the Hyperloop terminal, our own car can be used for traveling around at our destination, and then connects us back to the Hyperloop terminal and back home at the other end.

That’s a good solution for today.  But soon enough, private cars will no longer be the norm.  At that point, it gets even easier.  You simply summon a self-driving “taxi” (when hire cars no longer have drivers, there’ll no longer be any real distinction between an Uber/Lyft service and a medallioned taxi service), have it take you to the Hyperloop terminal, and either continue using self-driving taxis at the destination or perhaps hire a vehicle.

One other notable feature of Hyperloop travel is that because they are expected to be small and only carry a few passengers, they will have frequent departures.  So, rather than having to fit your travel plans around maybe two or three different flights a day, each capable of carrying up to 200 passengers, you might instead have a choice of 20 or 30 Hyperloop departures, each carrying up to 20 passengers.  You’re never late for a departure, merely early for the next one.

Our Daily Commutes

A great start to everyone’s day – almost 30 minutes of frustrating commute, and the promise of 30 more minutes to get home again.

Never mind long distance travel.  Most of us spend the majority of our travel time on something much more mundane – daily commuting.  The average travel time to work is 25.4 minutes in the US.  Here’s a fascinating map that enables you to see the typical travel time in your area.

The average commute distance is approximately 15 miles, although there’s a large spread, with half of commuters traveling less than 10 miles and 16% traveling more than 26 miles.  Statistics aren’t as detailed about travel distances, because really, for us all, our commute is primarily defined by the travel time it takes, rather than the travel distance involved.

There’s little a Hyperloop can do to speed up a 15 mile journey, particularly when several miles at both ends would be ‘last mile’ type travel, between your home and Hyperloop terminal, and between the other end of the Hyperloop and your workplace.

But, that is approaching the issue from the wrong ‘end’ of the equation.  How about, instead, considering the implication of a 15 minute Hyperloop journey in the middle of your 25 – 30 minute total commute.  In 15 minutes on a Hyperloop, you could travel up to 150 miles.

So, think about the implications of that.  Instead of a 15 mile commute, you could now undertake a 150 mile commute, and do so still in a ‘normal’ commute time.

But wait, that’s not all.  Remembering the lower cost of Hyperloop travel, the extra commute distance not only takes no more travel time, but likely adds no more cost, either.

Draw a 150 mile radius around your workplace and look at all the places it includes.  Maybe some beautiful waterfront property, maybe up in the mountains somewhere, maybe a lovely little country town, and almost certainly, somewhere with lower property prices and better ‘quality of life’ than wherever you’re currently living.

If that’s not far enough away, it would only take a Hyperloop another five minutes to travel an extra 50 miles, or ten minutes to travel an extra 100 miles.

This could lead to an entire new model of residential development.  Think cluster settlements, ranging out hundreds of miles from central city cores.  One’s residential location can now be essentially uncoupled from where one works, and can be a lifestyle choice instead.  If you like the beach, you can find yourself some affordable beachfront within a couple of hundred of miles of where you work – not for an occasional weekend treat, but as your main residence.  If you prefer the mountains, head up into the mountains, and so on.

Note also the mention of the word ‘affordable’.  By removing the geographic pressures on housing, people are free to live where they want to and can afford, without sacrificing material convenience.

This point is worthy of illustration.  If you limit yourself to a radius of, say, 30 miles from the main city center, to allow for less than a one hour commute using traditional methods, that gives you a total area for the city and suburbs of 2800 sq miles (assuming that the city can spread out in all directions without water or mountains or other obstacles).  But if you use high-speed hyperloop commuting, maybe your radius extends to 100 miles and a total of 31,000 sq miles of choice, or even 200 miles and 125,000 sq miles of choice.  In other words, you have ten to fifty times more area to choose from.

Even more extraordinary, if we add another 10 minutes commute time, taking the radius out to 300 miles, that allows for 283,000 sq miles of region to settle in.  How big is 283,000 square miles?  Slightly larger than the entire state of Texas.

A total disconnect as between where we live and where we work (and, for many of us, less need to be physically present in an office all the time) will have profound effects on both parts of this equation.  Employers can now choose locations that make best sense to them rather than necessarily needing to locate in major population centers, and we similarly as employees will have a broader range of companies we can consider working for without needing to relocate.

If you live in central California, you could choose to work anywhere from north of San Francisco down to San Diego.  Live in Flagstaff, and work in Vegas, Phoenix or Albuquerque.  Live in upstate New York, work anywhere in much of New England, or, if you prefer, Philadelphia or possibly even Washington DC.  And so on.

High Speed Travel Comes to Secondary Routes

It is expected that Hyperloops will be much less expensive than high speed rail.  It may be possible to get 5 – 10 miles of Hyperloop service constructed for the same cost as a single mile of High Speed Rail service.

This means that Hyperloop systems can service secondary routes with fewer passengers on them.  As well as, for example, Las Vegas/Los Angeles, Reno/Sacramento would also become practical.  As well as Dallas/Houston, Amarillo/Lubbock.  And so on.

This will become even more practical, due to the ‘Southwest Effect’.  When travel becomes convenient and cheap, more people travel.  When people find it is only a quick hour and maybe $50, maybe less, to travel 500+ miles, travel becomes massively more appealing.

Who wouldn’t enjoy going away for weekend breaks to somewhere 500 – 1000 miles away, with a roundtrip cost under $100 and a travel time of 90 minutes or less each way?  For me in Seattle, San Francisco becomes an hour away and Los Angeles or Las Vegas 90 minutes.  (And, when I get there, I can stay affordably and pleasantly in Airbnb style accommodation, and of course use self-driving cars to transport me around the areas.)

Public Transport No Longer Needs Dense Population

The interior of a self-driving car “micro-bus” doesn’t even have to look like a traditional vehicle layout, as this concept from Mercedes-Benz illustrates.

Traditionally, public transport has only been feasible where there have been concentrations of people – a concentration at one end of the service routes where people live, and a matching concentration at the other end, being where people work.

If you have both concentrations, then traditional mass transportation options – rail, light rail, buses, and underground metro systems – can all work effectively.  If you can have, for example, frequent buses, each of which is full, you’re probably getting close to breaking even on the service, and of course the more frequent the buses, the more convenient they become and the more you encourage people to use them.

In our suburban paradises, with single family dwellings, and with our spread out business parks and equally low density workplaces, we have fewer opportunities to benefit from public transportation.

But when we switch from the concept of 50 passenger buses and 500 passenger metro trains, and instead consider the implications of 5 passenger smart self driving cars, running on low-cost electricity and getting 100+ mpge, we’ve totally changed the underlying cost equation and necessary break-even points.  A bus carrying 50 people might cost $500,000 or more, give 5 – 10 mpg, and require a bus-driver.  A car carrying 5 people might cost $50,000, give 50 – 100 mpge, and not require any driver at all.  Even at this simplistic level, it would seem that what formerly needed multiples of (say) 50 passengers to operate successfully could now operate with multiples of 5 or less.

So if the five passenger micro-bus only needs 3 or 4 passengers to be viable, that also means there can be a greater frequency of them, and it excitingly means that a smart matching service can put together people wanting rides along the same general route, and match them to their general destinations, too.  This means instead of having to first get to the bus stop, then wait for the bus, then endure stops every couple of minutes all the way to where the bus gets passably close to your destination (and possibly needing to change buses somewhere along the way), then walking the rest of the way from the bus stop to your office, you call for a micro-bus when you’re ready to go, it comes to your door, makes no more than another two or three pickup stops and no more than two or three drop off stops before you’re right at your place of work.

Chances are it will also be greatly less expensive than taking your own car, and probably less expensive than present public transport services too.

Who wouldn’t be delighted with that type of commuting service?  Whether it is used for the complete journey, or for a ‘last mile’ situation to get you to and from the Hyperloop terminals, it is clearly brilliantly convenient.

Travel Time is No Longer Wasted Time

In the current situation, getting between home and work is not particularly pleasant, and not at all productive.

If you’re driving, about the best you can hope for is to make some phone calls that you don’t need to make notes about, or to enjoy a radio station of your choice.  In public transport, you hope to find a seat and not have an oversized person sharing it with you.

But now, someone – or, more to the point – something – does the driving for you.  You’re assured a comfortable seat in a micro-bus or Uber/Lyft hire car,

Your travel time is no longer unpleasant and wasted.  Plus you’ll be given an accurate eta for when you’ll be collected and when you’ll be dropped at your destination, so your time can be scheduled, and the wide variety of internet connection options allows you to read, study, send and receive emails, and pretty much work or relax (watch video, listen to music, read books) any way you wish.

The traditional concept of clocking in and out at the office, and needing to be physically present, is becoming less and less essential for more and more people.  If you can get your employer to understand and accept that you are online and productively working for 30 minutes during your commute, each way, each day, then that removes a lot of the ‘pain’ of an extended commute.

Doesn’t this all sound wonderful?  Hurry up, please, the future!  And there are still more delights not yet considered – what about flying cars?

Well, we’re glad you asked that question.  We’ll answer it, next week.

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Feb 172017
 

A tunnel boring machine, automating pretty much the entire ‘make a tunnel’ process. See article below.

Good morning

My ‘new era of transportation’ series took another detour this week.  What was supposed to be a couple of sentences on the shifting balance of ‘should you/shouldn’t you own a car’ ended up with almost 5,000 words of commentary and a complete full article, then a couple of reader responses caused me to add another section and push well through the 5,000 word total.  The final piece follows tonight’s roundup.

I hope you’re enjoying this series.  It is exciting for us all to be living through what truly is an astonishing revolution in personal and public transportation, with a ‘perfect storm’ of seemingly unrelated things all coming together in a way that will totally alter our future travel patterns.

It is often hard to realize what is happening when you’re wrapped up in the day-to-day changes; I hope this week’s article, the ones before it, and the one still to come, helps give you a perspective.

I read an interesting article on this general topic yesterday, that ties together both the ‘changing type of transportation’ theme, the ‘self driving’ theme (and automation in general), and combines it with some fascinating perspectives on Mr Trump’s avowed intent to ‘bring back the jobs’ to the US.

Ostensibly reporting on the onset of automated self-driving trucks, the article, in Britain’s left-wing Guardian newspaper, goes beyond that and points out some of the broader implications of this.  It reports that while the US has indeed had some manufacturing shift off-shore, the total level of industrial activity in the country has been steadily growing rather than shrinking over the last several decades.  Since 1990, the total inflation-adjusted value of goods produced in US factories has increased 73%.

The real loss of jobs is not to Mexico and China.  The article says that even though factory output increased by 73%, factory employment reduced by 30% – representing a loss of more than 5 million actual jobs (and the non-creation of another 12+ million jobs that would otherwise be implied by the 73% increase in output).

I’ve several times written about the future implications of increased automation, robotics, and AI.  But I have been blindsided and wrong.  These impacts are not going to start evolving over the next 10 – 20 years.  As this 17+ million gap in employment clearly shows, they have already been happening, and we are already feeling their effects.

May I move one step further from the central theme of ‘travel and travel related technology’ for a few paragraphs to raise an issue that we will be forced to confront, and apparently sooner than any of us expected.

There is continued discussion, in a growing number of countries, about guaranteeing everyone a minimum level of income; this being a response to the growing concern about the ‘what will we do when none of us have jobs any more’ problem.

I might be the first to look a bit further down that line of reasoning.  At present, it is everyone’s unquestioned right, in almost every country in the world (except China with a primarily ‘one child per couple’ policy), to have as many children as they wish, no matter the circumstances of the parents, the possibility or even certainty that the children will be born into lifelong poverty, or with severe defects preventing them from ever living normal lives, or whatever else.  Some people in more generous countries deliberately choose to have as many children as possible, so they can profit from all the welfare payments they get from the state.

To argue against this notion gets automatic angry cries of Nazism and accusations of eugenics leveled against one.  Everyone hides behind unchallengeable social fictions and pretend that all children start with equal potential and all children may become useful contributors to society and positive forces for good.  Maybe that is even true – who knows.  Most of us avoid arguing the point and simply accept, in a case where maybe 80% of us are indeed productive, it is easier for us to support the other 20% than to confront really difficult issues and come up with alternatives that would be deemed acceptable in open free societies.

But what will happen when there is an automatic cost to society for every child born, because of the near certainty that the child will never get to have any type of productive job?  We no longer have 80% supporting 20%.  We will have maybe 1% supporting 99%.  Will our (possibly by then AI) rulers impose limits on the number of children we can all have?

Truly, we are living in extraordinarily ‘interesting’ times.  So much so that anything else this week must seem anti-climactic.  But, may I still humbly offer you :

  • AA Pilots Ostensibly Upset Their CEO Didn’t Meet Trump
  • Lufthansa’s Pilots Make Up With Their Airline
  • Boeing Trounces the Machinists’ Union in SC
  • Barcelona – Perhaps Not the Best Choice for a New Hub?
  • Another Manifestation of the ‘Sharing’ Economy
  • My Mother’s Maiden Name is “Ff926AKa9j6Q”
  • Elon Musk is Truly Boring
  • And Lastly This Week….

AA Pilots Ostensibly Upset Their CEO Didn’t Meet Trump

It seems the entire world is now having conniption fits when it comes to our new President.  Should they be seen with him, or not?  Should they buy his daughter’s fashion line items?  And so on.  If they associate with him, they risk being boycotted, but if they ignore him, they’re distancing themselves from an important element of the nation’s hierarchy.

As I mentioned last week, when President Trump held a summit with the nation’s major airline executives, one person was conspicuously missing – AA’s CEO, Doug Parker.  He had a ‘scheduling conflict’ and was instead due to attend a ‘leadership conference’.

Whatever the reason for his no-show, he has disappointed his pilots, who, through their union, seized upon his absence as a reason to pass a vote of no confidence in his leadership.  To be fair, the pilots seem to be generally spoiling for a fight more than specifically upset that Parker snubbed the President.

As for President Trump’s reaction, well, let’s just say we’d be surprised if any businesses around DFW proved to be an early recipient of any federal largesse.

Not wanting to be left out, AA’s flight attendants have been picketing outside the airline’s Fort Worth headquarters this week, and also at LAX, CLT and MIA airports, complaining about ‘broken promises’ dating back to the airline’s 2013 merger with US Airways.

Lufthansa’s Pilots Make Up With Their Airline

After five years of dispute, and I think 15 strikes during that time, it seems that Lufthansa and its fractious pilots have finally agreed to bury the hatchet (other than in each other’s skulls).

The deal sees pilots getting one-time cash bonuses around €5,000 – €6,000 per pilot, plus an 8.7% pay rise in four equal annual stages, with the first stage being backdated to 1 Jan 2016.

Lufthansa however gets to exclude the pilots of 40 new planes it is adding to its fleet from the agreement (presumably for its Eurowings operation) – which had been one of the sticking points – Lufthansa’s desire to get some low-cost operations separate from the full mainline operations.

At one point last year, the pilots were asking for asking for 3.66% a year raises, to be backdated to 2012 when their previous agreement expired – ie, about 20% in total, and with a huge amount of backdating.  So it seems they ended up with very much less than they were hoping for.

Although the deal requires ratification by the pilot union’s members, it seems likely to be accepted.  Hopefully that might mean we can start booking LH again, and not worrying anxiously if booking an international UA flight that will end up being operated by LH.

Boeing Trounces the Machinists’ Union in SC

Talking about unions, more often than not, Boeing has experienced a parlous relationship with the IAM and their local 751 in the Puget Sound area.  It is thought that opening a second facility in Charleston, SC was motivated in large part by Boeing’s desire to escape the clutches of the IAM and the sometimes extended strikes that occurred.

Certainly, now that they have a facility – and one conspicuously capable of considerable expansion – it is a new ballgame for Boeing in its union negotiations.  As a result, the IAM have been strongly focused on unionizing the SC assembly plant.  Here’s a great article that recounts much of the contentious events between Boeing and the union over the last couple of decades.

A vote to unionize was held this week.  The workers chose overwhelmingly not to join the union (2,097 against, 731 for).  This buys Boeing a further year before the IAM can hold another vote.  Even if the IAM should win a future ballot (and for sure it will keep trying) it may prove to be a hollow victory – there are plenty more states where Boeing could set up shop in the future, too.

In the meantime, perhaps Boeing had better hope that their current ‘best friend’ status with our new President isn’t jeopardized by the IAM pointing out to him how little of Boeing’s planes are actually made in the US these days.  This exploded picture shows how so much of a 787 is actually made somewhere else in the world.

Barcelona – Perhaps Not the Best Choice for a New Hub?

I wrote, a couple of weeks ago, about how Barcelona is seeking to limit the number of tourists visiting each year, by freezing the number of hotel rooms in the city.

So, imagine you were the head of an airline group – the British Airways parent company now known as IAG, and you were thinking of adding a new series of ‘low-cost’ long-haul flights, under a new airline brand, from a hub somewhere in Europe.  Where would you choose to base this airline?

Keep in mind an inviolable rule for airline hubs.  They need to not only be a convenient point for flights to connect through, but they also need to have a generous amount of traffic to and from the hub itself.  Simplistically, this is why, the world over, the major hubs are invariably located in major population centers rather than in the middle of nowhere.

One more thing.  If you’re operating a low-cost carrier, it helps if you are in a moderately low-cost destination.  Budget travelers seek low-cost destinations.

So, let’s think about larger sized cities with the opportunity to considerably grow their incoming tourist numbers.  Several cities immediately come to mind.

In the case of IAG, they have announced they’ll base their new low-cost airline in, as you’ve probably guessed, Barcelona – the city least likely to be able to accept more tourists, and the city most likely to see skyrocketing costs of what little accommodation is available.

Well done, IAG.  You win the prize for ‘new budget airline least likely to succeed’.

And in other BA news, stand by for their latest cabin-crew strike, with Heathrow based crew planning to strike between 22 – 25 February.  They want more money, and have already had 11 days of strike action so far this year.  Their earlier strike action has been only minimally impactful on BA’s flights.

Another Manifestation of the ‘Sharing’ Economy

The internet is finally being used effectively in the way many of us predicted, two decades ago.  It is a great tool for disintermediation – it readily puts people in touch with other people when one has a need and the other has an effective service or solution to match the need.

Much of the ‘old’ economy involved businesses that, while claiming to offer various different services, in reality were nothing more than knowledge brokers and connectors between people wanting something and people offering the same thing.  A classic example would be travel agents.  With my agency, the reason that hotels and tour operators in far away parts of New Zealand and Australia would pay us 10%, 20%, sometimes 25% or even 30% commission, was because there was no other way they could reach and sell their products to potential tourist customers.

The internet promised to change all that, although in the case of travel, the more things change, the more things remain the same.  What no-one initially predicted was that there would still be ‘connectors’ between suppliers and customers – in the case of travel, those far away hotels and tiny tour operators have ended up paying much the same commissions they have always paid, but now to companies such as Expedia.  Progress is sometimes a funny thing.

The internet hasn’t so much eliminated the role of intermediaries, as it has created new intermediaries and new ways of connecting niche suppliers and consumers of items, theoretically instantly and at low cost.  Hence, the rise of companies such as Uber (connecting people with a car and a willingness to drive you somewhere with people who are looking to be driven somewhere) and Airbnb (connecting people with a spare room and a willingness to rent it overnight to strangers with people who are looking for somewhere to stay), and so on.

The latest interesting example of this is a company, Roadie.com.  They offer to connect people who wish to ship packages, small and large, with people who are driving their vehicle between where the person with the package is and where they wish the package to be delivered.  This is not a million miles different to what Uber is looking at doing too, but whereas Uber is focused on local pickup/delivery, Roadie is offering to move items across the country.

Clearly this is a business that desperately needs to grow to a point where they have reached critical mass and there’s a reasonable likelihood of people wishing to ship items being able to quickly connect with people willing to transport them.  On the face of it, it might prove to be an excellent idea, but we’re not yet sure of the economics of it, or how long it takes for items to be delivered.

If you’re planning a road trip and have spare space on your back seat or in your trunk, it seems to cost nothing to sign up to be a driver, and the possibility of picking up a several hundred dollar ‘gig’ becomes very appealing.  If you need something shipped that isn’t time sensitive, the possibility of having a normal person take good care of it, rather than needing to entrust it to a commercial freight company, is also appealing.  I bought a chair on eBay a couple of years ago, and the freight that I had to pay to move it half way across the country was more than the cost of the chair ($500 for freight).

One curious thing with its shipping comparison service – the numbers don’t add up for the competing services.

$8 + $7 = $21?  $8 + $3 + $1 = $31?  Hmmm….

 

My Mother’s Maiden Name is “Ff926AKa9j6Q”

We all know that it is a bad thing to use the same password on every site we visit.  Clearly, if our password is stolen on one site, it becomes easy for identity thieves to then try other websites we might frequent and see if the same password works there, too.

But something not so immediately obvious is how to answer the other security questions that some sites have for situations where we (or someone pretending to be us) say we’ve forgotten our password.  In theory, these are questions to which only we know the answers.  In reality, some of the question/answer pairs are easily found out, perhaps by looking at a person’s Facebook profile.  What is the name of your pet?  What was the name of your high school?  What is the name of your best friend?  In what city were you born?  And so on.

A recent theft of user data from Yahoo is said to have compromised not only our User IDs and passwords, but also the other security questions and answers to ‘safeguard’ our account.  The really scary part of that is that we tend to answer these security questions correctly, and the same way, on every site that asks us.

So, what you should do is answer the security questions not with the correct answers, but with password type answers too – but don’t forget the answers.  Write them down in a book, or use a password manager program (I use Roboform, there are plenty of other good ones too).  The sites don’t care what you enter for your pet’s name or any of the other questions, all they care is that the answer you entered when creating your account matches the answer when you’re trying to recover your account.

So, when asked your mother’s maiden name, don’t say Smith.  Say Ff926AKa9j6Q on one site, and d$d23*KW!9 on the next site, and so on.  This will transform the ‘extra layer of protection’ from what is currently more akin to an extra layer of vulnerability, and make it truly secure.

Elon Musk is Truly Boring

Electric cars.  Rockets.  Hyperloops.  Mars.  Hasn’t the man set enough wheels in motion already?  Apparently not.  Challenged by dense traffic around his Hawthorne office at SpaceX in Los Angeles, he came up with a ‘solution’ to his daily commute – the type of solution that us lesser mortals would neither consider nor implement.

I used to work next door to a wealthy individual who solved his own transportation problem (loss of license after a DWI) by simply buying a helicopter to commute between home and office.  But Mr Musk has a possibly better idea.  He will dig a tunnel.

Actually, the idea is potentially very sensible.  I’ve never understood why digging tunnels is such an expensive business.  These days, it isn’t like the olden days with a gang of men armed with pick axes, wheel barrows, and the occasional stick of dynamite.  Enormous tunnel drilling machines (see picture at top) do the entire thing, semi-automatically, and due to a glut of the devices on the market (surplus from some Chinese construction projects) they can be purchased at one tenth of new price.

It is not clear that even the redoubtable Mr Musk will be able to address some of the problems that seem to beset such devices – unexpected changes in substrate that either prove too hard or too soft – but let’s hope he might.  He makes the point that we are building a three-dimensional world (ie multi-storey buildings) but to travel between such structures, we are limiting ourselves down to two dimensions.  He suggests that multiple layers of tunnels would open up a new infrastructure of highways – for our cars and for his Hyperloops.

It seems that he is a man of action, because he has already started digging for a tunnel in his car park.  No-one is quite sure where the tunnel will go, but hopefully somewhere.

More details here.

(In other Musk/Tesla news, an article about yet another possible Tesla beater.  They truly are becoming a dime a dozen, aren’t they – well, not literally – at least, not yet.  This particular car is guesstimated as selling for $160,000 and up.)

And Lastly This Week….

Have you ever tried one of the new VR headsets?  One of the problems many users experience is that watching something through a VR headset can make them motion-sick.  But for some of us, we can feel queasy with something a lot less all-encompassing than a VR headset.  For example, particularly if you’re not at your most relaxed on the edge of a cliff, expand the video at the top of this page to full-screen size and see if even the sight of a beautiful lady is enough to stop you looking away.  (There is a possibility that this is the start of a new craze.  Oh my.)

As a proud New Zealander, you might think I’m delighted at the news that scientists have managed to discover that New Zealand is not just two tiny islands in the South Pacific, but actually the eighth continent.  But, instead, I’m rolling my eyes at what is surely the most ridiculously mislabeled ‘discovery’ of the week.

On the other hand, if it gives us an advantage against Australia, I’ll be all for it!

If you’re taking Monday off, and particularly if you’re traveling somewhere for a long weekend, I hope it is a great one, and, of course, always, until next week, please enjoy safe travels.

 

David.

 

 

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Feb 152017
 

Might you soon be able to avoid the generally awkward experience of buying and selling cars?

Some things in life we take for granted and accept without question.  Brushing your teeth, for example.  Learning to read and write.  And so on.

Another instinctive thing, for most Americans, is the essential inviolable need for and benefit from privately owning one’s own automobile.  Sure, if you live in mid-town Manhattan, you can create a cogent case against car-ownership, but for those of us in the suburbs and smaller towns, it is an essential part of our lives.  How else would we get to our jobs, to the shops, to our social activities, and so on?  As we discuss in our series on our new national transportation opportunity, traditional methods of mass/public transportation do not work in lower density environments.

This is a chicken and egg situation – the growth of private auto ownership allowed our lifestyles to change so that we no longer needed to concentrate in the same small areas to live in and the same small areas to work in, and now that it has become part of our accepted lifestyle, it is very hard to break out of these expectations, but until we re-concentrate our housing and our working, public transportation remains unaffordable and unappealing.

So, if we can’t count on buses, metro lines, light or even heavy rail to move us variously from where we are to where we want to be, what choices do we have other than our own private car?

As good as cars are, they are becoming less appealing.  The cost/convenience of a car is getting worse – commute times and congestion in much of the country are going up, while our brief respite from high gas costs is sure to disappear with the suddenness that it appeared, and sooner rather than later.

Taking taxis is an expensive and awkward process, often involving dirty decrepit cars and rude drivers.  They have little appeal as an alternative to private cars.

Two New Paradigm Changers

Two new paradigm changers are appearing.  The first is quasi-taxi type services such as Uber and Lyft, which are transforming the taxi type of travel experience.  Not only is every part of the experience nicer and better with these new companies, they are also less costly and more convenient for ad hoc short distance travel.

The second paradigm changer is car sharing services such as Zipcar and Car2Go.  These offer a solution for when we need a car for half a day or so at a time.

There are now three ‘sweet spots’ for personal transportation – Lyft/Uber for single journey ‘about town’ travel, Zipcar/Car2Go for a half day or full day of driving around ‘doing things’, and traditional rental car services for when we need a car for multiple days in a row.

With the growing appeal, affordability and presence of these alternatives, it is time to re-examine something we tend not to consider.  How much does owning and using a car truly cost us – is it still the most cost-effective and convenient solution to our personal transportation needs?

We seldom study or think about the costs of our car ownership, because the cost comes under several different ‘categories’ in our lives and budgets, and is viewed as unavoidably essential.  Similarly, with the concept of owning a car an instinctive automatic ‘given’, few people outside of central city centers look for or consider alternatives.

The Surprising Cost of Owning a Car – Fixed Costs

Where to start when picking apart the entirety of all the costs of owning a car?  Well, there’s the cost many of us make each month in car payments or lease instalments.  For most of us, our biggest monthly commitment is what we pay for our house or apartment.  Then the second biggest is our car payment.  And they are both generally accepted as unavoidable.

We also have the cost of the car’s insurance – something we think of as ‘sensible’ and ‘virtuous’ (and possibly mandatory as well).  This is probably about $100/month, and maybe gets lumped in with our health, home, personal belongings, and other types of insurance payments we also make monthly.

Then the car’s registration – if you’re lucky, that’s not much; if you’re not so lucky, it can be many hundreds of dollars a year.

Add these up, and many of us are paying over $500/month, every month, before we even step into our car.

And wait, that’s not all.  There’s more, and possibly more obscured.

Where do you keep your car while you’re at home?  Do you garage your car or park it on the street?  If you park it somewhere on or inside your property, there’s a cost associated with that (sometimes there’s even a cost associated with a street parking permit, too!).

Okay, so maybe your home came with a garage, so you didn’t think of it as an optional item.  But with a bit of extra finishing, that garage could be a den, a storage room, a home theater, a mother-in-law apartment/income-generating rental unit, or used for any of many other purposes.  So, there’s an ‘opportunity cost’ to your garage, even if not an obvious direct cost.  Actually, there are or will be direct costs too – the next time you need to reroof or paint your home, you’ll be directly paying more for the garage as part of that process.

Perhaps you’re in an apartment/condo building where you pay extra for each parking space, and can clearly see the cost of parking.  Or maybe you get one park ‘free’ but have to pay for a second park for your spouse’s car.

If you’re renting a place, you probably already know that homes with onsite parking rent for more than homes with nothing.

The cost of garaging your car is usually ignored in studies of what it costs to own a car (inexplicably, our sense is that just about all such studies prefer to under-estimate the true total cost of car ownership).  There’s a similar cost that also is generally never included.

Another Cost Invariably Overlooked

So, when you take the car to work, or anytime you drive anywhere, what happens when you arrive at your destination?  Are you paying for parking?

It is hard to walk away with much under $20 to park your car in a downtown parking lot.  You’ll pay more at the airport unless you choose an off-site option that adds considerably to your total travel time and hassle.

Should we also mention the times when you go over on your parking and suffer a parking penalty ticket?  And if we’re talking about such things, don’t also forget other types of traffic tickets that you might get from time to time, especially if you have a bit of a lead foot!  Whatever the circumstance, the cost is still a cost, isn’t it.

Maybe you have some sort of monthly parking contract and pay ‘only’ $300/month to park somewhere close to your office.  That is sort of good, but if your commute is 10 miles each way (which is about the national average) and if you’re working 20 days a month, then the $300 means that for the 400 miles you’ve driven to and from work, you’re spending another 75c per mile.

Perhaps we should almost mention tolls – our sense is that this cost too is often overlooked.  Unfortunately, now that new technologies make it easy to electronically charge tolls, as compared to when you had to slow down and drive through a lineup of toll booths, they are springing up everywhere.

Another Somewhat Obscured Cost

Now let’s mentally step into our car and start it up.  Time to start thinking of the costs of driving the car.

You’re probably now thinking of your regular visits to the gas station.  Surprisingly, for most of us, the biggest cost isn’t gas.  Believe it or not, it is depreciation.  If you buy a $40,000 car, then you know that after putting 200,000 miles on the clock, it is going to be worth close to zero.  In simple depreciation terms, that’s 20c a mile.  And that’s a best case scenario.  Few of us drive our cars 200,000 miles before trading them in.

At the other end of the scale, if you buy a $60,000 new car and sell it after a year, on average you’re going to lose 20% of its value in the first year – $12,000.  So for that first year, you’re paying $1,000 a month for depreciation – you can think of this either as a flat cost, or perhaps if you’re driving 12,000 miles a year, you can think that it is costing you $1 per mile for depreciation alone.

What’s that, you say?  The IRS only allows you to claim 55c a mile, in total for everything, and your depreciation alone is twice that?  Well, golly gee, did you really think the IRS was going to let you ‘win’ on that allowance?  (Your tax alternative of course is to claim actual costs incurred.)

Most people find themselves paying $500 – $1000 a month to own their car, before they ever use it at all.  A few outliers might have a lower cost (an old reliable car that no longer has any payments or remaining depreciation), and some will have a much higher cost (an expensive luxury auto that is leased or which gets traded in regularly).

Note that the depreciation cost might be reflected in your monthly payment cost.

Running Costs

Now let’s start to look at all the costs once you’ve stepped into the car and turned the key.

Now we can mention gas.  It is the obvious cost you most regularly incur.  But it isn’t the only cost.  Every mile sees you using up your brake pads, your tires, and getting closer to the next oil & lube and periodic replacement of other fluids, hoses, belts, and so on.  Replacing these ‘consumable’ items is predictable – you know about how many miles you get per set of tires and brake pads, so you know there’s a direct cost for every mile for such things.

Even the occasional car wash, while not a huge sum, is still another $10 out of your pocket.  Do that once a week and you’re spending $500 every year (so if you drive 10,000 miles, that means you’re spending 5c a mile just for car washing, alone).

Plus you have the ever-present excitement of never knowing when something expensive isn’t going to fail, landing you with an unexpected four figure repair bill.  Or maybe you buy an after-market extended warranty, but if you do that, all you’ve done is swap unexpected costs for another per mile cost.  If you get a 50,000 mile warranty for $5,000, you’ve added 10c a mile for most maintenance, except that, as you’ll know from past experiences, there might be a $100 per repair deductible, and sometimes you’ll encounter items that aren’t covered.  So you’ll still be paying more, even with the warranty.

There’s no avoiding the cost of repairs.

Back to the Hidden Costs

Now, think about something we all are usually very careful never to consider.  What would happen to your personal wealth situation if instead of making a car payment and/or incurring depreciation every month, you were paying the same amount into a retirement/investment account?  With cars, most of the money you pay to own a car is money you’ll never see again.  Hopefully, with savings and investments, it is money you’ll get back, several times over, in the future.

For example, say you have $50,000.  If you use that to buy a car, in 12 months’ time, your $50,000 would have dropped to $40,000, plus you’d have had to pay $1000 – $2000 for insurance and registration and other costs, even before you started to drive it – a net outcome seeing you down to $38,000.  But if you invested the $50,000, maybe at the end of the year it is worth $55,000.

The ‘opportunity cost’ of the car is the extra amount that you are not getting by investing your money into a true appreciating asset.

Official Costs of Car Ownership

Various organizations such as AAA come out with annual costs of car ownership.  As we note above, these costs don’t include all the costs of car ownership/use, and so seem to be under-reporting the reality as reflected on your credit card statements and bank balance.

The IRS are happy to allow you to claim 55c a mile in 2017, no questions asked, which a cynic would say implies the real cost is higher than this.

This article suggests a cost of between about 37c and 93c a mile, depending on the miles a year you drive and the car type you own.

But remember that we calculated that monthly parking costs alone might be 75c a mile (for the part of your driving that takes you to and from work).  Car washes are 5c a mile, also not included.  And so on.

How do these costs compare to other types of semi-personal transportation?

Car Ownership Costs Compared to Alternatives

If you call a ride from Lyft or Uber, you’ll be paying somewhere between 70c and $2.00/mile, plus a few dollars ‘flag fall’ at the start of the journey, plus also a cost per minute of around 10c – 50c.

If you choose their ‘ride share’ type option, these costs might reduce from 10% to 50%.

In other words, it would seem, at first blush, that your own personal car is cheaper.  But if you are using Lyft or Uber, while the cost per each journey is probably a bit higher than driving your own car, you’re not also tying up maybe $50,000 of your cash in a car, and you’re not taking as much as a $1,000 a month hit with depreciation or car payments.  That $1,000 a month – $35 a day – pays for the extra cost of a lot of Lyft/Uber rides, doesn’t it!

If you only drive a little each month, the higher per trip cost of Uber/Lyft is balanced by the high fixed costs of car ownership, making Uber/Lyft a better deal.  If you unavoidably drive 1,000+ miles a month, maybe owning your own car might remain the better choice.

If you choose a Zipcar for a couple of hours of driving around town, you’ll probably be paying $6 an hour and upwards, or, if renting for a full day or longer, $56 and up per day.  These rates typically include insurance, gas, maintenance, and probably 180 miles of driving per day.

Competitors to Zipcar include Car2Go, which simply charges 41c/ and up per minute, or $15 and up per hour, and $59 and up a day, for a Smart or Mercedes-Benz car.

So even if you’re paying $75/day, compare that to owning your own car at a cost of $1000+/month.  That $1000 pays for a lot of $75 days, doesn’t it.

If you’re renting a car for multiple days at a time, you can pay as much or as little a day as you like, depending on the type of car you choose, the insurance options you select, and whether you’re with a leading brand name company or a no-name ‘Rent a Wreck’ type company.  You could pay much less than $56/day, and of course, you could also pay much more.  You also pay for gas, but nothing else.

So, on the face of it, Lyft and Uber might be less or more expensive, depending on the travel you would do.  On the other hand, you’re never up for parking costs with them.

A Zipcar or similar is cheaper if you just want a car for a few hours, a rental car is probably more expensive, but if you’re about to go on a long journey, then quite a few people choose to rent a car and leave their car behind, so as to avoid taking a large hit with extra depreciation (or lease penalty fees) by putting a sudden few thousand extra miles on the car.

On the other hand, many people choose to ignore these calculations entirely, because car ownership isn’t so much about the last penny or two per mile of cost, it is about convenience.

We’ll accept that, so let’s now turn our lens to focus on the convenience of private car ownership.

Some Inconvenient Truths About Car Ownership and Convenience

Your car – your greatest liberator, right?  The world is, more or less, all of a sudden at your feet; you can go anywhere you want.  You can be 500+ miles from home in less than a day, and so on.  You can not only go where you want, but also when you want, and you can control your environment.  You get to set your car temperature, the music that plays, and who travels with you.  You’ve plenty of leg and shoulder room, and can bring as many bags (or even shove stuff loose into the car) without caring.

Around town, what easier way to go shopping and bring everything back home?  Bulk stores like Costco couldn’t exist if everyone had to hand-carry their purchases to a bus and then from the bus stop to their home at the end of the bus ride.

But sometimes, the perceived advantages of owning your own car are not as great as they seem.  It just requires a new way of thinking.  For example, if you want to go into town and drive to three or four different shops, buying items at each store, the convenience of your own car almost certainly beats getting more and more burdened with items, calling for multiple cars and incurring minimum ride fees for each hire, and so on.

But even that isn’t as clear-cut as you might expect.  What say you have to pay for parking at several of the places you are stopping at?  An alternative is to get a Lyft/Uber car, and simply ‘leave the meter on’ – paying their cost per minute while they are waiting for you.  At, say, 15c a minute compared to a $10 parking fee, you could have the car wait up to an hour for you and still save money.  Or maybe on these types of occasions, you simply rent a Zipcar for the afternoon.

What say you’re going out for dinner and drinks with friends?  Using a hire service means you can enjoy yourself and not worry about drinking too much.

Some cities also now have intelligent car-pooling.  This means your Lyft or Uber ride might already have someone else in it, going the same way you are going, or you might detour on the way to pick someone else up.  It might take you a bit longer (or it might not, depending on the sequence of pickups and drop-offs) and it will definitely save you more money.

This becomes practical, even for daily commuting.  Your cost goes down, your ride gets to travel in car pool lanes if available, and you don’t have to conform to the restrictive requirements of formal car/van pooling schemes.

Think about going to work.  If you don’t have guaranteed (and company-paid) close-by parking, you’re up for the hassle of finding somewhere to park, the extra time walking between your park and your office, and of course the extra cost.  Compare that to a literally door to door service with Lyft or Uber.

Let’s also think about how ‘convenient’ it is when your car’s battery fails on the cold wintry day when you have no spare time and in the most inconvenient location (have you ever had a battery fail on a warm summer’s afternoon when you’ve plenty of spare time to deal with the unexpected problem?).

Or how ‘convenient’ it is, even when you have to take your car in for regular servicing, or for unscheduled repairs.  Something as simple as fitting a new set of tires can take up half a day if you go somewhere that doesn’t have exactly scheduled time slots – and if they say ‘come back in a week’s time for us to re-torque the wheels’ you’ve just wasted another half day.  And so on.

How convenient is it to be stuck in stop and go traffic, or an unexpected traffic jam?  At least, if someone else is doing the driving, it is possible these days to catch up with emails, phone calls, or just to enjoy the time by reading news articles, websites, watching videos, or whatever.  Our ability to be connected everywhere now means that having to concentrate on driving has become from ‘something to do during an unavoidably unproductive time’ to now disadvantaging the driver while allowing passengers to be as productive as they wish, in the car, same as if they were at home or in the office.

Perhaps a Partial Approach

Just because you have your own car doesn’t mean you should always use it.  For example, when commuting to work.  That ‘free’ carpark your company is paying for?  It might be free to you, but it surely isn’t free to your employer.

What do you think they’d say if you approached them and said “I want to become a more eco-friendly commuter, and so I would like to use Lyft and Uber ride sharing.  This will save you the cost of the car park you’re paying for me; can you instead apply that money to subsidize my ride sharing plan?”

With phrases such as ‘eco-friendly’ and ‘ride-sharing’, you’re touching all the essential politically correct buttons, and indeed, some cities have ride-sharing subsidy schemes that you might be able to get your employer to qualify for that would make this request even more of a slam dunk.  Maybe the company will credit you the entire amount saved from your vacated car park – especially if you point out that this means you can do some productive work during your commute – but even if they split the difference and give you half the cost, you’re still well ahead.

Another consideration is to consider reducing the total vehicles owned in your household.  Most households average around two cars.  Why not ease that back to only one vehicle.  You can decide between yourselves who has the greatest need for the car each day, and the other person gets to use Lyft/Uber/Car2Go/Zipcar as needed.  Think about it like this – if the average person can justify about 1/2 to 2/3 of a car, and rounds that up to owning one car, two people together can justify 1 – 1 1/3 cars, and that is better rounded down to a single car, rather than rounded up to two.

Minimizing Miles – Sensible or Not?

We mentioned earlier how some people will leave their car at home and rent a vehicle when going on a long road trip.  That saves them having to take a big depreciation hit (or go over their mileage allowance if they are leasing their vehicle) when suddenly adding a thousand or more miles to their car.  It also means they can own a small ‘about town’ vehicle, and switch to a better car for long distance driving for just the times they need it.

The thing about vehicle depreciation is that it occurs as a combination of both the vehicle’s age and its mileage.  Even a car with zero miles on it will still depreciate each year; and on the other hand, all cars of a certain age have depreciated to a similar amount, within a fairly wide zone of actual mileages driven.  Think of it a bit like “all cars depreciate by a minimum amount each year that includes a certain number of miles ‘for free’ as part of the deal”.

So if you are driving somewhat less than the average of perhaps 10,000 – 12,000 miles a year, you’re not going to get a big saving by avoiding another thousand or two miles.  Similarly, if your vehicle is already being labeled as ‘high mileage’ another thousand miles won’t make a lot of difference either.

In other words, renting a car to avoid adding miles to your car can sometimes have an impact on depreciation issues, but because depreciation combines both the age and the miles of the vehicle, its impact isn’t as great as you might think, and as long as you stay in the typical zone of miles/years, going up or down by 5% or so isn’t really material, especially after the first couple of years.  There’s an obvious difference between a one year old car with 5,000 or 15,000 miles on the odometer, not so much of an obvious difference for a five-year old car with 55,000 or 65,000 miles on it.

If you have a leased vehicle, you probably only need to worry about the mileage allowance if you know you’re not going to buy the vehicle at the end of the lease.  Typically, if you decide to buy the car when the lease expires, you pay the amount specified on the lease you originally signed, and any extra mileage is ignored.  But if you know you won’t buy the car at the end of the lease period, and you’re in danger of exceeding the total miles allowed during the lease period, renting a car for longer journeys definitely is something to consider.

On Balance

Your best future strategy depends a great deal on where exactly you live, your typical driving patterns, the quality of service offered by public transport, by Lyft/Uber, the presence of Zipcar/Car2Go in your neighborhood, and your preferred type of vehicle ownership.

But it seems fair to say it is no longer an obvious foregone conclusion that owning your own car is always automatically your best choice – and even if you do own a car, it may not always be the best way to travel places.

A combination of Lyft/Uber, Zipcar/Car2Go, and regular rental cars, covers just about every possible transportation need and scenario, and quite possibly at lower cost, and with less catastrophic risk in case of major mechanical failure.

This reality is already starting to seep into the market.  Lyft/Uber are skyrocketing in terms of their usage, Zipcar/Car2Go are reporting ‘double digit annual growth rates’, and other new competitors are springing up offering slight variations on the ride or car sharing concept.

At the same time, the number of households in the US with one or more cars is starting to drop.  We’re waiting the release of the most recent National Household Travel Survey to get an update on this.  The previous survey was in 2009; there’s a new one for 2016 expected soon, with the 2009 report hinting at a drop after ownership levels seem to have maxed out a decade earlier.

A More Rational Type of Car Use

It should come as no surprise that personally owning a car is not automatically the best solution.  Our cars – the second most expensive ‘asset’ most of us ever own – are used so little.  And they’re not actually ‘assets’ – assets typically hold their value or go up in value.  Cars don’t.

How many hours a day do you use your car?  Probably, week days, you’re in it for 30 minutes each morning and evening commuting to and from work, and that’s about it.  Maybe a couple of hours a day on the weekends.  So, with 168 hours in the week, you’ve been getting use from your asset for 5 – 10 of those hours.  Even worse, for much of the other 160 hours, you’ve been paying to park the car somewhere, and it has been silently depreciating.

More to the point, for the eight hours during the day between when you drive to work and drive home again, ‘your’ car could be ‘paying its way’ – working for someone else, somewhere else.  If there was an easy convenient no-risk way whereby ‘your car’ could be making money for you when you weren’t using it, wouldn’t this be a great thing for you?

We already see this concept with other types of sharing services such as Airbnb which takes your unused spare bedrooms and allows you to rent them out to overnight guests, and VRBO.com which lets you rent out your entire house by the day or week when you’re not present yourself.  So, why not your car as well?

New internet services are springing up, offering the essential tools to connect people who want cars with people who have cars available.  The missing piece of this puzzle is soon to come our way – when the car itself can do the driving, it will conveniently travel from hirer to hirer, and do the driving while being hired, too.  That makes it brilliantly convenient for everyone, and removes the worry of trusting a bad driver with your expensive car.

We expect with a decade, private car ownership will start to plummet, and it will become something primarily for collectors and enthusiasts.  Most of us will generically just request a self-driving car, as and when we want it.

Car Ownership Traditionally Resists Rationality

Reader Richard, in the comments below, rightly points out how a car has been hyped up as being the quintessential expression of our individuality.  Generations of car marketeers have persuaded generations of car owners that we are what we drive.

Even if we resist such marketing hype, many of us form deep attachments to our cars.  To start viewing them with no more passion than we do the hammers and screwdrivers in our tool box, or the planes we occasionally fly on, will indeed take time and a major attitudinal change.

But we think this is inevitable.  External pressures will force us to rationally confront the concept of car ownership.  Parking, for example, will start to vanish – it won’t be needed when you just call a self-driving car.  As reader Mark points out, also below, homes will be built with less garaging.  Extra lanes on freeways will be opened only for smart self-driving cars (this is already happening with car pool lanes being opened for car poolers and electric vehicles).

Those of us who can’t break free of our love-affair with our cars will of course keep them, just like some people still enjoy horses and buggies, steam powered trains, and DC-3 airplanes.  But for most of us, and nearly all our children, owning a car will make no more sense than owning a plane or bus.

What You Can Do Right Now

With the rapid changes in vehicle technologies and transportation services, the last thing you should do is to buy an expensive new car.  Some people would say that the last thing you should ever do is buy an expensive new car, and that advice is definitely even truer at present.

Who will want to own an ordinary car when new cars start to truly be self-driving, offering both greater convenience and safety?  Who will want to own a gas-powered car when new cars start offering truly practical battery power and cost one tenth as much per mile to drive?

Make sure you’re not making a big commitment to old technology.  If you need to replace a current vehicle, buy perhaps a two-year old vehicle – something that still has some remaining new car warranty, but which has already dropped in price by a third or more from its original new price.

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Feb 092017
 

Even if you know where this is, it probably won’t help you guess the air route with the most first class seats – see article below.

Good morning

Does President Trump read The Travel Insider?

He met with airline CEO’s on Thursday – although American’s CEO, Doug Parker, was notably absent due to a ‘scheduling conflict’.  One has to wonder – what sort of scheduling conflict would take priority over meeting with the President?  Maybe he was busy meeting with Nordstroms?

Mr Trump seems to have taken the advice I offered him last week.  He told the airlines that he was unable/unwilling to interfere with current international airline open-skies agreements, and pointed out that foreign airlines are actually contributing to our economy rather than draining it.  Bravo.

He also focused in on the new FAA Nextgen ATC system as being an infrastructure project he could support.  Bravo a second time.

All exactly as suggested in last week’s feature article.  Great minds think alike?  Or ‘fools seldom differ’!?

And, if you’re there, Mr Trump, please have a look at this week’s feature article too.  A transportation/infrastructure project that is calling out for infrastructure investment, and a huge opportunity to Make America Great Again.  You’ll see it at the end of the weekly roundup.

Also this week :

  • More Tales of Traveler Misadventures
  • Delta Gets Snippy with Emirates
  • UA Pilots Get Snippy with Norwegian
  • US Airlines Win Top Three Places – But Maybe Wish They Hadn’t
  • Spirit Airlines Shrinks (Its Carry-on Allowance)
  • The Route with the Most First Class Seats
  • 2016 was a Great Year for the Airlines
  • And Lastly This Week….

More Tales of Traveler Misadventures

Following on from our items the last couple of weeks, reader and recently retired senior airline executive Nigel writes

Some true stories of passengers going in the wrong direction. …

The Korean seaman who boarded a flight in Johannesburg and failed to get off in Nairobi to get a connecting flight to Hong Kong.  Apparently he asked the crew why there were no Chinese junks on the River Thames after he landed at Heathrow.

The passenger who, when airborne from Dubai, asked the crew why the flight was going East instead of West.  He had booked a ticket to Dacca, Bangladesh instead of Dakar, Senegal.

My particular favourite. ..a little old lady walked into the ticket office of BOAC many years ago and asked the price of a ticket to Salisbury.  She was quoted a fare of several hundred pounds and exclaimed ‘What, to Wiltshire? ‘. The airline staff thought she meant Salisbury, Rhodesia.  She had meant to go to the coach station across the road!

Delta Gets Snippy with Emirates

In the ‘good old days’, such as Nigel and many other readers will remember, while it is true that airlines did indeed compete with each other for passengers, behind the scenes, they all worked together.

This was not in any attempt to be anti-competitive.  It was for the best of reasons.  People realized, at all levels of the airlines, that their biggest competitor was not another airline, but was the passenger choosing to drive instead of fly, or stay at home and not travel at all.  The airlines, behind the scenes, joined together to ensure that passengers had as good a travel experience as possible, no matter what their choice of carrier.

This took some forms that passengers may have noticed, such as the willingness of one airline to accept a ticket on another airline if the other airline had to cancel its flight, way beyond the requirements of the one-time CAB in the US for airlines to do so.  It also saw interlining of baggage that was more flexible before airline codeshares than it is now, where it seems fewer and fewer airlines will transfer bags between each other, even though in theory the systems to do so are now more readily in place than before.

Another form of cooperation was one which hopefully passengers never noticed.  If an airline’s plane had a maintenance issue, and the airline didn’t have the necessary spare part at the airport the plane was stranded at, any other airline at the airport would gladly lend them a spare part to get the plane up and operational again as soon as possible, and avoid any inconvenience to passengers.

We’re not just talking about needing a replacement nut or bolt or piece of wire.  I’ve even heard stories of airlines lending other airlines a spare engine, perhaps worth $10 million or more.

So, with that as background, you might understand the sadness with which I read the story about Delta withholding a spare part that would have otherwise allowed an Emirates plane to be quickly fixed and fly out of Seattle.  Delta of course hates Emirates with a passion these days.

What makes the story particularly outrageous is that first a lower level person at Delta apparently responded to Emirates’ request by saying, as always would have been the case, ‘Yes, sure, help yourself’.  Emirates took the part (not an engine – a mere $300 item) and fitted it to its 777.  So far, so good.

But then a senior manager at Delta’s head office learned of the good deed and overruled the Seattle employee, demanding the spare part be taken out of the Emirates plane and returned to Delta.  Delta’s excuse for this petty mindedness was that the unit was the only one of that particular part that Delta had in stock in Seattle.  But with regular flights from Atlanta to Seattle, and only a limited number of 777 services out of Seattle, and a part that clearly seldom fails, one would think the risk of needing the part prior to another one being flown up from Atlanta, or sourced from any of their other larger maintenance bases, was so immeasurably small as to be inconsequential.

Emirates had to remove the part and return it to Delta.  Eventually Alaska Airlines managed to come up with a suitable replacement part which it gave to Emirates (Alaska being an airline that likes Emirates and dislikes Delta), allowing the Emirates flight to leave, 6 1/2 hours late.

Emirates said, when asked to comment on the incident, that they will continue to help other airlines anytime they need help, the same as they always have done – even including Delta.

UA Pilots Get Snippy with Norwegian

In a move probably timed to coincide with President Trump’s meeting with airline executives, the head of United’s pilot union sent a carefully pitched letter to President Trump, claiming that former President Obama’s decision to allow Norwegian to fly to the US would destroy the US airline industry and all the jobs associated with it, because Norwegian bases its labor contracts on Singapore and Thailand standards.  The letter described Norwegian as a ‘flag of convenience’ carrier.

Well, that sure pushes all of Mr Trump’s buttons, doesn’t it.  But none of it is true, starting with the suggestion that it was a personal action of President Obama that gave special permission to Norwegian.  In truth, it was quite the opposite.  Obama’s Dept of Transportation scurrilously delayed, for no apparent reason, responding to Norwegian’s application to add extra service via its Dublin hub and Irish subsidiary.  It refused to respond, knowing that if it denied Norwegian’s perfectly valid application, that would cause international outrage and would be eventually overruled.  So it just did nothing at all.  For almost three years.  An application that could have been approved in three days and should have been approved in three weeks sat and sat and sat.

Permission should have been automatically granted as per the Open Skies Agreement between the EU and US, but was only finally approved after the Presidential election, in December.  So, if one were to ascribe the DoT’s actions to a president, one could say that Mr Obama’s administration delayed approving and only after Mr Trump was elected was approval granted.

It would be news to Norwegian, to the Irish and UK governments (currently most of the Norwegian flights operate from the UK), and the EU authorities, that Norwegian is contracting on the basis of ‘Singaporean and Thai standards’ – whatever that means.  The airline is in full compliance with all applicable EU, Irish and UK labor laws.

And the pilots’ suggestion that the entire US airline industry, and all the jobs associated with it, will be destroyed by Norwegian, is off the scale of fevered imaginings and nonsense.

However, if their predictions of doom and gloom do indeed come true, perhaps the two reasons why would be US airline ineptitude and US union greed.  The solution to these problems lies within themselves, can not be blamed on Norwegian, and definitely does not need Presidential intervention.

There is no sign of President Trump heeding these allegations.

A common theme running through all the US airlines and their unions seems to be a fear of competitors, and a preference to destroy competitors rather than to improve their own games.  We’d all be so much better off if the airlines and their unions would respond positively rather than negatively to competition – you know, the way the great American model of free enterprise is supposed to work.  The next item might explain why US carriers fear competitors so much.

And, happier news, Norwegian just announced the latest city it will be serving – Providence, RI.  Norwegian will fly 737s between Providence and probably several different European cities, starting as soon as it gets delivery of new 737 planes from Boeing, later this year.

This is very relevant to the UA pilots’ complaint.  UA doesn’t operate 737’s across the Atlantic, and indeed, has no international service from Providence at all (it offers flights to ORD EWR & IAD).

Norwegian isn’t pushing United out of a route that it currently operates.  Instead, Norwegian is creating an innovative new set of routes that no other airline has ever given any thought to.  These new routes grow the market as a whole, provide valuable extra choices and convenience for people in the Providence region, to say nothing of bringing in European tourists to boost the local economy.  Norwegian had earlier announced it will also bring similar service to Stewart Airport in Newburgh, upstate New York – an airport that United doesn’t fly to or from at all, not within the US and not internationally.

The UA pilots should be complaining to UA’s management about this, not to President Trump.

US Airlines Win Top Three Places – But Maybe Wish They Hadn’t

There are some awards you want to win, and some you don’t want to win.

We suspect that Spirit, Allegiant, Frontier and United may perhaps not be pleased to have come first, second, third and ninth on the list of the world’s worst airlines for customer service, but sometimes we also suspect that they totally don’t care.

Travel and Leisure have just announced their ranking of the world’s worst airlines for customer service; and in addition to the US carriers taking four of the nine places, the other five sinners, placing 4th through 8th, were named as Easyjet, Royal Air Maroc, Volaris, Egyptair and Air India.

Spirit Airlines Shrinks (Its Carry-on Allowance)

Still thinking of Spirit, the airline announced that the size of free carry-on you can bring on board with you on their ‘Bare Fare’ fares will reduce from 2688 to 2016 cu in.

The common size limits for carry-on bags is generally 22″ x 14″ x 9″, which is 2772 cu in.  It seems that the 2016 cu in is based on a 21″ x 12″ x 8″  set of dimensions.

If you’re caught with an oversize bag at the airport, you’ll be charged $100.  If you pre-pay, the cost is ‘only’ $26.

This is, of course, nothing other than an attempt to grab more revenue from more passengers.  The minor tweak in dimensions is unlikely to make much difference to how many bags can go in the overhead, but will make it easier for the airline to spot normal standard sized carry-ons and charge for them.

Spirit had announced a few days ago that rates of passenger complaints had been dropping.  This new measure, and their mass ejection of passengers last week, should help ensure they come top of the list again next year for the airline with worst customer service.

The Route with the Most First Class Seats

As part of the feature article this week, I listed the top ten busiest airline routes in the world.

Amazingly, none of the routes were in the US or Europe, and the busiest route of all was from Seoul to a place I’d never heard of and had to look for on a map.

I also came across another interesting statistic this week – the route with the greatest number of first class seats offered on it.  I was unsurprised by the route that came second (Beijing-Shanghai), but the route with the greatest number?  Bet you’ll never guess.  Answer here (and photo clue above, this being a landmark in one of the two cities on the route).

The article has some other interesting statistics too.  Some are unsurprising, others require a deep dive into arcane knowledge – for example, the oldest airport in the world.

Not mentioned, but a new record was set this week for the longest scheduled airline route.  New Qatar service now operating between Doha and Auckland has taken that title, with a 9,032 mile route and a 16.5 hour flying time, on a 777-200LR.  The return flight, into the jet stream rather than with the jet stream assisting, takes 17.5 hours.

Note that although this is the longest route currently being flown, when Singapore Airlines flew between New York and Singapore, it was longer, at 9535 miles.  SQ plans to return to that route, with a different plane.  It previously operated with an A340-500, and now plans to return with an A350-900ULR (‘ultra long range’) when the planes start being received in 2018.  It was/will be an 18 hour flight.

2016 was a Great Year for the Airlines

IATA report that global passenger traffic grew by 6.3% in 2016 compared to 2015 (although this was slightly due to it being a leap year), as measured on the basis of revenue passenger miles.  For the last 10 years (including the 2008 global financial crisis) traffic has been averaging a 5.5% annual increase.

The most growth was in India and China.  India showed a 23.3% growth, China an 11.7%.

A quick comment – everyone knows about China’s ascendancy on the world stage, but the real sleeping giant is India.  Its population of 1.25 billion is rapidly catching up with China’s 1.36 billion, and its skyrocketing GNP overtook that of Japan ten years ago and is now the third largest, after China and the US.  How soon before it eclipses the US, and how long before it exceeds even China?

This chart aptly shows the extraordinary growth in India over the last few decades. What will the next decade or two bring?

In the US, we had a below average rise of 5.7%, and with capacity growing by a lesser 5.1%, that means even fewer empty seats on planes and an average load factor of 82.2%.

The year also saw the establishment of 700 new city-pair routes, and a slight reduction in the average fare paid.

And Lastly This Week….

A rail passenger on Virgin Trains had an unusual problem last week.  He discovered that if he boarded his train to London from a stop 25 miles further away (on the train line) than the normal stop he’d board at, he could save £260 on his journey to London.  To travel 253 miles to London instead of 228 miles, you pay £92 instead of £356 – and you thought airfares were crazy!

He lived more or less in-between the two stations, so he went to the further away one to join the train, and bought a ticket accordingly, thinking that the extra 10 minutes of driving time was the best investment he’d made all year.

So far so good.  But the train’s guard accused him of getting on at the more expensive station, even though the same guard had checked his ticket twice already after he boarded at the further away station.

So – here’s the thing.  How do you prove which station you boarded a train at?  You might think that you should be given the benefit of the doubt, and you might wish to be considered innocent until proven guilty.  But Sir Richard Branson, and his Virgin Trains company, disagrees.  They believe you are guilty until you can prove your innocence, which gets back to this poor traveler’s problem.

The guard refused to believe the man, and so the man was met by police and detained in London until Virgin officials agreed to check through their CCTV feeds and eventually found video proof the man was telling the truth.

He missed the meeting he went to London for, was accused of being a cheat in front of the entire carriage of passengers, and of course, got to enjoy the companionship of London’s finest until eventually proven innocent.

No word from Sir Richard about this.  Details here.

Truly lastly this week, I wrote several weeks ago about Amazon’s Echo devices being accidentally triggered when a television news item mentioned the product and the ‘wake’ word used to activate them.

Last weekend saw the annual Superbowl ritual, one part of which is the parade of blockbuster advertisements (66 different ones this year).  One of these advertisements was by Google, promoting their own version of the Echo, called the Google Home.

And guess what happened.

Until next week, please enjoy safe travels.

 

David.

 

 

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Feb 092017
 

Part 3 :  The New Transportation Opportunity

This is the third part of an article series on how we have a new opportunity for the United States to once again take a position of world leadership in transportation.

In part one, we looked back at three previous periods of American greatness, and in part two, we looked at how we allowed ourselves to be blindsided by the extraordinary developments in high speed rail in Europe and more recently in China.

Fortunately, having done nothing with high speed rail in the past might now redound to our advantage, as we explain below.  And then, in part four, we look at the reality and the nonsense of a possible Utopian transportation future.

The Amazing Benefit of Having Done Nothing

It once seemed amazing, but sadly America’s NTSC color system was superseded by PAL and SECAM everywhere else in the world.

In the past, the US has often suffered the consequences of being an early adopter of new technologies.  We had the world’s worst color television system, because it was the world’s first.  Other nations came up with newer better systems that it would have been too costly for us to convert to until digital and HD television forced us to start afresh.

We had the world’s worst mobile phone system, for similar reasons, until 3G and newer technologies again enabled us to join the rest of the world.

While we eventually caught up with those technologies, in other cases it seems we’re doomed to always be disadvantaged.  Something as fundamental and omnipresent and taken-for-granted as our mains electricity (110V) is inferior to most of the rest of the world (220V), limiting the power available in all domestic appliances and requiring bulkier and more expensive wiring in our houses, offices, and everywhere.

What does this mean in the context of transportation?

A growing awareness of the downsides of high speed rail – environmental impacts and enormous cost – have seen continued research into alternative means of better transport systems.  And now, emerging over the last several years, there is finally a credible and exciting new method of high speed mass transportation that addresses all the concerns and weaknesses of high speed rail.

Those nations who are not yet locked into high speed rail have a great opportunity to take advantage of the new technology and ignore high speed rail entirely – something that seems like it might prove to have been a very expensive transitional technology, but now technologically and functionally obsolete.

The New Hyperloop Technology

A cut-away artist’s impression of a Hyperloop pod in its tube. Probably the pod will need to be smaller relative to the tube diameter than shown here.

The new Hyperloop concept solves all the problems of high speed rail, plus offers additional benefits too.  It is less expensive to develop, and less intrusive/obtrusive in the environment into which it integrates.  It is also faster than high speed rail – faster even than planes!  And, for the icing on the cake, it is the most energy-efficient and most affordable of all transportation alternatives.

The Hyperloop concept, expressed in its simplest form, involves a tube system inside which most of the air has been removed.  Sealed cylinders full of passengers are propelled through them at enormous speeds – 600+ mph.  Due to less friction from the reduced air pressure, they can travel faster than other forms of transport, and simultaneously with much less energy required.

Friction is a major factor, with the amount of friction increasingly more or less in line with the square of the increase in speed.  In other words, prior to reducing air pressure, a vehicle at 600 mph would have 36 times the air friction acting against it that would be the case for a vehicle at 100 mph.  This is why, back in the oil crisis of the early 1970s, the national speed limit was reduced to 55 mph.  Reducing air pressure therefore has a major impact on the energy required to move the vehicle – which is why airplanes like to fly as high as they can, where the air pressure is lower.

The Hyperloop idea is far from new – the origins of the Hyperloop were first suggested in 1805.  You may have even seen a miniature forerunner to the Hyperloop concept in department stores with central cash registers and a vacuum tube system delivering canisters between customer service points and the central cash registry area (Costco used this in their stores until recently, too).  Some banks also use the system to convey materials between drive-through stations and the tellers.

The system in its present form took on a high visibility in mid 2013 when, out of the blue, Elon Musk announced his enthusiastic support and surprised the world with a detailed and costed out example of a Hyperloop system connecting San Francisco and Los Angeles, and traveling between the cities in a mere 35 minutes.

Different groups of developers have been frenetically developing Hyperloop systems in the three and a half years since the Musk announcement.  The last weekend of January saw a competition between students at 30 universities around the world presenting their varying ideas of how best to implement the concept, with the winner being a team from Delft in the Netherlands.

Simultaneously, at least two commercial enterprises in the US (Hyperloop One and Hyperloop Transportation Technologies) are embarked on Hyperloop development, and a number of Hyperloop routes are on the verge of being built, and it isn’t clear exactly which might be the first to be started (or, more to the point, to become operational).  For a while HTT seemed to be at a mature stage of getting approval to build a system connecting Vienna, Bratislava and Budapest, but that has gone quiet over the last few months.

As well as the two American companies (and, increasingly, international partners joining with them) there are other foreign companies doing their own development, such as the Korea Railroad Research Institute and their plans for a Hyperloop that would travel between Seoul and Busan – about 210 miles, at speeds of up to 620 mph.

Other routes being considered include

  • Helsinki – Stockholm (including a tunnel under the Baltic Sea)
  • Dubai to variously Doha, Riyadh and Abu Dhabi
  • Moscow – St Petersburg
  • Paris – Amsterdam
  • Toronto – Montreal
  • Bratislava – Brno – Prague
  • Chennai – Bengaluru
  • Mumbai – Delhi

Tragically, although the concept in its modern-day form was espoused by and is being supported by Americans, none of these first Hyperloop deployments seem likely to occur in the United States – a tragedy compounded by the unfortunate combination that in the very state where Space-X is coordinating and encouraging the development of Hyperloop technology, billions of dollars are simultaneously being thrown at the California High Speed Rail project, a project that seems to take two steps backward for every one forward, and which would be an ideal opportunity for the Hyperloop concept to vividly show its potential.

Many routes in the US would be ideal ‘starter’ routes to prove the Hyperloop concept. If not Los Angeles – San Francisco, why not Las Vegas – Los Angeles, for example.

The California High Speed Rail project is expected to cost anywhere up from about $70 billion, and is not expected to be ready until late in the 2020s, if at all and with a journey time of 2 ¾ hours.  This compares with a projected cost of about one tenth for a similar (but actually much better) Hyperloop system that could be in place and operating well before any of the traditional high speed rail system.

Why hasn’t California shifted its focus to a Hyperloop system?  Legislative and institutional inertia, and a fear that if the project as a whole was re-presented to voters to re-approve in a new form, it might be completely rejected, both as a Hyperloop system and also now as the original high speed rail concept too.  The legislators and bureaucrats would rather cling to their current approvals, even in the face of waning pubic support and increasing costs, than change to a system that is maybe one tenth the cost and three or more times as fast.

Let’s look at the solutions and benefits offered by Hyperloops compared to conventional high speed rail.

Takes Up Less Space

All you need is one (or, more likely, two, to allow for simultaneous travel in both directions) tubes, with a diameter of about 10 – 15 feet, to run a Hyperloop.  There is no need for any substantial clear space around the tube.  In other words, you could have a twin tube Hyperloop system in about as much space as a single freeway lane – even less if you stack the two tubes vertically rather than have them side by side.

The tiny space needed would allow Hyperloop systems to run in the median between the two directions of freeway traffic, which would at times result in no more land being needed for this new system at all.  (Note that due to the very high speed of the Hyperloop pod capsules, they could not turn as tightly as freeways do so sometimes their path would diverge from the freeway, but for much of the time, they could share the same space with the freeway.

Even better, the Hyperloop tubes probably won’t usually sit on the ground.  They would typically be mounted on pylons, spaced 100 ft apart, and 20 – 100 ft above the ground, which allows most ordinary ground uses to continue underneath and without restriction.  The varying pylon height smooths out vertical changes in elevation, and also includes design features to make them resilient to earth movement and earthquakes.

Comparing Hyperloop systems to air travel, while it is true that Hyperloops obviously take up some space along their route the most valuable space and therefore relevant considerations are at the ends of each route – airports or Hyperloop terminals.  Hyperloop systems need no runways and taxiways, no ‘noise zones’, approach and safety zones, and because each Hyperloop pod is small rather than very large, the terminal platforms can also be short rather than lengthy.  Hyperloop systems can run right into the heart of cities, airports have to be located further and further out of cities.

Greatly Reduced Environmental Impacts

A Hyperloop system is much quieter than trains, doesn’t create any shockwaves, and doesn’t need large dedicated swaths of land or security/access fences.

It uses very little energy, and it has been proposed to mount solar cells along the top of the tubes, allowing for much of the power it needs to be generated by itself.

Costs Less – and is Faster – to Develop

It seems that Hyperloop systems can be developed for about one tenth the cost of high speed rail.  In large part this is because they don’t need as much land and could even be placed in the medians of existing freeways (as long as the freeways were reasonably straight).

They can be mounted on ground, above ground, or below ground.  It has been suggested that the California high speed rail project could be done by Hyperloop for about $10 billion instead of $65 – 100 billion.

Because much less landscaping and infrastructure is needed, a Hyperloop line can be built in one-quarter or less the time of traditional high speed rail.

Shorter Travel Times

Hyperloop vehicles can travel two, three, even four times faster than regular high speed rail.

Their projected speeds are even faster than passenger jet planes, and will probably be limited only by a desire to keep speeds below the speed of sound (ie 700 mph or less) and also a need to have increasingly large diameter tubes, proportional to the pod diameter, as their speeds increase.  We expect that for economic reasons, Hyperloops will probably seldom run much faster than 600 mph, but this is still faster than passenger jets (which seldom go much above 550 mph in the cruise portion of their flight and are speed restricted to about 250 mph while under 10,000 ft).

This chart compares travel distances and times for private car, high speed rail, passenger jet and Hyperloop.

The convenience of a private car makes it best for distances under about 100 miles, even though it is the slowest.  But from about that point, and with increasing benefit for all distances greater, the Hyperloop becomes the clear best choice.

Referring again to the California high speed rail project, instead of 2 ¾ hours to travel between San Francisco and Los Angeles, the Hyperloop offers the same journey in about 35 minutes.  Wow!  Five times faster.

It is harder to compare with scheduled air service.  The actual travel time, in the air, is always slightly longer than in a Hyperloop capsule, and then with air travel, more time is required to get to and from airports, to check in, to go through security, to board, to taxi, and everything again in reverse upon arrival.  So Hyperloop is always faster than air as well, but not by quite such a huge margin.

Energy Efficient and Lower Operating Cost

By traveling in a reduced atmosphere environment and using mag-lev suspension or riding an air cushion, friction is massively reduced, and the electric power propulsion system may possibly also be used to generate power when the vehicles need to decelerate, reducing still further the energy cost.

The Hyperloop enjoys (relatively) low construction costs, and astonishingly low fuel/energy costs.  It also is projected to have lower maintenance costs, due to few moving parts and no contact between the vehicles and the tubes they travel in.

Add to that the short journey times allowing for high utilization factors, and the net result is the fares charged by Hyperloop are expected to be way lower than other means of travel – $35 to go between LA and SF, for example.

More Frequent Service

A traditional train can hold anywhere from 200 – 1000 people; planes typically hold 100 – 400 people.  So as to get efficient loadings, they are not scheduled more frequently than is ‘needed’ to allow them to more or less fill for each journey.

But Hyperloop vehicles are expected to be very much smaller – even as small as 20 – 30 people per pod, so they could offer more frequent departures without needing to ‘batch together’ so many people at a time as planes or trains.

The smaller number of people also speeds the time it takes for people to get on and off each pod.  There’s no nonsense of taking half an hour to board and the always slow seeming process of getting off at the other end as is the case with an airplane, which inexplicably most western airlines insist on loading/unloading through only one narrow entry/exit door.  This process would take five minutes or less with the pods, and there’d be no stress or need to be an ‘early boarder’.  Pods could be designed relatively spaciously to allow for plenty of leg room and overhead space for all passengers.

Safer

The traveling pods are contained within a tube.  They can’t derail or collide with foreign objects.

The tube system is closed and self-contained, and can also be rigorously quality controlled.  Laser alignment can detect the slightest shift out of alignment, and something as low tech as a pressure gauge can immediately report on any leaks.

As long as the tube is intact, the system seems safe and secure, and if the tube suffers any sort of stress or failure, it can be readily and instantly detected.

Weather Resistant

Because the pods are contained within a tube, there need not be wind or rain or snow or other weather type problems impacting on the ability of the pods to travel in their normal fast smooth manner, no matter what the external weather may be.  Fog won’t slow them down.  Snow on the road or runway is not an issue.  And so on.

What is not to like about any of this?  Well, there are some other sides to the coin as well.

Hyperloop Concerns

With so many benefits, why isn’t there a headlong rush to Hyperloop technology?  We are spending billions of dollars on semi-high speed rail projects, why not get ten times more value and five times faster travel times by switching those spends to Hyperloops?

The big problem seems to be that the technology is still experimental and unproven, and there are some design challenges that are yet to be fully resolved.  But is this a reason to hang back, or to push forward?  Every technology was first experimental.  And the Hyperloop technology is at a point of working models and well-defined issues; it isn’t just an insubstantial dream.

As for ‘unproven’, that’s a Catch-22 problem that has never been an obstacle in the past.  Everything new starts off as unproven.  New models of plane, new models of car, everything.  But the normal rational response is to move forward and cautiously prove the concept, not to down tools and give up on the project entirely.

Let’s review the challenges that remain unsolved.

Ride Quality

The big problem, with the extraordinary speeds the Hyperloop pods will travel at, is the need for the tubing to be as totally straight as possible.  Even slight misalignments could result in terrible jerks – not just uncomfortable, but threatening the integrity of the pods and the safety of the people within them.

For example, to avoid severe G-forces, turns will need to be with a very wide radius.  Freeways typically have curve radiuses of ¼ mile or thereabouts, a Hyperloop track would need 32 – 50 times greater, ie at least an 8 mile radius and ideally 12 miles or more, depending on speed.

But is this a difficult impossibility?  Is it harder to design something with gentle curves than sharp curves?  It is true this may require more earthworks rather than closely conforming to the ground topography, but this is not a technological problem, merely one of mapping out the best path and adding some cuttings and some elevated sections as needed.  It might add some cost, but it is nothing impossible.

Damage to the Tubes

A section of a Hyperloop test track. A ‘real’ tube will probably have a larger diameter.

The need to maintain perfectly aligned tubing causes concerns about what might happen if an earthquake occurred, or if there was some other type of subsidence that moves one of the tube supports?  Maybe, if mounted on a freeway median, an accident causes a heavy truck to smash into a pylon and create a dangerous kink in the tubing.

Another concern is maybe terrorists would choose to attack the tube system.

These are indeed potential problems, but none of them need to be reasons to give up on the technology.  Real-time monitoring of the tube alignment is a very simple thing to do with lasers and other devices, so that within fractions of a second of any tube alignment problem, the system will alarm and automatically stop pods in the affected section of tube.

Another problem is what would happen if the tube sprung a leak.  That would definitely shut down the system until the leak could be patched and the air removed back to the partial vacuum state again.  But this would be an inconvenience if/when it occurred, not a life threatening danger.  Monitoring the pressure in the tubes is a totally simple and easy thing to do, and as soon as the tube pressure moved out of specification, automatic safety systems would again act to slow down or stop the pods.

Ability to Scale

There are some concerns about whether Hyperloops could scale up in size to fully meet the demands of high density routes that experience very large numbers of people traveling.

We have two suggestions.  The first is to do the same thing that trains do.  Have larger pods, or connect two or three or more pods together and send them in a combined single movement, just like adding extra carriages to a train.

Instead of having pods carrying 20 – 40 people, have larger pods or double pods carrying 60 or 80 people.  If they are dispatched once every 30 seconds, that would be 9600 people per hour – about the same as 50 – 60 737/A320 sized plane loads.

Still not enough?  Instead of double pods, go to triple or quadruple pods.  The only adjustment needs to be the loading/unloading platform length at each end.  This should allow for scaling up to 20,000 people per hour.  Assuming 15 hours of operation a day, that allows for 300,000 people every day.  The busiest air routes in the world carry less than 25,000 people a day.

The second suggestion – if this is still insufficient, do the same thing they do with freeways.  Add another tube.  But whereas each freeway lane takes up as much as 15’ of extra width, maybe a third or fourth Hyperloop tube could simply be stacked on top of the current two tubes, requiring no more ground space at all.

And now we are looking at 40,000 people an hour.  Where in the world is that not sufficient?  And if you can think of somewhere, then let’s add a third tube.  Will 60,000 people an hour be enough?

Switching at ‘Intersections’

A regular rail line has junctions, intersections, loops and branches all the time.  A regular highway has on and off ramps and interchanges all the time.

The basic concept of a Hyperloop is a one to one system without any branching or switching.  With a need for 12 mile curve radiuses, a fork in the tubing would be very lengthy and difficult to engineer.

But this is not a problem.  Think of the airlines.  Their routes are similar to Hyperloop tubes.  They fly from somewhere to somewhere else.  Hyperloops can be exactly the same, and instead of having to allow an hour and sometimes wait two or three hours between flights when going through a hub, you’d simply walk from one Hyperloop platform to the next and within maybe five minutes, you’d be on your way again.

Furthermore, there is a solution to building switches into Hyperloop tubes.  Simply slow the pods down when approaching a switch.

The enormous speed of the Hyperloop system is such that even if you had to take a slightly roundabout way to get to your destination, with a couple of changes along the way, it would still be faster than a nonstop airline flight.

The ‘Last Mile’ Remains Unsolved

The problem with any long distance transportation system is that there is still the ‘last mile’ to be resolved.  Getting between your home or hotel and the airport or train station.  These last mile challenges have various solutions – enormous parking lots around airports, shuttle buses, commuter rail into the city center, and rental cars.

What is the point of reducing your travel time between cities from hours to minutes, if all the time you save on the freeway between the two cities is lost while getting to and from transit hubs, and extra costs pile up when you park your car at the airport for several days and take taxis or rent a car at the other end?

For any new transportation system to be fully valuable, it needs to solve this last mile problem.  All of these problems would seem to apply equally with Hyperloops of course, although to be positive, the lower cost of the Hyperloop journey, and the shorter Hyperloop travel time goes part way to shifting the balance in its favor.

So the Hyperloop is no worse than other transportation alternatives.  And there’s also a solution that is a total game-changer that should be considered.

Loading cars on two levels onto the Amtrak Auto-train.

Amtrak has toyed with the concept of auto-trains where you drive your car onto the train and it travels with you.  This is also done for crossing the Channel in car-trains, and of course, car-ferries are a long-standing concept.

A car-plane is possible but would be ridiculously expensive because of all the extra space and weight that would be required.  (Air Force One carries its own vehicles inside, but we don’t have the same travel budgets that our President does!)

Driving your car onto a Hyperloop pod is entirely practical.  Why not simply drive to the Hyperloop station and directly onto a pod, then for short journeys, simply stay in your car while the pod whisks you to your destination, and for longer journeys, make your way to the passenger compartment.  Then at the other end, simply drive your car off the pod and proceed to your final destination.

This also saves you the hassle and cost of a rental car, and allows you to just chuck stuff in your car any which way when preparing for the journey.

Surely this is a complete ‘last mile’ solution for both ends of your journey.

The ‘Second to Last Mile’ is a Problem, Too

By this we refer to bringing Hyperloops into the centers of our cities.  The cost of land starts to skyrocket, the further in to a city center you get, which encourages several alternatives.  On the other hand, the decision about exactly where to situate a Hyperloop station is far from obvious, because increasingly, both people and businesses are located outside of former city centers.  Unlike an airport/airline, any type of rail/road system could have one or two stops within an urban area, giving some flexibility that air travel lacks.  But each stop increases the total travel time for people who aren’t getting on/off at that intermediate point, so there are obvious limits to how many stops can be added.

Obviously, building a Hyperloop in a freeway median, or above the freeway, is one approach.  The same might be possible above or alongside existing rail tracks.  And it is acceptable to have the pods travel the few miles in and out of city terminals at slower speeds, thereby allowing tighter radius curves and following the freeway or rail pathways exactly.

However, there’s another solution as well; one which to date often seems to end up being puzzlingly expensive or overlooked.  And the person hinting at it is, again, Elon Musk.  He is talking about boring a tunnel from his office to other places to avoid the terrible traffic that otherwise afflicts him around the Los Angeles area, and may have already bought a tunnel boring machine.

Wouldn’t this be perfect for the Hyperloop.  At whatever point that land availability becomes a constraint, and whenever rugged/hilly terrain gets in the way, just drill through it.

Not Just for Passengers

Fast and inexpensive are benefits for freight as well as people.

Historically, commercial freight has comprised goods that are not time sensitive, and, at least historically, everything was not time sensitive.  Ships took freight long distances over time periods spanning weeks, trains or trucks took freight where the ships wouldn’t go over time periods spanning multiple days.  UPS with their ‘one week and one day’ ground shipping service from coast to coast was good enough for consumers, and the slower services for commercial freight was something factored into everyone’s planning and expectations.

This has of course changed.  ‘Just in time’ manufacturing and a desire to minimize inventories has added pressure for fast reliable commercial shipping.  Now when you buy a computer and receive it a week or two later, it may have been built to order somewhere in Asia, after you placed your order, and then air shipped directly to you.

Amazon and first their free standard shipping and then their free second day shipping, and now their same day shipping at modest cost has shifted everyone’s expectations, at both business and consumer levels.

Hyperloop technology offers the low-cost benefits of sea or regular rail freight with the speed benefits of air.  Instead of Fedex and their fellow courier companies owning fleets of planes to fly freight from cities in to central sorting points each night, and then quickly flying them back out again a few hours later to their destinations, why not use faster and cheaper Hyperloops?

Talking about planes, let’s look at that some more.

Impact on Air

Most of the world’s busiest air routes are for surprising short journeys rather than long ones, and don’t require crossing bodies of water.  Longer flights over oceans (eg US East Coast to UK/Europe, or US West Coast to Asia) carry many fewer people than the shorter high density routes.

Seven, possibly eight of the world’s busiest routes would work well with Hyperloops replacing airplanes.  In order from busiest to tenth busiest, they are :

  • Seoul – Jeju 280 miles (which includes 50 miles of water off the South Korean coast)
  • Sapporo – Tokyo  520 miles
  • Fukuoka – Tokyo  550 miles
  • Melbourne – Sydney 450 miles
  • Taipei – Hong Kong  (too much overwater travel)
  • Delhi – Mumbai  725 miles
  • Ho Chi Minh City – Hanoi  700 miles
  • Beijing – Shanghai  670 miles
  • Surabaya – Jakarta  400 miles
  • Tokyo – Okinawa  (too much overwater travel)

No US city pairs made this list, but in case you wondered, the busiest three city pairs in the US are Chicago-New York, Los Angeles-San Francisco and Los Angeles New York.  Clearly, all three city pairs would be well served by Hyperloops.  The same can be said for flights within Europe.

This will have a major impact on airlines.  Eurostar’s service between London and Paris is thought to now have at least an 80% share of people traveling between the cities, because by most measures, it is faster and more pleasant than flying, even though (surprisingly) the Eurostar train is often appreciably more expensive.

Consistently, high speed rail service, when competing against airlines in the ‘sweet spot’ range (journeys under about 500 miles) takes the lion’s share of the market.

Because, with Hyperloops, that travel faster than planes, the sweet spot is unlimited – it starts from about 100 miles when they become better than cars, and then just keeps getting sweeter and sweeter, airlines will see their business models collapse and massively change.

If I was an airline, I’d be redefining my business as ‘moving people and freight quickly, comfortably, and affordably over long distances by all appropriate means’ and building a Hyperloop right now.  Seriously.  It would be an entirely sensible move forward into the future.  Think of this – airlines routinely place orders for many billions of dollars worth of new planes.  One large order of airplanes would pay for an entire Hyperloop system between (say) San Francisco and Los Angeles.

Some airlines have bought into high speed rail systems elsewhere in the world.  Why not now invest into Hyperloop technology, too?

Where is HyperLoop

Let’s fill our huge country with distance-conquering Hyperloop lines.

So, Hyperloops seem to offer us the lowest cost to develop and the lowest cost to operate, and the shortest travel time, of any transportation solution.

The few remaining issues identified with their development and implementation seem solvable, and the business case for adopting Hyperloop seems unassailable.

Why aren’t governments and private enterprise groups all rushing to build Hyperloops?  Most of all, why aren’t we in the US seizing this chance to make America’s transportation system great again, and the best in the world?

We have no answer to that question.

Please return next week for the concluding part of our four-part series, where we look at the Utopian future that Hyperloop and other transportation solutions might offer, and wonder if it truly will be as Utopian, and as achievable, as some people hope for.

And, if you’ve not yet done so, please check out our first two articles in the series, too :  Our Three Previous Periods of World Transportation Leadership and Our Missed Opportunity.

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Now here’s a sight to gladden any nervous passenger. Eight engines. A new airplane design – unsurprisingly from an engine manufacturer – using ‘open rotor’ turbo-electric engines for better fuel efficiency. See article, below.

Good morning

For the second week in a row, our new President is impacting on my choice of feature articles.  But his impact last week was generally rated positively, and I hope you’ll like this week’s article too which, in truth, actually is very little about the President, himself.

It had been my intention to add further to the series I started last week, but Joe Brancatelli wished to do a roundup of articles about President Trump and his impacts on travel, so I changed plans for this week, and instead have a piece that looks at the nature of international air agreements between countries – generally these days in the form of so-called ‘open skies’ agreements.

The US has established over 100 such agreements, but they have become more controversial of late, with our ‘Big Three’ airlines deciding they no longer like them quite as much as they formerly did.  Is there a chance to make America great again by rewriting some of these agreements, and if so, how?  Should our crusading new President attack them with the same vigor that he has been displaying in other directions?  Please read the following article for answers to these questions.

At a more direct level, may I remind you of our latest New Zealand tour this coming October/November.  I’m biased – I’m a New Zealander myself, but if I ignore my perceptions and instead report on what Travel Insiders have said after coming on this same tour in previous years, pretty much everyone rates it as a marvelous experience, with a glorious mix of places we go, and things we see and do; including both the best known ‘must do’ elements of New Zealand as well as the undeservedly less well-known ‘should do’ things that most visitors never get to do.

If you’d like to see New Zealand with a group of your fellow Travel Insiders, and if you enjoy good food and great wine (or great food and good wine), please do consider joining us.  Full details here.

What else this week?

  • Even the Right Ticket Doesn’t Necessarily Get You to the Right Destination
  • A Mass Ejection of Passengers by Spirit
  • Some New Ideas for Airplanes
  • Better Forget Barcelona
  • Argentina Reduces Tourist Taxes
  • More Airlines Now Participate in TSA PreCheck
  • More Chinese Cars Coming to the US – New Ownership Forms
  • Yet Another Amazing New Battery
  • And Lastly This Week….

Even the Right Ticket Doesn’t Necessarily Get You to the Right Destination

Last week I mentioned another occurrence of someone traveling to a city which, while being the right city (Melbourne) wasn’t actually the correct city (the passenger wanted Melbourne, Australia, and ended up going to Melbourne in Florida).

There’s another category of mistake, one I came perilously close to making myself one time, and it was only because the ticket beeped when being scanned prior to boarding that I was saved from my own stupidity.  Indeed, when the ticket beeped, my first reaction was ‘Oh good, an upgrade’; it took quite a while for me – and the staff – to work out that I was actually at the wrong gate trying to board the wrong flight.  Ooops.  (In my defense, I should add that when I checked in at the gate, I gave them my ticket so they could put me on the wait list for upgrades, which they said they did, and no-one said ‘Oh, you’re at the wrong gate’, which makes me wonder how efficient their adding me to the waitlist actually was!)

I was saved by the system, as you’d expect to be the case always.  But, inexplicably, some people get all the way to ‘their’ seat on the plane, and only discover the mistake when someone else comes to take the same seat.  Even worse, some people board the wrong flight, and actually travel to the wrong destination.  How this can happen these days is a total mystery.

Reader Stan wrote in response to last week’s item to recount :

I was flying to Los Angeles out of Philadelphia two weeks after 9-11, and sitting in First Class with this lovely older lady.  We were both excited to be going to California for a few days to relax.  As we were talking she says to me well you have quite the drive from San Diego to Los Angeles.

She shows me her ticket and her flight was to San Diego – she was on the wrong plane.  I am not kidding – two weeks after the tragedy with searches at all the gates, and they allowed a person to board the wrong flight.  Fortunate, our conversation and this discovery was before the plane pushed back.  She was escorted down to her correct gate.  Still, if I or someone less chatty than me had been sitting there, this women in her 70’s would have landed in LA and been lost.

A Mass Ejection of Passengers by Spirit

A passenger was intoxicated, misbehaving, and so was asked to leave the plane before it departed.  That’s a normal enough start to a story that plays out on planes all too often.

It is also the story that Spirit shared with us to explain what happened.  The reasons for why a second and then third passenger were also made to leave the plane however becomes a bit more murky, sufficiently so as to cast doubt on the veracity of the official story about the first passenger’s ejection.

And what do the passengers say?  The first lady says she wasn’t drunk, and was told to leave because her top was too low-cut (she shows her top in this article).  That unfortunately is a claim that has more than a ring of truth to it, although usually it seems to be Southwest where the fashion police are most aggressive.

The second woman was booted off for the crime of being a friend of the first woman.

And the third woman, well, that’s where it gets really interesting.  She was nothing to do with the first two ladies, and was seated in the next row forward.  As she tells her story, the first round of abuse passed out by flight attendants to the woman with the low-cut top caused the woman to start crying, so she (the third woman) turned around and passed the upset lady (the first woman) a kleenex tissue.

This was enough to enrage a flight attendant and so she was booted off the plane, too.  This third lady, in her account of the story, also notes that the flight was full and an off-duty flight attendant was on standby hoping to make what was the last flight of the day took her seat; she wonders if that had anything to do with the crew’s rush to evict her too.

I think we are much too casual at allowing such acts by flight attendants to occur.  The consequences of missing a flight can be draconian to us – in the case of these ladies, it involved having to stay overnight at the airport before they could get a flight the next day.  That’s fairly mild compared to cases where you might miss a wedding or funeral or key interview/appointment.  Or maybe you miss the start of your cruise.  Or any of many other possible scenarios.

We all pay good money for our tickets.  Surely that gives us some right to actually fly as per the ticket, and while there are indeed obligations on us to behave appropriately, being subject to the spontaneous whims of a bad-tempered flight attendant, with no more review than a rubber stamping approval by the glorified bus driver in the fancy uniform up front who invariably refuses to actually meet the passenger, hear their side of the story, and make a reasoned decision – particularly when we are risking something worth potentially many thousands of dollars to us in the process – that’s just not acceptable.

Even worse is the certain knowledge that no matter how ridiculous an act by the flight attendants, they’re not going to suffer any negative consequences.

I remember one time I nearly got booted off a BA flight for complaining, when boarding, that the people at the boarding gate weren’t enforcing their own boarding rules about who boards first and who boards next.  As I left and walked down the jetway, I saw the person I’d spoken to get into a huddle with the other people, and by the time I’d got to board the flight, a ground staff/security type person at the door was speaking loudly on his walkie-talkie, oblivious to the fact that I had normal hearing and could hear every word he said.  “Yes, I see him now, he is just getting on the plane.”  Then, in surprise, “Oh, he is going into first class, do you still want me to get him?”

Fortunately, my first class ticket saved the day, but otherwise, it was clear to me that I was going to be denied boarding for having committed the heinous crime of complaining that BA wasn’t following its own rules about the boarding order of its passengers.  They would describe me as drunk, or aggressive, or threatening, or they’d just utter the vague statement that ‘they didn’t feel comfortable allowing me onto the long flight’ and who would be there to second-guess them.  They are the trained professionals, after all….

Any time we dare to complain or criticize, we risk the airline staff involved choosing to ‘teach us a lesson’ – in part as a pre-emptive move so as to neutralize the credibility of any subsequent follow-up complaints we might make to management after the flight.  And when you have the cabin crew, the pilots, the gate staff, and the security all ganging up together in a display of solidarity, what chance do we have, as mere passengers?

Some New Ideas for Airplanes

Whether it be the eight engines depicted in the image at the open of this newsletter, or any of the other dozen designs featured in this article, it is great to see some work being done on unconventional airplane designs – concepts beyond our traditional design which hasn’t changed much in decades – single cylinder fuselage, center wings, tail, and one engine hung off each wing.

Some of the new designs are sadly far from new – flying wings date back to the 1940s and are currently seen in the form of the B-2 bomber, so one wonders if any of them will ever make it to an airport near you, in any of our lifetimes.  Some of the concepts promise fuel savings of up to 50% compared to the current planes they’d replace, so they should be enormous priority when you consider that airplane manufacturers change their designs, at a cost of billions of dollars, just to squeeze another three or four percent out of an airframe.

The sooner we see these, the better.  Our airplane designs seem to have stalled in the 1950s – indeed, the latest 737s just now appearing use the same fuselage diameter as the 707 did in the mid 1950s.

Better Forget Barcelona

The Barcelonans quite justifiably rate their biggest problem as being their high levels of unemployment.  At about 19%, Spain has the second highest level of unemployment in the EU (only Greece is higher).

We who think travel and tourism would automatically say ‘Good news; you’ve a great city that tourists love, why not grow your tourism numbers, because tourism is a wonderful generator of local jobs’.  But the number two perceived problem in the city is that it has too many tourists, and so their populist mayor, who in his 2015 overwhelming win for the mayoralty, campaigned on an anti-tourist theme, has now announced measures to freeze the number of hotel rooms (and Airbnb type accommodation) to restrict how many tourists can come to Barcelona.

This is of course nonsense.  All it will do is encourage more people to make day trips to Barcelona and fewer to stay overnight.  Tourism currently accounts for 12% of the city’s total GDP and (we estimate) a sizably greater share of total employment.  Good luck with getting unemployment down to a more bearable number without the support of a potentially thriving tourist industry.

This is a good article detailing some of the issues and impacts on the city.  It is also interesting to see that so many people have been rushing to create Airbnb style tourist accommodation that the city is now suffering a shortage of housing for its regular residents.  Airbnb is adding an entire new dimension to how people stay at destinations.

Note that if you want to visit Barcelona – a lovely city, even if the locals seem no longer to be very welcoming – you should quickly do so.  Assuming they don’t get overturned, these new measures will gradually start to strangle tourism and accommodation availability – there are already new hotels being developed that can’t be stopped, but from about 2019, expect the city to become increasingly less affordable and harder to find rooms in.

Argentina Reduces Tourist Taxes

Although they share the same language with Spain, clearly some other things are very different in Argentina.

Many countries allow for refunds of the GST or VAT that is charged on items visitors buy and then take out of the country with them.  With these taxes (usually invisibly included in the sticker price of things you buy and so easily overlooked) often reaching or exceeding 20%, the refunds can become sizeable and worth the hassle of going through the paperwork.

Much less common though is to refund the tax amounts charged on services, and in particular, on hotel stays.  It would be wonderful if that happened, of course, and I vaguely remember, decades ago, Canada would do that, but for sure it no longer does.

Argentina has just announced that it will now waive its 21% VAT charge on hotel stays for foreign tourists.  You simply have to pay with a foreign credit card, show your passport and prove your overseas address and – hey presto – your stay in Argentina just became appreciably better value.

The move was announced in September, but it has taken until now to come into force.  It is also relevant to note that some other South American countries also exempt foreign tourists from hotel taxes, including Chile, Peru and Uruguay.

How wonderful it is to see a country choosing not to gouge tourists.  Barcelona – please take note.

More Airlines Now Participate in TSA PreCheck

Not everyone realizes that just like travelers have to enrol in the TSA PreCheck program, so too do airlines.

PreCheck is great – you speed through a shorter line with much less fuss and bother when going through the security screening process (to the point where I often suspect the metal detectors may be switched off entirely, other than to count the people going through and randomly beep to select people at random for compliance secondary screening).  It can then come as a rude shock to one day arrive at an airport and find that you’re not eligible for PreCheck due to the airline you’re flying on, and have to wait in the long slow line with everyone else.  Ugh.

TSA has just added 11 more airlines to the list of participating carriers.  You can see the total list of airlines here – most American carriers but not very many foreign carriers.

More Chinese Cars Coming to the US – New Ownership Forms

I expressed surprise, last week, that China has yet to make any noticeable inroads into the US auto market.  It is hard to think of any reason why they couldn’t/shouldn’t, and just as China is a market our manufacturers lust after, the US has to be a similarly tempting market for the China auto companies.

News this week of another Chinese car company that plans to establish a beach-head in the US – this time Geely; the company that bought Volvo from Ford in 2010.  They plan to start selling their strangely named “Lynk & CO” brand of cars in the US and Europe in early 2019.  Their first expected models may be either hybrids or fully electric, and will be mid-priced.

As a further sign of the changing times, they’ll offer both the chance for people to buy cars as one normally does, or to use cars on a subscription fee model.  As unthinkable as it seems to a nation that still warmly embraces car ownership as one of the cornerstones of the American dream, it seems absolutely the case that traditional car ownership is a concept that is going to disappear – and probably much more quickly than we anticipate, to become instead a rare luxury rather than an ordinary event.

Think of it like, well, carpet cleaning machines.  Some of us hire a carpet cleaning company when we need our carpets cleaned.  Some of us hire a carpet cleaning machine.  But how many of us actually buy our own, industrial grade, carpet cleaning machine?

Think of it like planes, too.  Many of us travel a great deal on planes, but very few of us buy our own plane, and most of those who could countenance such an extravagance instead choose to belong to some type of fractional ownership type scheme instead.

The same logic will increasingly attach to cars.  If you need short-range transportation, you’ll either have Lyft or Uber (or a self driving car, soon enough) take you where you want to go.  If you need a car for a road trip, you’ll hire one on some basis or another, but probably not from a traditional car rental company such as Hertz or Avis.  Only wealthy people and hobbyists will buy cars and own them completely, and if they do, they’ll probably rarely drive them, preferring the other options for most normal transportation needs.

These new ownership models will surely substantially decrease the total number of cars being sold each year (and may also cause cars to be kept on the roads for longer, when they switch from being personal status symbols to merely functional things we use for a specific purpose).  Seems like a huge threat to the current auto makers.

Yet Another Amazing New Battery

The two stories we see all the time are ‘New SST almost ready’ and ‘New Battery Promises Twice the Life of Current Batteries’.

But, here we are, invariably years later, and we’re still flying slow subsonic planes, and we’re still using Li-ion batteries.  But while there truly has been absolutely utterly no improvement in subsonic airplane speeds in more than 50 years, there actually is a steady series of small but repeated improvements in Li-ion battery technologies, giving us ever greater battery life and ever lower battery cost.  The offsetting problem is that our electronics use more and more power, so as quickly as we get more powerful batteries, we need them and the net result is that our electronic devices struggle to keep the same net battery life today that earlier models offered years ago.

Modern iPhones, for example, have similar battery life when measured in hours of usage as did those of five and more years back.  But an iPhone 3G had an 1150 mAh battery, the next model 3GS had 1219 mAh, the 5S had 1570 mAh, and the current model 7 and 7+ have 1960 and 2900 mAh batteries.

Note that these capacities reflect both the ‘energy density’ of the battery (ie how many mAh of charge can be stored per cubic inch of battery) and also the design decision for how big the battery will be, so are a bit misleading.  It seems, in general, reasonably accurate to say that energy density (either in terms of energy per cubic inch or energy per pound – two similar but different measures) are increasing by 5% – 8% every year.  That’s amazingly exciting.

Even better of course is the much faster drop in the cost of energy storage, as measured in the dollar cost per kWhr of storage.  As evidence, here’s an article from June 2016 that refers to a 70% drop in Li-ion costs over the previous 18 months.  It also refers to a study suggesting costs will drop to about $200 – $250 per kWhr by 2020.  But credible reports in the months that followed suggest that prices are already well below $200 per kWhr, and I mentioned last week that pricing was now in the realm of $140/kWhr and expected to drop as much as 40% this year, perhaps to see pricing below $100/kWhr by the end of 2017.  Amazing, and in the best possible way.

Now – all of the preceding was just introduction, to point out that while amazing new battery designs would be good, what is happening, in a steady pace at present, is already amazing.  But who wouldn’t delight in a sudden doubling of battery capacity.

So here’s the latest report on a new battery technology promising just that.  It starts off by ridiculously asserting that regular Li-ion batteries ‘have had their day’.  And it just gets worse from there.  Note – in common with just about every other similar report of other pending amazing battery breakthroughs, the article goes silent when it comes to essential issues like exactly what the batteries would cost, when they will enter production, what their energy density will be (both per unit of volume and weight), how fast they can take a charge, how many times they can be charged, how fast they can be discharged, and what their rate of self-discharge might be.

The writer of the article – David Pogue – usually puts out great stuff.  But this time around, he fell into the ‘amazing new battery’ trap that so many other articles also get ensnared by.

And Lastly This Week….

I’ve just finished writing a piece about one of the dreary types of stories that keep on appearing – mythical new batteries that promise to transform our lives.  But some other often seen article themes are more endearing, such as those that hearken back to the ‘good old days’ of travel.  Here’s one such article, showcasing flight attendant fashions.

Which decade do you like the most?  Whichever it is, you’ll probably shudder, as I did, at the suggested direction that future flight attendant fashions might take.

It used to be common to have signs showing the airport you were arriving at, visible from incoming planes.  With the propensity for pilots to sometimes land at the wrong airport, it is probably a good idea.  And it is reassuring to see a ‘Welcome to Cleveland’ sign as you come in to land.

Well, it is usually reassuring.  But not in this particular case.

Truly lastly this week, the passenger seated next to you might indeed have their own ticket, and their own passport.  But don’t expect them to talk with you, and when the meals are served, the chances are they’ll be given a special meal.  A very special meal.  (Or maybe not.  Perhaps a meal of chicken might suit them just fine.)  Guess what and why….

Until next week, please enjoy safe travels

 

David.

 

 

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Feb 022017
 

President Trump is eager to ‘right wrongs’ and fix unfair trade agreements.  Happily, the current state of aviation agreements is consistently fair and needs no change.

The US airlines are hoping that President Trump’s “America First” approach to international trade and foreign relations might get them some favors and benefits, with some protectionist type barriers erected to insulate them from the severest of foreign competition.  But will this happen?  We can’t see how it could be practically implemented.

For sure, foreign trade is one of the cornerstones of our new President’s worldview and it could be said that airline services are a type of foreign trade.  He has already cancelled the TPP agreement, indicated he wishes to renegotiate NAFTA, expressed interest in one-on-one trade treaties with other nations, castigated companies for moving employment out of the US while still selling the finished goods in the US, and complained about the imbalance of trade with China.  And all of that in just his first week in office!

President Trump has yet to turn his attention to airlines and the treaties that govern how airlines can operate between countries.  Are there issues where the US has lost out on with the agreements we’ve made with other countries, or with the generally accepted international framework of how airlines operate between countries?  Our three remaining major international carriers say this is so.  But is this correct?  And is there something Mr Trump might – rightly or wrongly – seek to change?

The Present Situation – the ‘Freedoms of the Air’

The first agreement for international air service is thought to date back to 1913, between France and Germany, allowing for airship service between the two countries.

Historically, the concept of allowing airlines to fly between countries was a complex one, wrapped up in government protectionism and national pride – all the more so in the many cases where the government of a country was also the owner or at least a shareholder in the country’s international airline (often referred to as a ‘flag carrier’).  These concepts were unavoidably mixed with an understanding of the essential need for compromise – a country that refused to allow other airlines to fly in and out could hardly expect its own airlines to be given the very same rights in other countries that it was withholding, itself.  But reaching agreement was difficult because there was no template for standard terms and conditions.

After a confusing process of one-off negotiations between countries, and much ‘rediscovering of the wheel’, an international meeting of 52 different nations, held in Chicago in 1944, resulted in a document that has been subsequently referred to as the Chicago Convention.  It has been revised repeatedly since then, and has been ratified by all UN members except for Dominica, Tuvalu, and the Cook Islands.

This document established the International Civil Aviation Organization (ICAO), and created common rules for things such as the assignment of sovereignty for airspace to the nation underneath it, overflight provisions, some uniform safety standards, measurements to be in feet, nautical miles and knots as well as in metric units ‘for temporary use’, airplane registration, ‘rules of the air’ – a sort of international road code for planes, and many other issues.

It also created a common framework for defining what could and could not be done by airlines in other countries, which came to be known over time as the ‘Freedoms of the Air’ – a slightly misleading name because they are not freedoms as we’d understand them, but rather are negotiable optional permissions that may or may not be granted.  Indeed, the default relationship between any two countries starts off with no ‘freedoms’ being recognized or honored, and from that point forward, everything has to be negotiated and then formally recorded in some form of treaty or other agreement.

We discuss the nine formally codified freedoms of the air here.

The Present Situation – Open Skies Agreements

A typical agreement between two countries would spell out which freedoms were being extended, on what basis and subject to various conditions, and might name the exact airlines that were covered, probably the routes they could fly, possibly even the types of planes they could operate, and how often they could operate flights, and/or total number of seats/week allowed.

This clearly gave a great deal of certainty to the agreement, and for a long time, was acceptable, allowing both sides to feel they were in control of what was happening and not having to worry that by leaving something open or unspecified, they were inadvertently giving the other side an unquantified present or future advantage.

But as international air travel continued to grow, and as the mix of different airlines, planes and routes started to multiply, the need to always be updating treaties to record changing airlines, changing routes, changing plane types, and to respond to requests for permission to operate more flights, or to transfer the right to operate one city pair and assign it to a different city pair, and so on – this all started to become enormously complex.

The generally growing sense of less government protection and more free market also meant that governments no longer felt it was necessary or appropriate to protect their ‘flag carrier’ – indeed, in many countries, the notion of ‘flag carrier’ was becoming more diffuse, with reduced government ownership and multiple carriers where formerly there had only been one.

Eventually, someone presumably threw their hands up in horror and said ‘look, why don’t we just say that all your airlines can fly to anywhere in our country, whenever they like, and our airlines can fly to your country, whenever they like’.

Agreeing to this wasn’t as obvious or easy as it might seem, though.  Each country (and its airlines, hovering closely and nervously in the background) had to run through the list of the nine freedoms of the air and agree which were being assigned without any restriction, and were behind the scenes trying to work out if each element of the deal would be of greater benefit to them or to the other country.  Such agreements came to be termed ‘open skies’ agreements, and generally have been created at the wish, and to the delight, of the affected airlines.

Even a full open skies agreement is seldom as ‘open’ as it seems.  For example, while there is an open skies agreement between the UK (ie EU) and US, that doesn’t mean that a US airline could now be owned by Europeans.  Although the agreement says ‘any airline can fly in and out of Heathrow’ (formerly only four airlines could do so) the slot constraints at Heathrow still impose restrictions on airlines, even if the agreement does not.  And while open skies agreements typically always enable the first four freedoms, the fifth through ninth freedoms become successively less and less common.

Open Skies = Free Trade = Bad?

The US now has open skies agreements with over 100 countries.

Many are uncontroversial and popular with everyone involved.  But some have become more problematic.  In particular there are cases where the US carriers eagerly encouraged the US government to create open skies agreements with other nations at a time where the other nations had little or nothing in the way of potentially competing airlines.  The US carriers saw such agreements as very much a one-way deal, giving them access to other markets in which there were no competing airlines to worry about.  There was no downside to such deals, which is why US airlines liked them so much.

The most notable of these is the agreement with the United Arab Emirates – the home of Emirates, Etihad and (adjacent) Qatar airlines.  Following on from an initial note in 1999, the formal agreement was established in 2002.  At that time, Emirates Airline was just starting to appear on the international radar screen, Etihad Airways had yet to be formed (it started operations in mid 2003), and Qatar Airways was a small regional airline (also flying long-haul but only to London).

This has changed profoundly of course, and by some measures both Emirates and Qatar now figure in top ten lists of the world’s largest airlines, and Etihad, while smaller, is on a similarly steep growth curve.

All of a sudden, what had seemed like a one-sided agreement that was tilted in favor of the US carriers now seems much more balanced and even-handed – concepts abhorrent to our US carriers.

Total size is one measure, but a more important measure is that all three carriers feature prominently in the high-end of the market (ie for first and business class travel), making them more impactful on US carriers than size alone would imply.  Add to that their rapid rate of growth and generally healthy profits, and very positive reputations with passengers and regular wins as ‘best airline’ in the myriad of such airline rating systems, and it is no wonder that the US carriers are feeling cowed and terrified.

The US carriers claim that the three Gulf carriers are unfairly competing against them due to being recipients of government subsidies.  This claim has been weakened by credible costings that seem to suggest the US carriers have actually received more US government subsidies than have the Gulf carriers received from their governments, and the US carriers’ attempts during the Obama administration to get the open skies agreement overturned or at least massively rewritten have failed.

The recent addition of a flight by Emirates that goes between Newark and Dubai, but with a stop in Athens, has reinvigorated the complaints, even though for much of every year, no US carriers operate nonstop flights to Athens themselves.  But just because they don’t want a route themselves doesn’t mean the US carriers will happily see a competitor snap it up!

Another recent high-profile argument has been with Norwegian Air and its application in 2013 to operate between Ireland and the US – something clearly allowed by the US-EU open skies agreement.

The ‘Big Three’ US carriers (AA, DL and UA, joined by the usual group of unions) objected, saying that because Norwegian’s parent company was actually based in Norway, and because Norway isn’t a full member of the EU, it was trying to cheat the system and shouldn’t be covered by the US-EU open-skies treaty.  Norwegian said that its Irish subsidiary was an Irish company, had an Irish aviation operating authority, operated in full compliance with and under the control of all EU aviation and labor regulations, and as such was as completely European as any other European airline.  After a shameful and unprecedented three-year period of delay, Norwegian’s request to start flights to the US was finally granted by the US DoT in December 2016.

The US Airlines’ Arguments Against Open Skies Agreements

The default argument our ‘Big Three’ carriers are making against selected open skies agreements is that they allow foreign airlines to ‘unfairly compete’ because they are using foreign lower paid pilots and flight attendants, and foreign lower costing maintenance, whereas the US airlines are employing US union staff and paying massively higher costs in the process.

On the face of it, this seems intuitively obvious, even though one wonders why this has suddenly become a concern now when it wasn’t apparently a worry in past years.  But is it an accurate description of the underlying reality?  No.

The truth is more complex, just like when trying to distinguish between, eg, a US branded car (which might have 40% foreign content) and a foreign branded car (which might have 40% US content).  The “US” car might have been assembled in Mexico and the “foreign” car assembled in the US.  Each probably have components made elsewhere in the world.  And so on.

US carriers aren’t comprised solely of 100% US content.  They routinely ship jobs off-shore, as you’ll know if you call an airline (800) number and end up speaking to someone in the Philippines or India or the Caribbean or wherever.  They sometimes have maintenance done elsewhere.  They even employ foreign staff – obviously in their foreign destinations, and less obviously on some routes/flights too.  And when they do employ US staff, they’ll happily turn their back on high paid union staff and employ cheap contractors whenever they can.

When the US carriers aren’t hiring foreign staff, they’re actually doing something that is maybe worse – they’re contracting with foreign carriers to fly US branded flights for them.  The code-share and ‘joint operating agreement’ and ‘joint marketing agreement’ concepts now allow US carriers to shop not just where they hire staff from, but even who operates every element of what are supposedly their flights.  It is possible to fly around the world on what are identified as US flights, but none of which are operated by US airlines and US registered airplanes.  That’s akin to General Motors complaining about competition from Toyota, then buying in Toyota cars and with a Sharpie marker crossing out the word Toyota and writing in ‘Chevrolet’ below it and saying “restrict imports of Toyota cars, but not the ones we write Chevrolet on with a Sharpie marker”.

Adding further to the hypocrisy of US carriers is their willingness to join forces with the same Gulf airlines when it suits them, even while they are simultaneously decrying the Gulf airlines as providing unfair competition.  Surely this is the ultimate in ‘frenemy’ type relationships.

Another complicating factor – what happens if (as if often the case) the US carrier is flying Airbus planes and the foreign carrier is flying Boeing planes?

The flipside to US carriers having an unknown and varying amount of foreign content, is that foreign carriers in turn are not 100% foreign.  They have a varying amount of US content.  They make jobs and employ staff in the US, and even provide passengers to US airlines in cases where an itinerary involves travel beyond the flights to/from the US gateway they fly to (which is why some of the smaller US carriers were supportive of Norwegian’s application to fly from Ireland).

Norwegian Air currently employs both some US pilots and US flight attendants, as well as a growing number of ground staff at the airports they serve.  Local hotels and tourist attraction operators love Norwegian because of the extra visitors Norwegian brings in to the country.  The airline also operates an all Boeing fleet of nearly new 737 and 787 planes (average age of 3.6 years per plane).

So, it is far from certain there is a problem or how substantial it may be.  Yes, there is more US content in most US airlines than in most foreign airlines, most of the time.  But a careful analysis makes the total overall impact on the US economy and US jobs much more complex and shows little reason to fear foreign carriers (unless you’re a complacent US airline trying to shut out competitors).

Is it a foreign carrier’s fault if it pays its pilots ‘only’ $150,000 a year and requires them to work 125 hours a month, when US carriers have agreed to pay its pilots $250k  in return for 80 hours of flying time?  There’s no law forcing the US airlines to pay so much in return for so little work, just a series of ‘we don’t care, we’ll pass the extra costs on to our passengers’ style agreements with the pilot unions over the years.

Should we up-end international treaties so as to protect the jobs of a tiny number of pilots earning $250,000 a year for working half time?  Should we break these treaties when the downside ‘risk’ to the pilots isn’t unemployment, but merely being required to accept a more realistic wage for their jobs – a wage that is still unthinkably more than the federal minimum?

Trumpian Solutions?

So, what would or could President Trump do if somehow he was persuaded there was a ‘worst deal we’ve ever made’ lurking within one of our bilateral or multilateral aviation agreements – agreements which, when originally negotiated, were always greeted with grateful acclaim by our airlines and unions?

Sure, he could go about ending such agreements.  But what about the other side of breaking a treaty – if President Trump breaks an airline treaty with another nation, that simultaneously terminates the US carriers’ rights and access to the foreign market as well as vice versa.  Who actually wins in such a case?

Perhaps a better and more easily understood question/answer pair is ‘Who loses’?  The answer to that is ‘The American public.  They get fewer flights on fewer airlines to choose from, and almost certainly higher air fares.’

More than that, most flights simultaneously are taking American travelers out of the US, and also bringing foreign travelers into the US.  The numbers are not necessarily exactly balanced, but whether there is a preponderance of travel from one side or the other of the route, there are always some of each, and all those inbound passengers represent new tourism income for the US, benefitting our economy on many levels and flowing through to indirect benefits reaching all the way to pretty much every one of us.  Restricting airline access to the US doesn’t only harm outbound US travelers, it also harms incoming tourists and business travelers seeking to enjoy vacations and do business with the US, and in turn harms all the US businesses that would benefit from their arrival, and all the supporting/secondary businesses that in turn get work from the primary traveler contact businesses, and so on.

There may well be a clear and quantifiable loss to our economy and jobs when a manufacturer moves his factory into Mexico, while still shipping his finished goods back to sell in the US and simultaneously keeping the extra profit he has made from the lower cost manufacturing, also off-shore.  That’s a simple transaction that allows for simple analysis of simple limited outcomes, and may also allow for a simple response to ensure the US doesn’t lose quite so much by the manufacturer’s actions.

But when we start restricting international air travel, we create a sea of affected constituencies, both obvious and less obvious (for example, freight as well as passengers).

It is clear that the US airlines wouldn’t rush to fill the gaps created by restricting foreign carriers, even if the other nations affected by the abandoned agreement were to say ‘don’t worry about it, guys, you can still fly to our airports any time you like’.  For example, the new Emirates flight to Athens – that isn’t unfairly forcing out a current US airline’s flights.  It is a totally new flight on a route the US airlines have no interest in operating.

One possible solution might be to require foreign airlines to set up US subsidiaries and pay US taxes on their US related profits.  This is actually what some foreign airlines would love and which terrifies the US carriers – a chance to set up US airline subsidiaries (and then fly domestically within the US too).

Another possible solution might be to strike a compromise deal – foreign airlines should half staff their flights with US crews, and US airlines should be allowed to half staff their flights with crews from the destinations they are flying to.  But that’s not going to please the US pilots and flights attendants unions, because the foreign airlines will seek to employ non-union US staff, and the US airlines in turn will also seek to hire non-union foreign staff.

This is why we say Trump shouldn’t target aviation.  We don’t think there’s a problem that needs fixing at present, and even if there is, we don’t think it a problem that allows for an easy tweet-sized solution.

Something Trump Might (Should) Do?

We were delighted to see reference to speeding implementation the FAA’s long-delayed ‘Next Gen’ Air Traffic Control system as part of a Trump plan to rebuild America’s transportation infrastructure.

The Next Gen system would allow for more planes in the sky, flying more safely, using GPS-based and other updated navigation aids rather than the outdated and less accurate/reliable radar and radio type navigation systems at present.  It would cut down on the congestion in the skies that results in delayed flights, and allow better flight paths, saving fuel and time – both precious commodities to both the airlines and their travelers.

The system has been ‘in development’ – ie, awaiting full funding – for close on 15 years.  The admittedly substantial costs of implementation would be astonishingly quickly repaid in operational savings – perhaps in as little as two years.  But because the costs would be incurred in part by organizations that wouldn’t in turn directly see the operational savings, funding has been a problem to date.

Getting Next Gen finally deployed would be a massive tangible boost to our aviation system.  Let’s hope this part of the aviation system does indeed get focus and favor from the Trump administration.

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