Aug 182011
 

This mock Qantas logo captures some of the problems Qantas is experiencing currently.

Good morning.  Birthday wishes this week to a device that truly revolutionized our lives way beyond anyone’s dreams.

It is almost exactly 30 years since the first IBM PC appeared.  The first PC (amongst other things, IBM coined the now universal term PC for its new device) came complete with 16kB of memory, which could be expanded up to 256kB if required (Bill Gates once famously said that no-one would ever need more than 640kB of memory – keep that in mind as you use your current PC that may have 1, 2, 4 or even 6 or more GB of memory in it!).

The first ever PC had a 160kB 5.25″ floppy drive, and a second one was available as an option.  There were no hard drives, but you could add a cassette tape drive.  The CPU was an Intel 8088, which was an 8 bit processor running at 4.7 MHz.

The screen was a monochrome green screen, although a 320×240 pixel color screen was also available as an option.  The PC was not networked; indeed, it could not be networked.  Neither could it multi-task.  It had no sound card, speakers, webcam, or mouse.

The unit was priced at $1565 (about $4000 in today’s dollars).

Less than four months later, Time named the PC as its ‘Man of the Year’.  Some of Time’s choices have been controversial, but no-one can dispute its choice back in 1981.  Personal computing has changed all our lives – hopefully for the better.  We are now living lives that 30 years ago (indeed, 20 years ago) seemed to be fanciful science fiction, not just in terms of device size and power but also in terms of the internet, high speed wireless data, and the everything/everywhere connectivity and knowledge it brings us.  It is a truly amazing world we are fortunate to find ourselves in these days.

I posted a couple of blog entries yesterday, both of which need corrections.  Ooops.  Although I’ve corrected the blog articles, my sense is that if you’re getting them in this format, you might be getting the original version rather than the ‘new and improved’ versions, so just in case, here are the two corrections.

The article about replacing your iPhone 3G/3GS battery has a bad link in it.  The correct link is here.  Replacing the battery is a great way to rejuvenate your now somewhat long in tooth iPhone 3G or 3GS – I was amazed at the increase in battery life I got when replacing the battery in my own 3GS.

The second article needs to be corrected not due to a mistake on my part, but due to a change in external events.  The article invites you to come join me and other fellow Travel Insiders on another of the occasional Four Day Defensive Handgun courses at Front Sight in Nevada that I’ve sometimes coordinated groups for before.  Minutes – truly, mere minutes – after publishing the blog entry, I got an astounding offer from Front Sight.  Basically it means you can attend this class almost completely for free, and get a life membership to attend any/all of their classes in the future, as often as you wish.  What is the catch?

It seems to me that Front Sight is transitioning to a ‘Ryanair’ model – it can afford to give away four day high quality training courses, because it makes its money in all the related incidentals and extras that most people buy.  As you know, Ryanair gives away a lot of its tickets either for free or for ridiculously low prices ($10 or thereabouts) while making its profit out of charging for anything and everything else.  I’d hesitate to compare the experience at Front Sight with that at Ryanair, but it seems this is the revenue model they are increasingly pursuing (I do an analysis of it here).

Anyway, bottom line is that you can get a Front Sight ‘Diamond’ Lifetime membership from me for $200 if you order it prior to the end of Tuesday next week.  This gets you a 40% discount in their Pro Shop, and with the costs of renting a gun and electronic earmuffs plus buying ammo for the four day course totaling $394, the $157 discount on this cost almost covers the total cost of the membership – you’re spending a net of $43 to attend this four day class, and all future classes are free.  Amazing.

And now, back to our usual programming.

An airline alliance has been refused permission to proceed by a government regulator.  Wow – how’s that for a surprising turn of events.

The alliance in question was to have been between Air Canada and United/Continental.  Although the US regulators had no problem signing off on the deal, the Canadian Competition Bureau is proving harder to please.  It pointed out the alliance would be, in effect, a virtual merger and if it were to be allowed, it would deter rivals, reduce customer choice and cause airfares to rise.  Wow – how’s that for perceptive analysis – I wonder how it is the DoT has a very different vision?

Needless to say, the airlines are appealing the finding.  Details here.

You might recall that one of the two sticking points that delayed the re-authorization of the FAA’s ability to collect taxes and fees from passenger tickets was the Essential Air Service program.  This program was initiated when deregulation first came out, with its underlying premise being to ensure that in the ‘free for all’ that was expected to follow deregulation, no community that was already being served by airlines would miss out on ongoing air service due to deregulation.

Perhaps it was a good idea at the time, but that was more than thirty years ago, and these days there’s little purpose to what has become an expensive project.  This article details some of the more expensively subsidized routes.

Do people have a right to convenient cheap airline service close to where they live?  Supporters of the EAS program claim they do.

I’ve often accused the airlines as being slow to innovate and unimaginative when it comes to developing and marketing their product to potential passengers.  You might say, in response, that there’s not much that can be done to change a typical airline flight experience; it is a ‘mature’ product and therefore not easy to change, and you’d be half right about that.

While it is true that a seat is a seat is a seat – and always too narrow and too close to the seat in front (unless you pay massive premiums to fly in a premium cabin) there are all sorts of other things the airlines are slow to embrace which could make our overall travel experience much better.  These range from things we are seeing appear slowly on some airlines (eg interactively ordering food and drinks from the screen at your seat); and adding at-seat power, to improved baggage handling and tracking (by using RFID chips) to truly paperless e-ticketing (ie using confirmation codes on your phone screen).  I also have to wonder if there truly is no better way to ‘cook’ airline food than to simply heat it in ovens.

Plus there are surely all sorts of alternative ways to set ticket pricing and sell tickets, but most airlines, most of the time, are locked in the same traditional ticket/fare rules as always.

On the other hand, there are some areas in which airlines can display enormous creativity and innovation.  Unfortunately, this creativity is often (mis)applied to ways to circumvent the regulatory constraints which are very loosely imposed on airlines all around the world.  The whole concept of airline alliances is primarily a way to allow airlines to do things via alliances that they’re not normally allowed to do – all of this, of course, being offered under the banner of ‘for the convenience of our customers’, even though the real world experience of such convenience is usually quite at odds with the airline claims.

The latest airline to show some innovative ‘brilliance’ is Qantas.  As longer time readers will know, I have been a wildly enthusiastic fan of Qantas in the past – as I should be, because it was with their generous help that I built my former travel company up, during the 1990s.  But that was 11 – 21 years in the past, and a lot has happened since then.  The CEO for most of the time I was associated with Qantas (James Strong) was replaced by another CEO (Geoff Dixon – also excellent) and he in turn has now passed the baton on to another person (Alan Joyce) who doesn’t seem to have the same vision as his predecessors.

Qantas has always labored under a bit of a totally undeserved inferiority complex – as indeed do many Australians (I think it dates all the way back to how some of the original settlers were convict deportees from Britain).  Qantas has been desperately keen to become less Australian, but when the Australian government privatized Qantas, it mandated that it must remain 51% owned by Australians, and managed by Australian staff.

When I left the industry, and for many years subsequently, Qantas was one of the most successful airlines in the air.  It generated massive profits, it operated a fleet of nearly new planes that were as close to perfectly maintained as you could ever hope for (both mechanically and in terms of passenger experience items too), it gave good reliable service, it had a proud company spirit, a massive market share both within and outside of Australia, and regularly polled in the top two or three most admired companies in Australia.

Sure, if you scratched the surface, you’d find some hints of issues underneath.  Inefficient work practices and trade union contracts were burdens, but during the Geoff Dixon era he aggressively pared back the company’s labor costs, and continued Qantas’ impressive profitability.

Two things have been the essence and heart of the Qantas brand.  The first is its reputation for perfect safety (made famous in Rainman); and while this reputation is slightly exaggerated, it is true that it has never had a passenger fatality in a jet airplane due to a crash.

The second is its quintessential Australian nature, as its slogans have variously said, Qantas truly is ‘the Australian airline’ and ‘the spirit of Australia’.  Qantas used to sell its flights using the claim ‘Start your Australian vacation a little sooner’ – in reference to enjoying a bona fide Australian experience from the minute you walked onto their plane.

Unfortunately, Qantas’ new approach to its business is jeopardizing both these priceless brand assets.  By outsourcing its engine maintenance to Rolls Royce rather than conducting its own maintenance as it has in the past, it has suffered a number of nasty surprises on its Rolls Royce engined planes, with some very narrow escapes from what potentially could have been horrendous incidents.

The fact that its fleet is seriously aging hasn’t helped, either – what were shiny new 747-400s in the mid 1990s are now much longer in the tooth planes approaching their 20th anniversaries.  Qantas’ most recent response to its aging fleet has been to defer future deliveries of new A380s until 2019 or beyond, and its plans to receive some 787s have become vague and unclear.  It did announce a large order this week for 110 A320 planes, but these are short haul planes, not long-haul planes suitable for its long routes to the US and Britain.

And what about its Australian-ness?  Qantas seems keen to change itself from being an Australian owned and staffed airline to one which may not be Australian owned and which will definitely not be Australian staffed.

As a New Zealander, I’m far from upset to see Qantas set up a subsidiary operation in NZ (which has lower labor and general costs than Australia) and staff much of its trans-Tasman services with NZ cabin crew and pilots, and with airplanes that are even registered in NZ rather than Australia.  It is a bit of a stretch though to call these operations truly Qantas and/or Australian, though.

Qantas announced this week plans to create two more off-shore airlines, which will necessarily be joint ventures with other companies somewhere in South East Asia.  This will allow these new airlines to be staffed by lower cost crew from SE Asian countries, and Qantas will have major but minority shareholdings in these companies.

And therein lies the brilliant creativity.  Qantas is required, by Australian law, to remain majority owned by Australians.  So how to get around it?  Easy – or so it seems.  Simply set up new joint venture companies with other partners in other countries – instead of having these other companies invest directly in Qantas and be subject to all the Australian requirements involved with this, Qantas is flipping the dynamic completely and creating offshore airlines outside of Australia’s jurisdiction.

More distressingly, Qantas seems not only to be ceding future routes to these offshored new companies, but is also withdrawing from its current operations.  It is halving its flights to London, and other flights will now go only ‘half way’ at which point passengers will need to switch to a BA flight to travel the other sector of the journey (all flights between Sydney/Melbourne and London need a stop en route).

There are also unsubstantiated rumors that Qantas may allow its partner, American Airlines, to start operating flights from the US to NZ (and possibly even Australia too) on behalf of Qantas, rather than continuing its own flights.  And a recent switch from a daily flight to San Francisco to a four times a week flight to Dallas has been at best a strange decision with uncertain commercial success supporting it.

Qantas does have a strategic disadvantage compared to carriers such as Emirates and Singapore Airlines for service to/from Europe.  If you look at a map, you’ll see that Singapore is close to directly in the shortest path from Australia to Britain, and Dubai is not too far off course.  The advantage of these two places is that for people wishing to go to other places in Europe, they simply change planes at the Singapore hub for Singapore Airlines, or the Dubai hub for Emirates, and continue their journey efficiently to their destination.

But with Qantas and its London hub, passengers need to first fly past their ultimate destination in Europe, all the way to London, then change planes in London and fly back to wherever they wish to end up.  This is three flights rather than two – twice as many connections and opportunities for things to go wrong, and a much longer overall journey time.

The same is true for people in Europe wishing to travel to Australia, too.  Flying Qantas is, for most Europeans, the least convenient way to get to Australia.  Qantas formerly flew to more places in Europe than just London, but no longer does.  Perhaps its route cutbacks help to explain why the airline which in the 1990s had about a 40% share of the Australian outbound international market now struggles to get 18%.  Its market share has reduced to less than half what it was a mere 15 or so years ago.

For more on Qantas’ decline, read through many of the recent articles in Ben Sandilands’ excellent blog (today’s featured image was taken from his blog).  It is very sad to see Qantas eviscerating itself.

Talking some more about innovation, British Airways is experimenting with an interesting new customer service enhancement.  They are deploying iPads onto their planes, and will be downloading their manifests complete with expanded information on the passengers on each flight, so as to be able to better interact with their customers.  The iPads will be connected through the plane’s internet system and so flight attendants can also access latest schedule information and even enter real-time service requests for anything that might need maintenance.

Airlines are continuing to deploy iPad based systems for their pilots, with a complete set of manuals and other information for pilots, and now, it seems, are starting to look at customer facing solutions for their cabin crew as well.

Talking about gadgets, there’s been a lot of talk this week about Google’s extraordinary $12.5 billion buyout of Motorola.  This is all about buying Motorola’s patents, rather than about buying the phone manufacturing side of the business.

Patent rights have evolved from a positive system to encourage and reward innovation to, alas, these days being a negative system designed to discourage and limit innovation.  Technology companies buy patents at vastly inflated prices not because they can use the technology to make great products and great profits from those products, but so as to block other companies or license their patents.

Part of the reason Google needs these patents is as a defensive measure so it can do battle against its two major foes – Microsoft and Apple, both with huge inventories of patents and an aggressive approach to seeking to curtail Android’s runaway success in the market.

Perhaps because of all the discussion about the $12.5 billion Google/Motorola deal, less attention has been given to another interesting development in the mobile phone and tablet battle – the demise of what was PalmOS and more recently (after HP bought Palm) webOS.

Don’t feel too sorry for HP.  WebOS is dead in all but name, but HP now has 1650 extra patents that came as part of the buyout of Palm.  Interestingly, the price HP paid to buy Palm equates to nearly exactly the same price per patent as the price Google paid to buy Motorola and its 17,000 patents.

Increasingly, it is all about the patents, and how you can use them to slow down your competitors.  This is far from the finest example of American innovation and competition.

Next Tuesday sees some of the new DoT airline passenger protection provisions come into force.  If you’re bumped off a flight, the minimum compensation you can receive increased from $400/800 to $650/1300.  International flights will now be subject to penalties if they strand passengers on a parked plane at an airport.  Bag fees must be refunded if a bag is lost, and the airlines will be required to promptly refund tickets and other fees when applicable.

Other provisions have been delayed until 24 January, including increased disclosure of fees in general, showing baggage fees on e-tickets, a consistent approach to how bag fees are levied on itineraries with code share and interline flights, requirements to notify passengers of flight delays or cancellations on a ‘timely’ basis, and the ability to hold reservations for at least 24 hours prior to needing to pay for them.

Any advertised airfare prices will have to have all taxes and fees included in the advertised price (not sure how they’ll do that when an airfare eg LAX-NYC might be nonstop or with a stop or even two en route, meaning different amounts charged for PFC and per sector fees).

Both airlines and travel agents said they needed the extra time to make the changes necessary for these things.

In related airline passenger rights news, the Ninth US Circuit Court of Appeals has just released a very significant ruling that seems to remove the airlines’ shield of being only able to be sued in federal court.  It said the purpose of the law was “to make the airline industry more efficient by unleashing the market forces of competition – it was not to immunize the airline industry” from responsibility for reneging on its own agreements, like the frequent-flier program, the court said in a 3-0 ruling.

This is almost sure to be appealed to the Supreme Court, but if it is affirmed, it could dramatically increase the accountability of airlines.  More details here.

The latest world airport traffic report by the Airports Council International shows Heathrow as the world’s busiest airport in terms of international passenger numbers (60.9 million).  When you count domestic and international passengers, Atlanta takes first place (89.3 million) followed by Beijing, Chicago, and then Heathrow at number four position.  Tokyo (Haneda) is five, then Los Angeles, Paris, Dallas, Frankfurt and Denver.

Another category reported on was the world’s fastest growing airports.  Fastest growing (in terms of percent) is Istanbul, followed by Campinas (Brazil), Rio de Janeiro, Charleroi and Moscow (Sheremetyevo) in number five place.

More details here.

In other statistics, here’s a fascinating article that shows the percentage of companies that reimburse their employees for various travel related expenses.  89% of companies surveyed reimburse the cost of hotel parking, but only 9% reimburse mini-bar charges.  Well, probably no big surprise there, but some of the other numbers are interesting.

Have a look to see if you’re ahead or behind the curve in terms of what you get reimbursed.

Not quite statistics, but interesting nonetheless is this LA Times article all about the A380 and how different airlines have configured the cabin space.

To my surprise, it seems that among the most luxurious A380 cabins are to be found on the Korean Air planes.

In an embarrassing and still unexplained lapse of security, a Southwest flight from Vegas to Kansas City on Wednesday was delayed for an hour when, prior to leaving the gate, a flight attendant found a plastic bag full of fireworks under a seat.

Fireworks are prohibited on flights, and they should not have got through security screening.

None of the passengers admitted to owning the fireworks.  Everyone had to get off the plane while the airplane was inspected by the TSA, and – for good measure – everyone’s baggage was re-inspected too.

Once the bags were okayed and the plane declared safe, the flight took off.  The TSA says it is investigating how the fireworks got onto the plane.

Opposition is growing among some political quarters to the new TSA test program of what has been dubbed ‘chat downs‘ (as compared to ‘pat downs’).  Some of our more sensitive legislators are worried that the TSA may non-randomly choose to ‘chat down’ people of particular ethnic backgrounds rather than closing their eyes and truly randomly selecting people, no matter if they are young or old, ‘all American’ or, ahem, quite the opposite.

That’s not to decry the reality of racial overtones in the selection process at present, and a long time Travel Insider supporter writes to say

As a black person who travels extensively I have to disagree with your assertion that people of color are not selected for secondary screening.  I am a US Citizen – born and bred – who has been selected for secondary screening in the US, UK, India, China, Germany and Sweden in the past year or so.  When I asked why I was singled out I was always told that it was a random selection.  The majority of these selections occurred in the US.

I realize this is part of your rant about our refusal to profile based on ethnicity/nationality, and I agree with your assertion that we should be using Israeli-style profiling in the US.  But in the future be careful about making assumptions based on your observations.  You are one person and your travel experiences cannot possibly encompass what is happening in the world at large – or even the US.

Although I’m not sure I ever said that ‘people of color’ are not selected for secondary screening (I know they are) I do assert that attempts to ensure that people are screened in strict proportion to their representation in any given population group is neither sensible nor appropriate.

On the other hand, simply choosing a black person for secondary screening because they are black is very lazy and not very sensible.  One would hope that the TSA’s allegedly highly trained Behavior Detection Officers are better at spotting people than that.

Have you ever been on a cruise that tries to sell/auction art works to you and your fellow passengers?  These actions have attracted more than their share of controversy (and lawsuits) with people who have eagerly bought pieces on board a ship discovering, upon getting it home, that they paid way over the odds for it.

The most recent example (that has made the papers) is of an Australian who bought a lithograph for $50,000.  He then decided it was too expensive, and complained, which got the price reduced to $12,500.

But he then had it appraised by an art consultant, who said it wasn’t worth more than about $1500.  Hmmmm.  If you scroll about half way down this item you’ll see a recent news item also about Park West Gallery – the company that seems to be the most controversial provider of art work for sale on cruise ships.

It is far from clear to me why anyone would think a cruise ship at sea is a good place to buy upmarket expensive art.

Talking about getting upset, here’s an interesting thing about movies on flights.  No – I’m not referring to the ‘adult’ type movies on Qantas flights currently, but rather about ‘weepy films’.  Virgin Atlantic will be adding warning messages to movies which it feels are likely to cause passengers to burst into tears.

A survey found that 55% of passengers believe their emotions are heightened while flying.  41% of men said they crept under blankets to hide their tears.

The first two movies to be so labeled are ‘Water for Elephants’ and ‘Just Go With It’.

Finally this week, I’ve watched the global warming enthusiasts get increasingly desperate in their attempts to justify their beliefs, even as each and every one of the studies they’ve advanced that supposedly support their views have collapsed under careful scientific analysis.

But I think that someone somewhere has crossed a definite line and gone totally into fantasy land with this latest reason why we should reduce carbon emissions – because if we don’t, alien civilizations might come and destroy us.  Details here.

Until next week, please enjoy safe travels

Davidsig265 David.

 

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