Weekly Roundup Friday 3 February 2012

Good morning

Travel has understandably been on my mind this week.  Our September North Korea tour had three more people join – at this rate it will soon be that one in every 50 foreigners visiting North Korea in 2012 will be Travel Insiders.  Amazing.

Shall we try to make it one in every 40?  One in every 30?

I’ve also written a new piece to add to the growing collection of material about travel to New Zealand, seizing on the current focus the country is getting due to the news of director James Cameron moving there.  He bought such a large piece of prime real estate that it required the special approval of the Overseas Investment Commission – approval which was duly given, needless to say.

More on that in one of the other items in tonight’s newsletter compendium.

And now, the items in this first part of tonights compendium comprise :

• Reader Survey – Hotel Amenities
• American Airlines Hopes to Grow Its Way Out of Difficulties
• EU Airline Anti-Trust Investigation – Off Again, On Again.  What, Confused?  Not Them!
• Citibank Drops Us Right In It
• Citibank Ugliness Part 2
• The World’s Best Cities for….
• TripAdvisor’s Problems Continue
• Costa Concordia Update
• More Thoughts on This Week’s DHS Outrage
• Answer to The World’s Best Cities

Reader Survey – Hotel Amenities

A recent survey was held of travelers by a third company polling company to see what hotel amenities were most valued by travelers.  I thought it would be interesting to see what Travel Insiders value the most in a hotel, and so as not to bias your answers, I’ll not disclose the results of the other survey.

Below is a list of fourteen features often found in hotels.  I know it is hard to choose, but please click a link for the feature that is most important/valuable to you when choosing a hotel and please click a link for the feature that you care the least about.

If you really can’t choose between two (or even three) different features as being the most important and/or as being the least important, you may vote multiple times by clicking as many links as you wish.

Each link click should create an empty email with your selection coded into the subject line of the email that you simply send on its way to me.  I’ll count them all up and present the answers next week.

Thank you for participating in this survey – ‘the collective wisdom of crowds’ is always evident in the results of Travel Insider surveys.

American Airlines Hopes to Grow Its Way Out of Difficulties

Here’s a stunning piece of news.  Unlike almost every other airline that has gone through Chapter 11, and even some that haven’t (yet?), AA has announced plans for returning to profitability that include ambitious growth rather than shrinking.

Most airlines talk about cutting back on marginal routes (and not replacing them with growth on profitable routes), about ‘rightsizing’ (or plain simple downsizing) and about reducing ‘excess capacity’ in the market.  The whole concept of ‘excess capacity’ is a nonsense concept that is rebutted by the ‘Southwest Effect’ – the proven situation where if extra flights and lower fares are added between any two cities, rather than being ‘excess’ capacity, more people start flying and fill the extra capacity that has been added.

For sure, AA is also talking about walking away from some pension scheme obligations, reducing staff by 13,000 employees (about 15% of its total workforce), and generally rejiggering operating costs down to a level 20% below what they are at present.

But they’re also talking not about deferring new plane purchases (as has been standard elsewhere), but instead about seeking to have the youngest jet fleet in the country by 2017, and of course, the 20% growth in departures (with an emphasis on international routes) also within five years.

There’s a potential bit of fudging about this 20% growth – I wonder if some of it will be by redefining the AA share of some of their alliance/code share partners’ traffic.

But never mind the churlish questions for now.  It is great to see an airline that plans to grow its way back to profit.  That’s almost like – ummm – mainstream marketing and management thinking.  Wow.  Let’s wish AA the best of good fortune with such positive plans, and hope they don’t get swallowed up by a shrinking dinosaur instead.

But I do hope – again for their sake – they’ll quickly get their act sorted together.  The airline announced, earlier this week, that it lost a net $904 million in December (its first month operating in Chapter 11).

Yes, folks, that’s little change out of a billion dollars down, in a single month.  All of a sudden AA’s $4 billion in cash reserves and short term investments doesn’t seem like quite so much money – it would barely finance four more months with whopper losses like those (and the first quarter of the year is seldom the best quarter for most airlines).

EU Airline Anti-Trust Investigation – Off Again, On Again.  What, Confused?  Not Them!

We know that the US Departments of Justice and Transportation between them seem to seldom encounter an airline tie-up they don’t approve of.  In a wonderful bit of circular logic, first they would say ‘Well, if these two airlines start operating together, it doesn’t really matter because there are still so many others’.  Then the logic evolved to ‘Well, we did it for airlines A and B, so it is only fair that we now do it for airlines C and D’.  Then the final stage of their logic became ‘Now that there are mainly mega-alliances operating on this route, these remaining individual airlines can no longer survive on their own so we must allow them to ally together too’.

That’s brilliant logic, isn’t it.  Each step makes sense in and of itself (sort of) but in combination we’ve gone from dozens of airlines competing against each other, to the situation now where we have three mega alliances that seem more to cooperate warily with and shadow each other than compete at all.

Anyway, the bottom line is plain.  If we’re to seek any assertive assistance on breaking up the airline alliances and restoring competition, we need to look somewhere other than the US.

Maybe there’s a glimmer of hope?  The EU announced this week that it is investigating whether pricing and capacity pacts between Air France-KLM, Alitalia and Delta on routes between Europe and North America are bad for passengers.

But on the basis that as one door opens, another closes, the EU also said it was abandoning antitrust proceedings against other members of the SkyTeam airlines alliance: AeroMexico, Air France and KLM, Alitalia, Czech Airlines, Delta, Korean Air Lines and the former Continental Airlines.

Oh – wait!  So it is abandoning an investigation into AF/KL, DL and AZ, but simultaneously starting one?  Wow.  With logic like that, let’s not expect for great things to result.

Citibank Drops Us Right In It

Thanks for nothing, Citibank.  People are receiving 1099 forms from Citibank, in which the banking giant has reported what it considers to be the taxable value of frequent flier miles it has been giving to people as incentives to open new banking accounts.

This marks a new development, which apparently Citibank took on its own initiative, gratuitously deciding to have us incur tax liabilities on the free miles it has been so ‘generously’ awarding people who open new accounts with them.

Adding insult to injury is their valuation of the miles.  Citibank says that for tax purposes, each mile has a 2.5 cent value.  While the issue of how much miles are worth is a very complex and contentious one, the simple fact is that many airlines will sell you miles for less than 2.5 cents each, and for sure Citibank bought the millions/billions of miles it has given away at a bulk rate massively below 2.5 cents.

Answer me this :  How has Citibank profited from causing us to incur tax liabilities on the inflated value of ‘free’ miles it was ‘giving’ to us?  Why is it doing this?  Is this part of some quiet quid pro quo with the IRS that has helped them resolve some other dispute with the IRS?

The big problem is that by doing so, Citibank has forced the IRS to take official notice of the topic of how much miles are worth and if they should be taxed or not.  Until now both the IRS and we have all tried to ignore the issue, but with the sudden unexpected gift of who knows how much extra revenue from Citibank’s tax assessments of the miles we’ve all received, the IRS now finds itself in the position of needing to protect the income it now stands to receive – income that now has a definite certain value put alongside it by an apparently neutral third party – Citibank (rather than an interested party such as ourselves or the airlines).

The LA Times has been leading the coverage of this matter.  Here’s their first breaking news story and here’s a follow up.

Please keep this in mind next time you are wondering which credit card to cancel, or which credit card offer to accept.

Citibank Ugliness Part 2

If you should need another reason to hate Citibank, here it is.  Citibank imposed a ‘foreign transaction fee’ (a substantial 3% fee) on a ticket purchase made by a US resident, buying a ticket in US dollars (for flights to and from Singapore on Singapore Airlines).

None of us like, but most of us accept, a small foreign transaction fee (my Visa card issued by Bank of America charges 1%) if we’re buying something out of the country and paying in local currency for it.  But to buy an airline ticket in the US, albeit with a foreign airline, and to pay for it in US currency – where does the justification for a foreign transaction fee come from for that?  Nowhere is the answer.  There are no currency conversions for Citibank to incur any costs on at all.

Consumer advocate and travel writer Chris Elliott approached Citibank on behalf of the lady who incurred the $55 fee, pointing out the unfairness of it.  Citibank refused to reverse the charge.  More details here.

Please keep this too in mind next time you are wondering which credit card to cancel, or which credit card offer to accept.

The World’s Best Cities for….

Here’s an interesting conjunction of things that some people might not expect to be conjoined.  The city in the world that is ranked by Gaycities.com and American Airlines as being the world’s best gay travel destination is in the same country as the (different) city that is ranked as the best city in the world for religious travel.

How’s your general knowledge?  Can you guess either/both cities, and of course the country they are both in?  And, a bonus question, can you guess the world’s second best city for gay travel?  Answers further down the newsletter.

TripAdvisor’s Problems Continue

TripAdvisor has now been formally instructed by the UK Advertising Standards Authority that it can no longer claim to offer ‘trusted and honest reviews’.

The ASA’s investigation determined that the site could not guarantee customer feedback was genuine.  As a result, TripAdvisor may not claim or imply that all the reviews that appeared on its website were from real travellers, or were honest or trusted.

TripAdvisor’s response?  They said ‘We have confidence that the 50 million users who come to our site every month trust the reviews they read on TripAdvisor, which is why they keep coming back to us in increasingly larger numbers to plan and have the perfect trip’.

So, there’s nothing to see here, folks.  Move along now.  Or so TripAdvisor wishes us to think.

I just checked their site, and at the very bottom it has the tag line ‘World’s most trusted travel advice’, and a friend confirmed it remains visible in the UK too.

To be fair, the ‘official’ UK site is tripadvisor.co.uk rather than tripadvisor.com, but I bet many people in the UK click on a link or otherwise just type in the .com extension because both links seem to reveal very much the same underlying website and data; so – and contrary to the Advertising Standards Authority ruling – TripAdvisor is still making its ‘trusted’ claim in the UK.

Interestingly, the UK site’s tag line (‘The world’s largest travel site’) is echoed on the French site too (‘Le plus grand site de voyage au monde’).  Apparently TripAdvisor’s lawyers must feel the UK ruling can be enforced in the EU as well.

Even more strangely, neither tag line appears on the Canadian site.  Make of that as you will.

Costa Concordia Updates

Three interesting updates, and all are perhaps not complete surprises.

The first is that the race to file lawsuits seems to have been won by a New York based personal injury attorney, who has filed a $460 million class action suit on behalf of more than 500 passengers.  (That’s about $900,000 per passenger – a surprisingly modest sum, considering.)

This is in response to the ‘improved’ offer from Costa of $14,460 per passenger in compensation for lost baggage and psychological trauma.

The lawsuit was filed in Florida, the world headquarters of Costa’s parent company, Carnival.  But the terms and conditions on passenger tickets require lawsuits to be filed in Italy, where apparently the jurisdiction would be less favorable to the claimants, so the lawsuit is in the very early stages of legal maneuvering.

Talking about maneuvering, you may recall the Costa CEO complaining that the much maligned captain of the Concordia had failed to keep the company informed of the problems he was experiencing with the ship as between when it struck the rocks and finally went aground.

It now appears that – oooops – the captain actually had made at least six calls to the head of marine operations at Costa during the 73 minutes between hitting the rocks and deciding to abandon ship, and it further seems that during these calls he provided frank and detailed information about what was occurring.

That’s not to say the captain is now blameless.  But it is interesting to see that he may not have been quite as bad as he was first made out to be.  I wonder if he has any chance at all of getting any sort of libel lawsuit awarded in his favor as a result of these now clearly erroneous slurs?  Probably not, alas.

Lastly, Carnival has now revealed that its bookings have dropped about 15% since the Concordia disaster.  They are outlooking at least a $175 million drop in profits for the year – although about half of this reduction in profit is due to not being able to sail the Concordia and make money from its voyages.

It might be unkind and unfair to show this picture in view of the earlier item about the Concordia captain, but is there any truth to the story that the captain began a new job as a bus driver yesterday?

More Thoughts on This Week’s DHS Outrage

Further down the collection of articles you’ll see a piece I wrote earlier this week about the latest extreme example of the surly stupidity of the DHS.  You could probably sense my bubbling outrage at this idiocy – never a good frame of mind in which to write, but even so, probably justified in this case.

I had some discussions on the matter with a reader, and to clarify/amplify the article, one of my big concerns is that this can’t be excused as the actions of just one rogue officer.  How many colleagues and supervisors also had to participate in this appalling mistreatment of two innocent harmless ordinary British tourists, too?  It shows an endemic culture of – I’m not sure what is the best term (you choose one to suit) – that runs throughout the institution.

Not only was the event reprehensible in the extreme, the really big frustration is that none of the people involved will experience any sort of negative outcome at all.  It is sadly accurate to describe the people involved and the agency they work for as being out of control.

If you read one of the reader comments in the Daily Mail story that I link to, you’ll see this (US) reader say, in support of the DHS actions, ‘after 9/11, we have a right to be a bit paranoid’.

No, we don’t have that right at all.  We have an obligation to be more prudent and more sensible, and better focused on truly potential enemies; but we have no right to be paranoid or to mistreat our friends.  Paranoia, by definition, is a sick state of mind that does nothing to help the person so suffering to better cope with the world around them.  Paranoid DHS officials lack the mental clarity to distinguish right from wrong, and the unavoidable flip side of perceiving harmless Brits as terrorists intent on ‘destroying’ the US is that this lack of reasoning prevents them from recognizing and focusing on real threats when they appear.

Lastly, the most puzzling thing is the way these incidents appear from nowhere.  Most of the time, most of us have perfectly positive experiences going through immigration on the way into the US (although to be fair, most of us are also US citizens).  How is it that an organization that, most of the time, is somewhere close to fair and reasonable, occasionally goes so far out into left field without any sort of self-correction, either at the time of the incident or subsequently?

Answer to The World’s Best Cities

The best gay travel destination is Tel Aviv, with 43% of respondents choosing that destination, a clear win over the world’s second best city – New York – which was mentioned only 14% of the time.  The best religious travel destination is Jerusalem, and of course, need I tell you that both cities are in Israel.

Until next week, please enjoy safe travels

David.