Weekly Roundup Friday 27 April 2012

Good morning

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

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

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

Also in this week’s roundup :

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

 Korean Tour Third Bus Challenge

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

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

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

Airline Winners and Losers

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

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

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

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

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

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

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

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

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

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

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

US Airways Beats its Chest in Public.  Unions Impressed.

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

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

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

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

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

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

Southwest Loves AirTran’s Fees

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

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

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

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

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

United Likes Fees, Too

That’s hardly a surprising headline.

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

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

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

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

Something for us all to look forward to.  Not.

A Third Airport for Chicago?  Maybe.

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

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

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

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

Bird Strike Caught on Illegal Passenger Video

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

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

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

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

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

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

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

Hotel Price Statistics

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

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

Good Value Hotel Booking Site

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

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

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

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

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

Embarrassing Website Mistake

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

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

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

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

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

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

Travel Agents Continue Their Return to Popularity

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

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

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

This Week’s Security Horror Story

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

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

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

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

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

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

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

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

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

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

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

A Statue as Security?

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

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

Life Saving iPhone Apps?  So Says USA Today.

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

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

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

And Lastly This Week….

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

Until next week, please enjoy safe travels

David.