Weekly Roundup Friday 22 March 2013

Good morning

Welcome to spring, a spring which saw almost a snowfall here in the Seattle area on Thursday, after a snow-less winter.  But I’m once more pushing my mower around the lawn on a regular schedule, and it is daylight saving, so we’ll concede that spring is probably here.

Today is day 66 of the 787 grounding.  My sense of outrage at this entire process, which has never been far from boiling over, caused me to write another article about the testing process which is being conducted to double confirm and guarantee the safety of the ‘fix’ (to the problem which no-one yet has managed to identify).  It follows the weekly roundup.

Sometimes I feel a bit lonely when it comes to the 787 issue.  Am I the only person who is very concerned about this?  Actually, apparently no I’m not.  There’s a survey here (partway down the page) which currently shows 55% of respondents believe Boeing has yet to adequately address the battery problem and develop an appropriate solution – feel free to cast your vote as you feel most appropriate to add to the numbers so far.

I’m also adding a lengthy article on the current state of what I’m terming super-phones.  The earlier title of ‘smart phone’ seems inadequate for the latest generation of devices that are amazing in so many ways.  I include some speculation on even more amazing features that may appear in the future, and address the important issue of should you buy a super-phone now or wait for an even better phone subsequently.  It is lengthy, but hopefully helpful.

Also please read on for articles on :

• Boeing Provokes the NTSB
• He Gets a $20 million Severance Package, but AA’s Horton Isn’t Actually Leaving
• The Real Reason Airlines Give Us Lousy Service
• JetBlue to Add Premium Seating?
• BBC Sells Lonely Planet for a Huge Loss
• Privacy Rights Restored on Digital Content at Customs
• US Customs Harming International Visit Numbers
• And Lastly This Week….

Boeing Provokes the NTSB

Boeing held a rather strange press conference in Tokyo a week ago as part of its public relations approach to getting approval to start flying its 787s again.  Some of us might wish they’d spend more time, effort, and resource on engineering than on public relations, but that’s another story, isn’t it.

In this press conference they got into arguments with reporters as to if the batteries that caught fire actually did experience thermal runaway events or not, and disagreed about the severity of the fires that occurred.  This article does a good job of describing Boeing’s verbal antics.

While some of us were content with merely rolling our eyes at Boeing’s attempts to talk their way out of their battery problem, the NTSB felt compelled to issue a public statement.

The NTSB has always been like the poor, ugly and single cousin at the wedding, because it has no regulatory power at all, and its recommendations are not always and automatically adopted by the FAA.  In this case, it is probably feeling doubly annoyed, because it seems the FAA is going to approve Boeing’s ‘fix’ before the NTSB has even issued a report on what the problem was, or suggested any fixes of its own.

Or possibly trebly annoyed, because some of their comments have expressed concern at the huge shortfall between the reality of the battery problems and Boeing’s claims and assurances in its self-certification process, and the FAA’s unquestioning acceptance of same.

In a letter written to Boeing by the Board’s General Counsel, the NTSB said that Boeing’s statements in Tokyo were ‘inconsistent with our expectations’.  Apparently the NTSB feel that Boeing was putting words into its (ie NTSB’s) mouth and that’s a definite no-no.  Among other things, Boeing went as far as to say that there actually wasn’t a fire on the 787 in Boston – one wonders exactly what the airport fire brigade were doing on the plane for 99 minutes, and what all the smoke coming out of the plane was from.  Details here.

But what can the NTSB do in response, apart from writing a petulant letter?  Therein lies the problem the NTSB always wrestles with.  Precious little is the answer.

He Gets a $20 million Severance Package, but AA’s Horton Isn’t Actually Leaving

You probably understand the concept of severance packages, even if you don’t agree with them.  They are designed to give a person some security, so that if they go work for a company they know that no matter what, they are guaranteed a certain amount of income.

We wrote a couple of weeks ago about the former CEO of Groupon getting a $378.36 severance package.  Groupon is a public company not in Chapter 11, but rather with a $3.5 billion market capitalization, and their CEO was fired, more or less in disgrace, as a result of the company’s poor performance of late.

American Airlines is in Chapter 11, and is about to be merged/bought out by US Air.  It has a $1.5 billion market capitalization.  Its CEO and Chairman, Tom Horton, is to become Chairman of the new merged airline, while the CEO position will go to US Air’s CEO, Doug Parker.  It is not known what this will do to Horton’s annual salary.

But what is known is that Horton will get a $19.88 million dollar severance package for now becoming ‘only’ Chairman of the merged company, rather than CEO and Chairman of AA in Chapter 11.

Do you think that is within three zeroes of being fair?  The good news is that the US Bankruptcy Trustee doesn’t think it fair and has filed an objection in the US Bankruptcy Court.  An AA spokesman justified it as being necessary to ‘appropriately motivate a strong management team during the integration process to ensure the value potential of the merger is realized’.

What utter nonsense.

Or, alternatively, if AA is correct, it seems they seem to be saying that Horton’s normal salary and benefits and bonuses would be insufficient to motivate him to work as best he can at present, and if that is the case, he shouldn’t be employed at all.  Temperamental prima donna CEOs of insolvent companies should be paid less rather than more.

The Real Reason Airlines Give Us Lousy Service

Here’s an interesting article that points out an uncomfortable truth.  The real reason airlines give us such poor service is because that is what we prefer.

Repeatedly in the past, airlines have tried to offer better service, and have charged sometimes very modest amounts extra for appreciably better service.  Passengers have praised the better service, but when forced to choose between (eg) a $340 fare with a comfortable seat and friendly staff and a positive experience in all respects, or a $330 fare with a tiny seat, surly staff and a generally negative experience in all respects, they consistently choose the cheaper fare, no matter what sacrifices are associated with it.

Although I don’t accept the article’s contention that Virgin American’s problems are due to it offering better and more costly service than other airlines, I do agree that the reason we get increasingly fewer and fewer frills with our fare is because we’re not prepared to pay any more money for anything extra.

The reality is that airlines would love to compete on services rather than fares.  A few dollars of frills and benefits can go a long way to justifying $10 or $20 more in fare, if the passengers are sensitive to service issues.  But every time we are given a choice, we unerringly head for the lowest possible fare option (and then complain about it!).

Of course, one could also point out that some service issues cost nothing to provide.  Courtesy and customer sensitivity should be provided, no matter what the fare level is we pay, but some airlines – and their employees – seem to get perverse pleasure in almost ‘punishing’ us for seeking out the lowest priced fares.

JetBlue to Add Premium Seating?

JetBlue says it will add premium seats on selected trans-continental flights, starting sometime next year, and will also equip its entire fleet with Wi-Fi.

This will help it correct a current problem – it has to compete with other airlines for coach class fares on its trans-con flights, but can’t get any of the ‘bonus’ premium revenue from the ‘up front’ seats, and the lack of Wi-Fi, while forgivable on shorter flights, is a greater disadvantage on longer flights (at least for the few passengers who pay for it).

The seating will be on day not night flights, and JetBlue hasn’t explained exactly what ‘premium’ will mean or how much extra the premium seats will cost.  It will release more information later this year.

BBC Sells Lonely Planet for a Huge Loss

Some of us never understood why the BBC bought the Lonely Planet company in the first place.  The BBC is a government-owned and funded state broadcasting company in Britain, and has restrictions (albeit ever thinner) on how it can and should compete with privately owned broadcasters.

But in 2007 it bought the Lonely Planet collection of guidebooks and related businesses, paying a total of £130 million for the business in two stages – £88 million in 2007, and then the balance when it bought the original owners’ (Tony and Maureen Wheeler) remaining 25% shareholding in 2011.

Think back to 2007.  The internet was already in full swing, Facebook was in its infancy, Twitter was barely a year old, the first iPhone appeared in June and the first Kindle appeared late that year.  The iPad would not arrive for another three years and wasn’t even being guessed at.   Traditional guidebooks were probably at their absolute peak – international travel was booming, and internet based substitutes to traditional guidebooks were only starting to be hinted at.

The BBC’s strange decision to get into the guidebook business was made at about as wrong a time as possible.

But in the five years since then, the world has turned upside down, and traditional print guidebooks are now being besieged by a wealth of electronic alternatives.  So it is unsurprising that the BBC has now sold the business, and at a whopping great big loss – almost £80 million ($122 million).

There’s one thing that has been a bit obscured about this – something even more scandalous than the loss as a whole.

We can understand the high marketplace valuation for the Lonely Planet business back in 2007 (but not why the BBC would be buying it).  At that time, the BBC paid £88 million for a 75% share, suggesting a total value of the company at £117.3 million.

But when the BBC bought the remaining 25% in 2011, it paid a further £42.1 million for this, which implies a total company value of £168.4 million.  Although I’ve not seen any of the figures, it seems beyond credible belief that in 2011 – the year before last, with all modern guide-book alternatives now in full swing and eating into the guide-book market at every turn, – that the BBC could support a valuation that suggested Lonely Planet had increased in value by 44% over the four extremely troubled years for the industry as a whole.

This also means that the imputed £168.4 million in 2011 has now, less than two years later, been corrected down to £51.5 million.  That’s a heck of a revaluation, which of course confirms my suggestion that the BBC not only probably paid over the odds in 2007, but doubly did so in 2011.

But – the silver lining in the cloud?  One also has to wonder if any guidebook business is worth £51.5 million (US$78.3 million) today.  Particularly with Google having purchased the Frommer’s guidebook series in August last year for a reputed mere $25 million.  Maybe after paying way too much for it, at least the BBC managed to then sell it on at more than its remaining value, whatever that may be.

One has to wish Lonely Planet’s new owners (NC2 Media, about which almost nothing is known) the very best of good fortune – we suspect they’ll need it; although the very recent announcement that Google may be discontinuing all of Frommer’s print publications might breathe a tiny bit of extra life into Lonely Planet for a short while longer.

Details here.

Privacy Rights Restored on Digital Content at Customs

Good news.  The 9th US Circuit Court of Appeals overturned an earlier ruling and said that the Border Patrol must have reasonable suspicion before it can seize and copy/inspect the data on phones, cameras, and computers that people bring with them into the US.

The Obama administration had argued that it could search anything, at any time, without any reason at all – neither probable cause nor reasonable suspicion.

The court also nixed the Catch-22 logic offered by the government, that if a person password protected their data, that provided prima facie reasonable suspicion.  Full details here.

US Customs Harming International Visit Numbers

Talking about the US Customs & Border Patrol, I usually find it a quick and easy process to pass through Customs on my return to the US.

Perhaps that is because these days I’m blessed to be a US citizen, and so generally get a non-adversarial brief interview, or, better still, can go through the automated lane and not talk to anyone at all.  Even so, I generally have massively more interaction with uniformed officials, and even once in a rare while, have my bags opened and inspected any time I enter the US than anywhere else.

I have never been approached by any Customs officers in any other country anywhere in the world, other than for the few countries that X-ray all bags.  For most of us, the typical entering-another-country experience is handing your passport over, saying nothing, receiving it back again a minute later, collecting your bags off the carousel, and walking out through the Green lane exit without being slowed down at all, and most of the time, without having had to have filled out any of the forms we need to fill out to return to the US.

But the US Travel Association released results of a survey this week that showed a surprisingly negative response to the experience of entering the US on the part of foreign visitors.  43% of respondents said they would discourage others from making the trip because of their own experiences entering the US.  In addition, 40% of business travelers said they would attempt to avoid returning to the US during the next five years because of bad experiences.

The U.S. Travel Association estimates that losing overseas travelers to bad experiences or word-of-mouth is costing the economy at least $95 billion in total output and more than a half million jobs across the economy. One responder who has vacationed in the US four times said his experience in entering the country had declined with each visit.

As for the CBP, they are doing their own survey, and say that preliminary findings suggest that ‘a large percentage of travelers agree the CBP process made them feel welcome to the US’.

That’s as may be, and the two results are not inconsistent with each other.  CBP could indeed say that 57% of travelers is ‘a large percentage’, but if that means the other 43% are unhappy, then it isn’t nearly large enough.

Remember what we are taught – a happy customer returns, but an unhappy customer not only doesn’t return, but spreads sufficient negativity as to cost you another ten customers too.

Whatever CBP’s results show, we shouldn’t be content with whatever large number they find to be satisfied.  We need to focus on the ones who feel unsatisfied.

It is difficult to accurately see ourselves as others see us, but I consistently am told by foreigners – by people who, due to my accent, view me as a fellow non-US citizen, that their travel experiences entering the US are the worst in the world.  Well traveled people who’ve been to some very out of the way places complain loudest and longest about their experiences entering the US.

That’s not right and not the way it should be.  And if the US Travel Assoc figures are correct, it is costing us half a million jobs.  We are a country that once – and justifiably – prided itself on being both friendly and efficient.  Now our foreign visitors, on their first impression upon arrival, report waiting up to three hours to go through the Immigration and Customs process, and complain about unfriendly overbearing staff.

And Lastly This Week….

You may have read this week about how Jeff Bezos, CEO/Founder of Amazon, funded an expedition that found some of the Saturn F-1 rocket motors that were used to launch the Apollo moon rockets, and managed to retrieve them from their watery graves.

These were the enormous first stage rocket motors, and even today, 45 years later, they remain the most powerful single chamber rocket motors ever developed.  There were five of them on each rocket, and each one of them generated 1.522 million pounds of thrust (an A-380 engine generates 70,000 lbs of thrust – 22 times less), and burned for 165 seconds.

During this 165 second burn, each engine consumed 500 tons of propellant (a mixture of kerosene and liquid oxygen), and the rocket reached a speed of 6,000 mph by the end of the burn period.

Here are some amazing photos of the discovered engines.  And here’s an excellent page on the F-1 rocket motor.

The timing of Bezos recovery mission is interesting, because after being unused since the end of the Apollo space program in 1972, just this year a team of engineers have started a series of tests with an F-1, so as to re-acquaint themselves with this long neglected technology with a view to using it on future craft such as perhaps the Space Launch System.

It is impossible to overstate to extraordinary technology that was developed in such an amazingly short period of time in the 1960s for our Man on the Moon program.

The journeys of the Voyager spacecraft is beyond amazing.  Launched in 1977 (that’s more than 35 years ago) it was originally hoped they would survive a three-year journey past Jupiter and on to Saturn.  Well, they did that, and have kept on going ever since, and now Voyager 1 maybe/maybe not is leaving the solar system entirely, being some 11 billion miles from the sun (we are a mere 92 million miles away), with Voyager 2, launched 16 days later, only a short distance behind.

The two craft have sent enormous amounts of data back to the Pasadena Jet Propulsion Laboratory.  But I’ve been unable to determine the veracity of the claim that they proved the rings of Saturn are composed entirely of lost airline baggage.

Until next week, please enjoy safe travels

David.