Weekly Roundup Friday 28 February 2014

The once proud 'Flying Roo' of Qantas is in a sorry state this week.
The once proud ‘Flying Roo’ of Qantas is in a sorry state this week.

Good morning

For once, a week relatively unharmed by weather disruptions.

Let’s hope we’ve put that behind us for another winter (ummm – is this where I point out the weather forecast for next week isn’t too good?), and let’s hope the ‘authorities’ – airports, FAA, and airlines – might invest more and be better prepared for next winter.

Apropos this, I report on last week’s survey about paying to prevent future weather disruptions, below.

Also now behind us is this year’s Travel Insider tour to Sri Lanka.  I think most people would agree that they saw a lot more and did a lot more than they expected, and the main complaint, if complaint it is, was that so much was being included every day!

Our next Travel Insider tour will be to New Zealand this October.  It will not be as intensely packed full of activities as was Sri Lanka, but will instead allow a lot more ‘self paced’ activities.  It takes you to some of the main tourist highlight points, and also to places that regular tourists seldom get to see.

But I must say it will not include the Chatham Islands (although you could go there on your own before/after the main tour if you wished.  In case you are wondering why this disclaimer, here’s a possible explanation – and as background, I should explain that the Weka bird is one of NZ’s (at least, in the main islands) treasured native birds…..  If you watch the article to almost the end, note also the keenness evinced by the male anchor to visit there!  We like to call a spade a spade in NZ!

Anyway, Chatham Islands or not, please do consider coming to the rest of New Zealand with me and a small group of your fellow Travel Insiders this October.  Details here.

Last week I wrote about Amtrak, and then this week, while still thinking about Amtrak issues, had an epiphany of sorts.  The automobile (and airplane) eviscerated the railroads – we know that, of course.  But is the latest technological transportation innovation going to finish the railroads off entirely?  Quite possibly so.

Please read the article on that point attached to the roundup/newsletter.

And, immediately below, please see additional pieces on :

  • Last Week’s Weather Survey Results
  • $10 Flights Across the Atlantic?
  • Not Quite the End of the DC-10
  • A Tale of Two Airlines
  • Last Minute Hotel Bookings
  • The Tyranny of Online Travel Agencies?
  • The Biggest Waste of Internet Bits and Bytes This Week
  • A Different Type of Disney Magic
  • And Lastly This Week….

Last Week’s Weather Survey Results

Last week I asked you if you’d be willing to pay a bit more on every roundtrip ticket you purchased if that meant you would be spared the inconvenience of winter weather disruptions.  The underlying concept is the extra money would be used to fund the development of weather-resilient systems so that the next winter snowstorm could be managed without disruption.

You were also asked to indicate if you’d been the victim of a winter weather disruption in the last couple of years.

The first result was perhaps surprising – but perhaps not when you consider how regularly Travel Insider readers travel.  Fully 44% of readers had suffered, first hand, a weather related disruption in the last couple of years.  Clearly, weather related flight disruptions aren’t just a small problem affecting a few unlucky people – this is an enormous problem impacting on almost half our readers.

Or – is it really an enormous/serious problem?  In truth, the first analysis point only tells us it is an enormous/prevalent problem.  Let’s now turn to the second point – how much people would be willing to spend to avoid weather disruptions in the future.

Unsurprisingly, 30% of people who had not been affected by weather disruptions were unwilling to pay anything to avoid such inconveniences in the future.  On the other hand, that also means that 70% of people unaffected by disruptions were willing to pay to avoid them in the future, even if there was no direct immediate high chance of them benefitting personally.

Surprisingly, 24% of people who had been affected by weather disruptions didn’t seem to care, and refused to consider paying even as little as $3 per roundtrip in the future to guarantee no disruptions subsequently.  Probably what that most tells us is that some weather disruptions are very minor in nature – and possibly that the more cynical of us don’t believe that spending money would actually solve the problems.

On average, people unaffected by weather in the past were willing to pay $3 extra per roundtrip in the future, and people who had been affected were willing to pay $6.  More than a third of people who had been affected in the past were willing to pay up to $10 per ticket, and one wonders how much even more than that they might be willing to pay, too.

What can we conclude from this?  In total, 72% of all passengers are willing to pay an extra sum for every ticket they purchase so as to avoid weather service disruptions in the future, split evenly between those willing to pay up to $3, up to $6, and up to $10 on all their future roundtrip travel.

This does show one thing very plainly.  When naysayers say ‘people would never agree to pay for the extra costs of making our weather resilience more robust’ they are completely wrong.

About 750 million roundtrips are undertaken in the US each year.  If we levied a mere $4 per trip, that would add $3 billion every year to be allocated towards making our most weather-troubled airports more robust.  That would buy an enormous amount of salt, de-icing fluid, snow removal machines, and everything else.

And while I’ll never be pleased about any fees, this $4 fee has to be seen in the context of all the other – much greater – fees that have already been added to airline tickets with little debate or complaint.  For example, up to $18 for airport ‘facilities improvement’ (isn’t that a good way of saying ‘snow removal’ anyway?).  Or the fee of $3.90 for every flight segment within the US at present, that gets sent off to the federal government, as well as the 7.5% federal excise tax on the value of the ticket.  And then there’s the up to $10 per roundtrip in security fees.

And that’s before we start scratching the surface of some of the more arcane fees, like a $5 fee for animal and plant health inspection services on all arriving passengers from foreign destinations (no, that’s not included in the other $24.20 of arrival fees that everyone is hit with).

Our point is simple.  Perhaps 95% of the winter weather related delays our aviation system suffers from each year are avoidable.  All it takes is sufficient money thrown at the problem.  The airlines, unsurprisingly, refuse to spend any money on the problem.  More disappointingly, so too do airports and the federal government.  But here we are, as passengers, lined up and viewing a small ticket surcharge as cheap insurance to ensure we get better winter travel experiences, and no-one is willing to take our money and spend it appropriately.

$10 Flights Across the Atlantic?

Ryanair CEO Michael O’Leary is at it again, and acting a bit like a broken record.

It used to be every time he opened his mouth he threatened to either remove all toilets off his planes, or make them into pay toilets.  That always got him headlines in the press.

But he recently promised to become a kinder, gentler CEO.  No more swearing (well, at least, not quite so much), and no longer being deliberately rude and insulting to his passengers (well, again, not quite so much).

So instead of stealing headlines with toilet based threats, now he steals them with teases of low fares across the Atlantic.

He’s been doing this for quite a while now, and most recently is quoted in this article earlier this week.

Although he is full of plans for flights from a dozen or more European cities to a dozen or more US cities, and indicates that it could be up and running within six months of Ryanair getting the planes to do so, please don’t be fooled into thinking this will happen in our lifetimes.  Alas, no.

The catch is his requirement to get appropriate planes that would allow him to do this profitably.  Exactly what make and model plane would allow for profitable $10 fares – even with the worst of baggage charged added – is never specified or made apparent.

Probably because such planes completely don’t exist.

Not Quite the End of the DC-10

After reading this story, provocatively headed ‘Remembering the DC-10: End of an era or good riddance?’ you could be excused for thinking the DC-10 is no more.

But the article merely refers to the end of the plane in regularly scheduled passenger service.  We know Fedex still has dozens of the planes, slogging away every day getting packages to us all, and we believe Kelowna Flightcraft have four or six of them too, although perhaps also only for freight rather than passenger charter, and there are sure to be some others out there, too.

It is true the DC-10 did suffer some unfortunate accidents in its early life, but it is also true that the issues that caused these early problems were fixed and in its last couple of decades it gave excellent and safe service.

We’d certainly prefer to fly on a DC-10 than a 787 any day…..

A Tale of Two Airlines

Have you ever noticed that whenever airlines are unprofitable, it is always someone else’s fault.  Blame it on the economy, or on fuel prices, or exchange rates, or something/anything.

On the other hand, whenever an airline is profitable, it is exclusively and entirely due to their brilliant management.

I delight in seeing very similar airlines performing very differently, because such situations clearly illustrate the difference not in the factors which affect both airlines, but rather the key difference between them – their management.

In the past, I’ve happily noted how Qantas has reported some enormous profits while neighboring airline, Air New Zealand, almost went bankrupt and had to be bailed out by the NZ government.  But over the last few years, there have been management changes at both airlines, and there have been financial changes too.

Qantas has been reporting extraordinarily bad results for the last way-too-many accounting periods, particularly at times when the general airline industry has been enjoying record profits.  And, not only the general airline industry, but neighboring airline Air New Zealand in particular.

This week saw Air NZ report a 40% increase in its net profit for the first half of its 2014 financial year, with a record NZ$140 million net profit.  Not bad work for a small airline in a small country.  The airline is full of exciting plans to add new planes and expansion in general.

But what of its larger airline colleague on the other side of the Tasman Sea?  Oh, this week saw Qantas report a massive A$252 million loss in its first half-year result, and rather than growing, it is deferring airline purchases and laying off 5,000 staff (one in every six employees).

And while the NZ government is slowly and carefully selling out of its shareholding in Air NZ, Qantas is pleading for government aid, but it seems the Australian government is unwilling to preferentially help one Australian airline while not doing the same for the other Australian carriers (most notably Virgin Australia).

Are the problems at Qantas due to a witheringly incompetent management?  Oh no.  Qantas tells us that high fuel costs, a strong Australian dollar, increasing international competition and a domestic price war have been the reasons for its continuing fall into airline oblivion and irrelevancy.  No management problems whatsoever.

Strangely Air NZ advises that its fuel costs remained about the same as they were last year (and the same in most of the rest of the world), the NZ dollar has strengthened in line with the Aussie dollar, and competition is a given everywhere in the world (except here in the US).

Not everyone accepts the Qantas excuses.  This article is a bit heavy-going for people not closely connected to Qantas’ sorry saga, but when its writer, Ben Sandilands, makes comments such as ‘The problem of [CEO] Joyce making a fool of himself in public…’ the gist of his comments are fairly apparent, and if you choose to read back through Ben’s archive of the last few years of his articles – or even just glance at their headlines – they tell a consistently terrible story of the fall of a once great airline.

Last Minute Hotel Bookings

One of the exciting promises of the internet has been as a way to efficiently, instantly, and at low-cost allow purveyors of expiring goods to sell them on to potential purchasers, albeit perhaps at some discounted rate.

We’re not just talking stale fruit at the supermarket here, we’re talking today/tomorrow’s flights and tonight’s hotel rooms – things with low variable cost which means the product provider can afford to discount them heavily from their normal price and still make some profit.

There have been various different services created to help the vendors achieve this goal, some with the added promise of sparing the vendor the ’embarrassment’ of exposing their unsold/distressed inventory and the very low prices they are willing to sell such products for.  An obvious example of this type of ‘opaque’ process is that offered by Priceline – you don’t know who the hotels/airlines are you’re bidding on until/unless you’ve ended up winning the bid, and you don’t know how low they might be prepared to sell their rooms or flights for, either.

We have a detailed analysis of how Priceline works and how you can skillfully use it to your best advantage here.  If you’re not familiar with the tips and tricks we give you in this article series, you should go and read it.  They save me money every time I’m able to make a booking through Priceline, and can save you money too.

These days there are many other web and mobile services that also promise to save you money on last-minute hotel bookings.  Here’s a good comparative review of some of them, but it necessarily omits Priceline from its comparisons, because there’s no way you can get an exact price on an exact hotel through Priceline.

The growth of these last-minute booking services is however a bit of a double-edged sword.  I know that, in my case, I no longer feel any need to book a hotel room in advance (unless I know I must be at a specific hotel, or if I know a city will be absolutely full due to some special event).  Why book in advance, when hotel room rates now seem to decline, the closer you get to arrival date.

This was a problem, a decade or so ago, for the cruiselines.  Last minute discounting of cruises had become so prevalent that too many people were no longer booking in advance and everyone knew to wait for the last-minute bargains.  Eventually the cruise lines were forced to totally revise their policies and now they almost never offer – well, at least not across the board, last-minute discounts.

Are the hotels playing a dangerous game here with the same negative outcome to themselves?  Quite possibly.  But, for now, you’re well advised to take maximum advantage of the ruling situation and book as late as you can.

The Tyranny of Online Travel Agencies?

Continuing the theme of unexpected consequences, hoteliers – and most other travel product providers – were ecstatic as the internet evolved.  The internet, they believed, promised to cut out all the middle men and allow them to sell directly to their customers, without having to pay any commissions to anyone in the middle.

In the past, it was typical for most travel product providers to pay a 10% commission to most travel agencies, and possibly an additional 10% to various wholesalers and other intermediaries in their distribution process.  While no-one liked doing this (and, in turn, the retailers and wholesalers felt they were paid too little in return for doing a great deal), it was a semi-stable system that sort of worked.

So along comes the internet, and there was a major shakeup in how travel providers distributed their products and the commissions they paid.  Everyone knows that one outcome was most airlines discontinuing most of the standard normal commissions they pay to travel agencies, but there have been many more subtle ‘behind the scenes’ changes too.

And now for the unintended consequences.  Rather than the internet empowering many travel providers, and giving them an equal voice and bypassing middle men, it has done the opposite.  Individual hotels, for example, are now lost in the clamor of so many other hotels and so many booking websites, and at the same time, there has been a clear concentration of market share in a small handful of OTAs – Online Travel Agencies – companies that simultaneously act as their own wholesaler and retailer, and which demand double margins for doing a single job, and more besides.

Many hotels now find they are forced to pay even more commission than before the internet evolved.  An unexpected outcome, indeed.  Layer that on top of the internet apparently encouraging people to book late for a discounted last-minute room (see previous item) and few hotels are actually rejoicing at the net result of the internet.

Here’s an interesting item on this topic.

The Biggest Waste of Internet Bits and Bytes This Week

I understand that many journalists have to ‘publish or die’.  If they don’t write articles, they don’t get paid.  And I sure know that sometimes it is hard to come up with new compelling stories, week in and week out.

But sometimes, when you have nothing to say, it is best to, well, say nothing.

Here’s a case in point – an article that reads like it was (poorly) written six months or six years ago, about the potential danger of electronic devices in planes.

Most of us view that as a question now thoroughly answered.  There. Is. No. Danger.  As proven by tens of thousands of flights, every day, now safely operating with passengers happily using their portable electronics without interruption all flight long.

But this article worries a bit that maybe, just maybe, some dangers remain, because, many years ago, some electronics might have caused a problem with some avionics which aren’t used any more, anyway.  Oh – he also trots out the other well-worn excuses – interferes with people concentrating on the pre-flight safety briefing, and the potential for laptops (which have to be put away, still) becoming ‘flying missiles’ in the event of a crash.

In a ‘brilliant’ ending, the writer shows he has no comprehension at all of our lives when he says

Besides, is it really a nuisance to put the devices away for the 20 minutes on each end of the flight that the plane is below 10,000 feet?

Yes, it really is a nuisance to have nothing to do for 40 minutes, or to have to supplement one’s lightweight small-sized electronics with old-fashioned books.  There. Is. No. Danger.

A Different Type of Disney Magic

Disney announced the latest increase in their park admissions – the second in less than a year, and meaning park admissions have doubled in just on ten years – that’s easily twice the rate of general inflation.  Clearly there is indeed some sort of magic at work.

This page tabulates the admission price at WDW in Orlando since the park opened in 1971.  Back then, $3.50 (tax included) would get you a day of fun; today, $99 plus tax is required.

But – oh yes, great news for kids.  Well, for kids nine years of age and under.  They get a discount.  Yup, for these children, they get a full $6 off the full adult admission.  Way to go, Disney – Walt would be proud of you.  Not.

However, I’d like to share the true magic of Disney with you.

Not long ago, I bought two 500 ml bottles of Dasani water.  I shuddered, when buying the first bottle in the gift shop of one of the most expensive upmarket hotels in Vegas (Bellagio).  It cost an outrageous $1.49, for a pint of plain ordinary water.

A couple of days later, I found myself in Disneyland, buying same sized bottle of the same Dasani water.  Except that Disney really was working some magic on that water.  The overpriced bottle of water in Vegas in a fancy gift store inside a fancy casino/hotel now cost an unthinkable $3.00 to buy off a wheelbarrow type cart in Disneyland – twice as much.  That’s truly magic.

My daughter will hate me, but I just can’t support this outrageous gouging any more.  I urge you to avoid it, if at all possible, too.

And Lastly This Week….

As you may know, there’s a sub-theme of being a bon viveur associated with our New Zealand tour this October.  We’ll be featuring some of New Zealand’s world-beating finest food and wines as part of the tour, and it is definitely true that most New Zealanders enjoy a drop of two of alcohol on special occasions – days of the week with the letter ‘y’ in them, for example.

I’m not sure if I was disappointed, or pleased to see that NZ failed to make this list of the 15 most drunken nations in the world.  But I was surprised!

Truly lastly this week, here’s a new way to avoid getting a traffic ticket, especially if you don’t have your driving license with you at the time.  Best done in a foreign country.

Until next week please enjoy safe travels






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