Weekly Roundup, Friday 6 May 2016

Some sense of the size of Bucharest's ginormous Palace of the Parliament can be gained by looking at the tiny dots in front - those are cars.  One of our group was given a personal tour of this building by then dictator Nicolae Ceausescu and his wife; if we're lucky, she'll share some of her experiences with us on our Balkan cruise from Bucharest to Budapest this Aug/Sept.
Some sense of the size of Bucharest’s ginormous Palace of the Parliament can be gained by looking at the tiny dots in front – those are cars. One of our group was given a personal tour of this building by then dictator Nicolae Ceausescu and his wife; if we’re lucky, she’ll share some of her experiences with us on our Balkan cruise from Bucharest to Budapest this Aug/Sept.

Good morning

It has been a busy week for the best possible reason – we now have eight people who rushed to join our Bucharest to Budapest Balkan cruise in late August.  Six of them have traveled with me before (including one lady who will be on her seventh Travel Insider tour!) and the other two people are traveling with two good friends of mine, so it seems we’re putting together an excellent group of people, and you’re of course invited to come and join us, too.

There’s a lot of information about the cruise on the two pages I published last week, but if you’d like a huge amount more, here’s a comprehensive independent review, written by a couple who in 2014 went on the same cruise, but in the opposite direction, and a month later.  So you need to ‘read backwards’ – or, simply, just allow for the reversed order of their travels, and you’ll get a good impression of what to expect, although our cruise, a month earlier, will enjoy longer days and warmer weather.

Executive summary :  They loved it!  As did I when I did it before, and hopefully, as you might you if you choose to come along too.

Full details of the cruise are here.

Of course, to enjoy the cruise, you have to first fly to Europe, and in that context, the good news is that the Department of Transportation finally – two and a half years late – ruled in favor of allowing Norwegian Air to operate low cost flights between the US and Ireland (and connecting on elsewhere in Europe).  Yay.

But the bad news is, the ‘Big Three’ US airlines and their labor unions all promptly appealed the DoT decision, putting things back on hold again for another period of time.

But we have an opportunity to file our own submissions; the airlines and unions have managed to get some 6,000 people (probably more by now) to all send in one liner objections, trying to convey the concept of a groundswell of public outrage at the thought of a newer, better, airline, with better service, better planes, lower fares and a perfect safety record, arriving in the US.  Gosh – who would want that?

We should all send in submissions too.  Perhaps two lines rather than one, and express our support for this award winning airline (the third largest low-cost carrier in Europe) and their proposed new routes to the US.  I wrote a submission that is a bit more than two lines (it came to six pages!); if you’d like to see what I wrote and to get some suggestions on how to craft a shorter note, yourself, please read on to the article that follows this morning’s regular roundup.

And what else this week?  How about :

  • Navel Gazing and Platitudes about Alaska Airlines’ Buyout of Virgin America
  • US Airlines – Record Profits; and also Record Complaints
  • Delta Joins the 20th Century (But the Rest of Us are Now in the 21st)
  • Denver’s Expensive Fare to Take the Train to the Airport – and London’s Very Much Worse Fare
  • Tesla Boldly Defies the Constraints of Reality
  • And Lastly This Week….

Navel Gazing and Platitudes about Alaska Airlines’ Buyout of Virgin America

Disclosure – I’ve never liked Virgin America.  It tries too hard, and too self-consciously, to be ‘hip’ in a form that dares you to dislike it.  Well, I’ll take that dare.  I don’t like purple lighting, and I hate the music they blast at you when you board and deplane.  The reality of course is that no matter how garish a color scheme, and how many beautiful women Sir Richard Branson pays to stand awkwardly too close to him at photo opps, at the end of the day, it is just another airline, one that struggled to ever become profitable and eventually gave up, selling itself off to the highest bidder.

On the other hand, I love Alaska Airline’s slightly staid, stodgy, and old fashioned approach to providing an airline service – there are still a few traces and hints of ‘the good old days’ when flying was fun and more was included, when you take an Alaska flight somewhere.

There’s been a lot of theatrical posing and wailing at the possibility of losing Virgin’s ‘unique culture’ – usually by, one suspects, people who didn’t give Virgin enough of their business to allow the airline to stay independent!  Here’s one such example, redolent with self appointed experts and their unwanted opinions.

Call me a cynic, but my guess is the shirt and tie brigade at Alaska Airlines have no intention at all to preserve/protect Virgin America’s image, other than to the most minimalist amount necessary to maximize their retention of formerly loyal Virgin fliers.  Oil and water don’t mix, as Virgin Atlantic discovered with Singapore Airlines.

But their senior executives are catching on to the concept of paying lip-service to all the ‘wonderful things’ that Virgin has to offer and which they can allegedly learn from.  Here’s a beautifully meaningless statement from Alaska’s CEO, quoted in a sadly uncritical piece about the merger, that promises to carefully study Virgin while also clearly hinting that little is likely to change :

We’re not going to rip the Band-Aid off on the [Alaska] brand and on the customer experience. We’re going to take a good look at what Virgin does and try to adopt what’s best….

Alaska Airlines is making a big show of taking the best of the ‘uniqueness’ of Virgin America and protecting/preserving it.  But, dollars to doughnuts, it will have vanished without trace sometime in the next five years.

Alaska Airlines already knows all about all its competitors and the different ways they do things; there are no searing epiphanies waiting to happen, and if there were a prudently better (ie more profitable) way to do anything, Alaska Airlines would already be doing it.

US Airlines – Record Profits; and also Record Complaints

In 2015 the combined US airlines managed to amass $25 billion in profits, more than three times their 2014 total, and almost as much in profit as their worst year of losses ($28.7 billion in 2005).  Their previous best ever year was 2006 with a $16.5 billion profit.

Fewer airlines, but bigger profits.  Just as classical economic theory would suggest – disappearing competition means easier money making for the remaining airlines.

But something else has been increasing as well, and that too is unsurprising to the economists in our midst.  Customer complaints.  There were 20,170 formal filed complaints in 2015, up 30% from the 15,539 in 2014.  Details here.

Another interesting statistic was uncovered in this article.  US carriers are operating 11 new trans-Atlantic routes this summer.  Ten of the eleven are with old 757 and 767 airlines, and the 11th with 777 service.

Contrast that to Emirates and their steady expansion into the US, with nearly new planes and often A380s.  Or with Norwegian, when it finally gets its approval – it has a brand new fleet of 787s.

There are plenty of reasons, all obvious, why US airlines no longer win awards for best of anything, and why they are so terrified of competitors, whether it be from Emirates, Norwegian, or any other non-affiliated ‘Alliance partner’.  But there are absolutely no reasons why we should reward bad behavior and protect our US carriers from the consequences of their neglect of us, their passengers and the source of their abundant profits.

Delta Joins the 20th Century (But the Rest of Us are Now in the 21st)

A technology that I’ve been advocating for two decades is now appearing at Delta, but not yet any other US carriers.  Delta is in the process of implementing a $50 million investment into adding RFID chips to the baggage tags it places on everyone’s checked luggage.

Twenty years ago, airline execs were excitedly telling me about this wonderful new way of managing their bag handling systems, but would then pull long faces and complain that more senior level executives were refusing to approve the investments needed to get such systems deployed.

Adding RFID tags to every bag means they can be tracked in much more detail, all the way through Delta’s system, and, even better, it can be realtime detected if a bag is ‘mishandled’ and sent to the wrong plane.  And if that failsafe still fails, it will be easier to work out exactly where a bag is if it does ‘disappear’ or if it needs to be offloaded.

Delta anticipates the RFID tracking will massively reduce its mishandled bag counts (I’ve seen several wildly different statistics as to the reduction so hesitate to be specific).

Whatever the numbers, a massive reduction in mishandled bags is wonderful for us.  That is very kind of Delta, isn’t it, and shows a commendable awareness of how inconvenient it is for us when our bag doesn’t arrive at the same airport, at the same time, as we do.

Actually, no.  That’s not why Delta is doing it, at all.  Last time I looked at the numbers, an RFID bag management system would pay for the initial costs within 15 – 18 months (a mishandled bag costs about $100 in total to get found and returned to its owner, along with compensation and other costs, an RFID tag costs about 20c), and then become ‘profitable’ in every successive year.  Delta probably doesn’t care too much about you and your bag, but is keen to save the costs of recovering lost bags and returning them to their owners.

Whatever the reason, it is great to finally see RFID technology starting to appear.

But, like I said, RFID luggage tracking is not new.  Alas, it is now not only no longer new, it is also no longer state of the art at all.  For example, Delta’s arch-competitor, Alaska Airlines is experimenting with a very much more advanced technology.  It may be that rather than being an innovator, Delta’s enhancement is a case of ‘too little too late’ and will prove to be an inappropriate choice of outdated technology.

One can only guess as to how many multiples of $50 million Delta would have enjoyed in extra profits over the last couple of decades if it had done this sooner.  The airline admits it has been trialing RFID tags for 13 years already – that’s some trial!

Denver’s Expensive Fare to Take the Train to the Airport – and London’s Very Much Worse Fare

A reader wrote in reply to my mention, last week, of the new rail service to DIA (Denver International Airport), and suggested I also comment on the very high fare being charged, compared to the fare on other rail to airport services in the US.

There is already an analysis on that very point.  But what is not clear are the varying degrees of subsidy and shortfall as between the fare charged and the actual cost of providing the service, and while the Denver fare at $9 is comparatively high, it is probably still a great deal compared to grabbing a cab (especially if you’re traveling alone).

On the other hand, there are some truly ridiculously high city-to-airport fares elsewhere in the world – yes, London, I’m thinking of you, with your up to £27 ($40) fare to get from Paddington to Heathrow (about 15 miles).

The Heathrow Express fare is all the more ridiculous because if you buy a ticket online 90 days in advance, and travel on a holiday, you can get fares as low as £5.50 – five times lower!  It is rare to find even an airline with a five-fold spread between advance purchase and day-of-travel fares, and if you’re traveling between Heathrow and central London with someone else, and haven’t managed to get an advance purchase ticket discount, you can almost always travel at lower cost with Uber or a minicab company.

Tesla Boldly Defies the Constraints of Reality

Elon Musk can do no wrong, or so it seems based on the generally uncritical adulation heaped on his shoulders in the press, and the extraordinarily high valuation placed on his Tesla company’s stock.

As you surely know (because I wrote about it!) the launch of their future Model 3 car resulted in over 400,000 pre-orders, and with each pre-order requiring a $1000 deposit, that’s a nice $400 million boost to their cash flow.  The vehicle might start shipping at the end of next year (but based on past experiences, it probably won’t), and Tesla were planning to ramp up production between now and 2020 to 500,000 vehicles a year, including the Model S and X vehicles.

This made it seem likely that many of the people pre-ordering might be waiting four years to get their car, and it seems that Tesla themselves were almost as surprised as everyone else was at the popularity of their new car and the huge number of pre-orders that flooded in.  They had their quarterly earnings call this week, which saw them hinting at the unintuitive circumstance that because they’ve had so many pre-orders for the new car, they’ll probably need to raise some more cash to pay for the cost of building them all.

They also said they plan to bring forward their increased production rate, and now hope to be building 500,000 cars a year in 2018.  That’s good news for people currently planning on a 4+ year wait to get their new dream car.

So, last year Tesla produced 50,580 cars.  This year they hope to produce 80,000 – 90,000 cars.  Next year, who knows.  And then, come 2018, they’ll be right from 1 January producing at a rate of 500,000 cars – ten times their production rate last year.

That’s very impressive, isn’t it.  Or is it simply impossible, unbelievable, and shamefully unrealistic dreaming?  Here’s an article that credibly argues the latter case, and it is worth reading all the way through so as to get a contrast between the hard hitting facts contained therein and the anodyne unquestioning recycling of Tesla’s claims in the mainstream press.

One other dissenting voice is also worthy of attention.  Along with memorably describing Musk as ‘California’s answer to Richard Branson’ the writer points out another reason for Tesla’s increased sense of urgency in getting its Model 3 into the marketplace – the growing presence of Chinese competitors (to say nothing of other cars like the Leaf and the Bolt and the i3 – with the Leaf soon to get a massive range increase, and the i3 announcing this week a new model that will almost double the range of the present i3).

Tesla doesn’t want to replay the nightmare disaster of the Ford Edsel – a splendid car, but one which was so delayed in getting to the market that it was obsolete before it was released.  It seems they realize this.  But it does not yet seem clear they have a credible plan to get from 50,000 cars a year to 500,000 cars a year, all in a mere 18 months.

And Lastly This Week….

I was complaining, above, about how the US carriers are using nasty old planes to launch new longhaul routes, whereas their competitors treat us to the latest and greatest in airplane technology – quieter rides, better at-seat electronics and entertainment, more humidity, etc.

But some people like nasty old planes, and there’s a UK tour operator capitalizing on that.  They are offering such people a tour to Belarus and North Korea – the two places in the world that still have operable old Soviet era airplanes.  If that’s your idea of fun, here’s the link.

Talking about nasty old planes, people are already getting nostalgic for the halcyon days of the 747-400, the best selling and largest of the 747 models until Boeing’s ill-received 747-8 came along.  It seems way too soon to consider that a plane from yesteryear.

Certainly for me, I flew on plenty of 747-200s, and some 747-300s, but the two planes I loved the most were the 747SP (particularly a memorable Qantas flight where the pilot was having fun with the incredible power and speed those planes could produce, with the plane being reasonably empty of passengers, freight, and fuel, giving it a wonderful power to weight ratio, and being excitingly close to the ground but still at 600+ mph) and the gracious 747-400.  I enjoyed many dozens of trans-Pacific flights on Qantas 747-400s, and always experienced tremendous comfort and totally peaceful flying with no cause for any concern during the long 15 hour flights on planes that were always maintained to an impeccable standard.  Gosh, rather than seeming ‘historical’, I can clearly remember, perhaps only 20 years ago, being on a 747 ‘delivery’ flight from Seattle nonstop to Australia, and getting to experience the airplane equivalent of the ‘new car smell’!

There was something so ‘unbreakable’ seeming about these beautiful beasts of the skies as the four engines with their deep whining roar confidently lifted the plane up into the skies and then quietly hummed away incessantly until landing at the far end of the flight.  The mere sight of a 747 – either moving so seemingly slowly, suspended in the sky overhead, or parked at an airport, always denoted far away travel and reassuring excitement.

But now, the planes that were state of the art a mere 11 years ago (production ceased in 2005) are already being phased out everywhere, and even placed in museums.  Here’s a fascinating story of Delta moving a retired 747-400 to its Atlanta museum – a non-trivial move because it involved taking the plane out of the ATL airport grounds and along public streets to get to the museum.

How long before specialty travel companies start arranging tours to airplane enthusiasts eager to hunt down a remaining 747 that can still fly, one wonders.

One more bit of futuristic nostalgia (a nice phrase I just coined).  Plans have been mooted for a new flying boat, with a capacity of up to 2000 passengers.  Will it ever, ahem, take off?  Almost certainly not, but here’s a nice Australian article that mixes even measures of nostalgia for the glory days of flying boats, and futuristic speculation about their possible return.

If you’re just interested in airplanes and how they work in general, did you know that a typical airplane toilet costs $17,000 and has 300 parts?  Air New Zealand has taken time out from making Hobbit themed ‘fasten your safety belt’ videos to offer up a video on their ‘Pee Lab’.

Lastly this week, please do consider joining us on either our Bordeaux or Balkan cruises, or if you prefer, our New Zealand land tour.

Until next week, please enjoy safe travels






2 thoughts on “Weekly Roundup, Friday 6 May 2016”

  1. Hey David,
    Why would you not like an airline that provides a subdued environment, (aka purple light,) the best trained employees (knock Richard Branson as much as you want, but both Virgins have some of the best staff going,) real food (that you can order from your seat,) decent seating, excellent seatback entertainment, and strong on-time performance? Just because you don’t like Branson and might feel old (don’t worry, your not as old as I am,) and therefore longing for the good old days of air travel. I remember those days as well and I think the best domestic example of that sort of travel experience now is Virgin America, hands down. Jet Blue does a decent job from second place as well. What makes Alaska so special? It seems like a poor cousin to American.

    1. Hi, James

      I’ve nothing against the Virgin employees, but they’re not really all that special, either. The seats are indistinguishable, in coach class, from any other generic airline. On a 1 – 2 hr flight, I could care less about seatback entertainment. I don’t see any tangible difference, where it counts, flight by flight, rather than system-wide, in their on time performance compared to other carriers. Usually bad on-time performance relates as much to the airports an airline services as to the airline itself.

      I’m not longing for the illusory ‘good old days’ of air travel, and indeed, the term is amorphous and means nothing other than something different to anyone/everyone. I simply see Virgin America as an overhyped and underproducing ‘me too’ airline, just like its so-called founder and his other creations.

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