Dec 292017
 

Glorious Kiev, dating back to the 5th century, and the fount from which Ukraine and Russia were founded.

Good morning

I hope you had a very Merry Christmas.

But if you were disappointed with your Christmas presents, why not now buy a little something for yourself.  Well, actually, quite a big something.  A used 426′ long BC (Canada) ferry – listed on the Canadian Government’s auction site for a mere C$5,000.  Currently, it has received 44 bids and is now at C$6,420.

Strangely, the terms of the sale prohibit the vessel being returned to any type of service, but perhaps it could be pressed into use as something to play with in your bath (bath not included).  No wonder, if there’s a prohibition on its future use, that an earlier attempt to sell it for C$400,000 failed.

BC Ferries and the BC government have a mixed record on ship sales.  In the mid/late 1990s they built three fast catamaran ferries for C$463 million – and if that sounds like a lot, yes, it was indeed more than twice the anticipated cost.  After only a couple of years of service, they were withdrawn in 2000 and offered for sale for C$120 million.  When they finally sold at auction in 2003, they fetched a mere C$19.4 million.  Ooops.

My goodness.  Was it really a year ago that I was penning a farewell to 2016?  A year ago that we were all preparing for an uncertain year that was to follow?  Truly, time passes ever more quickly, and I’m certain that’s not a good thing.

There is a lesson in this, however.  As time passes more quickly, and becomes more finite in nature, surely it is more important to spend time positively, and to attack one’s ‘bucket list’ rather than delay and defer, letting trivia interfere.  At the risk of seeming venal, can I suggest your New Year Resolution for 2018 should be to do something ‘big’, rather than to let another year pass with no exciting new experiences etc………..

We all have our own bucket lists, and perhaps for you it means something like parachute jumping, completing some type of educational qualification, moving, or who knows what else.  Maybe it also means traveling somewhere special and/or doing something special, and with that in mind, we’ve put together a very special set of Travel Insider experiences for 2018.  Nevada, the former Soviet Union, Britain, Ireland, New Zealand and Australia, and Europe.

Surely there’s something and somewhere special on that list for all of us, and maybe even two or three things.  You can see details of all the tours on the new Master Tour page.

In particular, can I point out that our Grand Expedition of Great Britain is almost full.  We already have 24 people who will be enjoying this experience next June.  We can accept another couple of couples, so if this is something you’ve been considering, please do add your names to the list as soon as possible before I close it off.

I also now have all the details of the ‘Triple K’ tour of Kazakhstan (and optionally Kiev (including a chance to visit Chernobyl) and Kyrgyzstan) now online and the joining form available for you.  I added three extra pages about this tour, one of which follows the newsletter, and all the pages are linked from that.  I’m probably going to go directly from this tour to the Grand Expedition; if you too would like to do both tours, I’ll offer a small ‘sweetener’ to encourage you.

And, happening the soonest, there is also a page following the newsletter about a Front Sight firearms class spanning a four/five day weekend in early March.

Later in the year we have three tours, the details to which I’m still finalizing – Ireland in August (which might be termed the Triple I tour – because we’ll have Ireland, Northern Ireland, and optionally the Isle of Man too), New Zealand and Australia in late October/November, and another Christmas cruise in December.

I read an interesting article earlier this week which said that getting out of the house regularly contributes to our ongoing longevity, especially as we age.  I realized, as I read the article, that I feel very much more ‘alive’ and mentally/socially active when traveling on a tour than I do while living my ordinary life at home, so I understand the reasoning about this.  For your health’s sake, please do consider adding a Travel Insider tour (or two) to your 2018 plans!

A few other assorted bits and pieces to round off the year.  Please keep reading for :

  • Was 2017 a Bad Year for the Airlines?
  • Will 2018 be a Good Year for the Airlines?
  • Which is Better :  Two 787s or One A380?
  • Beating Britain’s Dreaded Air Passenger Duty Tax
  • The Real Reason for Boeing’s Complaint Against Bombardier?
  • Passenger Boards Wrong Flight – Unexpected Outcome
  • Woman Bumped Out of UA First Class to Make Room for Politician from Hell?
  • Apple’s Slow iPhones Really Are Slow
  • Bringing Back Color Coded Security Warnings
  • An Unexpected Additional Reason to Bring Your Own Travel Blanket
  • And Lastly This Week….

Was 2017 a Bad Year for the Airlines?

Possibly so, according to the WSJ.  It says rising costs massively exceeded rising fares, and so projects diminished annual profits to be reported as a result.  But, never fear, it seems the airlines will still be robustly profitable.

With a backdrop of 2.2% overall inflation in the US, airline revenue for the first nine months of 2017 rose 3.8%, but costs rose more than twice as much, 8.1%, notwithstanding major programs to cut costs (ie to dole out less to us and charge us more fees).  As a result, pre-tax profits have dropped from an astonishingly high 15.5% the previous year to 12% this year.

As well as rising fuel costs, the biggest cost increase has been in the form of worker compensation, with airlines in a round-robin series of pay rises to staff to do what has been variously described as ‘catching up’ or matching the pay rates at other airlines.  And the strange pilot shortage is definitely seeing pilot salaries rise; we certainly can sympathize with giving more to a new first officer struggling to earn much more than minimum wage with a regional airline, but we find it harder to see the desperate need for pilots already making generous six figure incomes while working part-time to also get pay rises.

Managing payroll costs and labor relations in general is one of the never-ending problems with the airline industry.  As soon as there’s the first whiff of regular profits, the airlines cave in to their unions and start generously spreading bonuses and pay raises like there’s no tomorrow.  Inevitably, a day of reckoning comes, and the airlines start demanding ‘increased productivity’, layoffs, and wage cuts.

But, will 2017 have been a bad year for airlines?  Only if you consider projected 12% pre-tax profits to be bad.

Will 2018 be a Good Year for the Airlines?

So, 2017 – positively profitable for most airlines, it seems.  What about next year?  According to the international airline lobbying group, IATA, 2018 will be a better year than this year.

Their forecast is for continued growth in total passenger numbers (up 6% to 4.3 billion), and total industry profits to rise from $34.5 billion (estimated) this year to $38.4 billion next year.  That would make for four years in a row where profits and return on invested capital have exceeded the notional (and actual) costs of capital.  This is all the more impressive because part of the projection is for fuel costs to increase 12.5% on the average 2017 cost.

Although $38.4 billion seems like a large number, to put it into perspective, the ultimate net profit per passenger per flight ends up at $8.90.

Details here.

Which is Better :  Two 787s or One A380?

In this article, the CEO of Qantas is quoted praising his airline’s new 787s, saying that two 787s use slightly less fuel than a single A380.  That is good, but not altogether startling.  Even though the 787 a slightly newer plane with the latest composite structures, a Qantas A380 holds slightly more than twice as many passengers as a Qantas 787.  So the fuel cost, per passenger mile, is closely comparable.

But, in more general terms, the equivalence of two 787s to one A380 points to the heart of the issue – which is better :  two smaller plane flights, or one larger plane flight?  This is a very relevant question at present, with the overall future of large passenger planes looking grim.  Boeing has essentially ended its 747-8I passenger jet program, and the A380 program is at risk of being discontinued any day now if Airbus and Emirates can’t come to terms on a possible order for another 36 planes.

So, which is best?  The short answer is ‘it depends’.  A slightly longer answer is ‘look what the airlines are doing’ – they have ordered 1300 or so 787s, plus some thousands more of other wide bodied twin-engined jets, all smaller than the A380, while only ordering 317 A380s.

The longest answer of all is quite long, but perhaps we can stop at the medium length answer and observe how clearly the market has shown its preference for operating more flights with smaller planes, particularly because there are two rather than just one benefit to smaller planes.

The first benefit is more flights a day.  Instead of a single flight that is too early for some and too late for others, you can have two flights, getting closer to a convenient time for more potential passengers.

The second benefit is that you don’t need to rely on hubs so much.  Instead of having to combine passengers from secondary cities by first transporting them to a hub and then onto a bigger plane, you can offer more nonstop flights between secondary cities in smaller planes.

The sweet spot for the A380 has proven to be smaller than expected.  It is only useful on very dense routes (ie with lots of flights a day anyway) and where either or both the airports are congested.  This means flights such as New York/London or Singapore/London (Singapore Airlines flies two A380s and two 777s between the two cities every day).

But, and here’s the really big thing.  The congested hubs are becoming less a factor, because the now economical smaller jets are bypassing them entirely.  Plus the airline alliances are able to strategically shift their traffic to their least congested hubs, or ‘promote’ secondary cities into new hubs.

An excellent example of this would be Heathrow, and IAG, the holding company that owns BA, Iberia, Aer Lingus, Level and Vueling.  It seems IAG is no longer placing all its eggs in one basket (Heathrow) and is allocating considerable extra resource into airlines such as Aer Lingus, building up EI’s Dublin hub, at the expense of Heathrow (and BA).  If London isn’t your final destination, changing planes in Dublin is as excellent an idea, and as sensible/logical a route, as is Heathrow or any of the major European hubs.

Beating Britain’s Dreaded Air Passenger Duty Tax

Talking about Aer Lingus and Dublin, if you’re traveling primarily to Europe, it makes great sense to avoid Heathrow and not break your journey in Britain at all, and particularly so as to avoid the UK’s outrageous international air tax – its “Air Passenger Duty” fee which applies if you make a stop in Britain (but happily not for connecting flights).  This APD for flights to the US is £75 in coach class and £150 if you’re in Premium Economy, Business, or First Class.

If you do want to spend time in both Britain and Europe, it helps if your long flights are in to the UK, and then out from Europe back to the US.  The APD is calculated on a flight length basis, on your flight out of Britain, not on your flight in.

The APD is reduced to a more moderate £13/26 if your flight out of Britain is less than 2,000 miles.  That saving of £62/£124 equates to $84/168 (the pound is creeping up in value again).

If you traveled by Eurostar between London and Paris, you’d even get to save the smaller £13/26.

So – if you fly to Britain, then Europe, then home, you pay much less than if you fly to Europe, then Britain, then home.  Makes sense?  Fair?  No, not at all, but since when has sense or fairness been a consideration when governments go after our pocketbooks.

The Real Reason for Boeing’s Complaint Against Bombardier?

You may recall Boeing filing a dumping type complaint against Bombardier for allegedly selling its Cseries jets to Delta at below cost price, and the enthusiastic acceptance of Boeing’s complaint by the US Commerce Department, even though most independent industry commentators thought the complaint to be totally without substance.

It was hard to see how Boeing could complain, because it does not make a competing airplane to match alongside the Bombardier Cseries of small-sized planes.  Even its smallest 737 (which is notably not selling) is significantly bigger.

But the threat of as much as 300% punitive duty being levied on Cseries plane imports, as a response to Boeing’s complaint, seemed to force Bombardier into the arms of Airbus, and Airbus, now the majority owner of the Cseries program, has said it will simply assemble the planes within the US at its own plant, thereby making the concept of duty on imports moot.

It is also thought that Boeing’s aggressive and unexpected attack on both Bombardier and Delta has won it few friends in the airline world, and may have been one reason why Delta awarded a large new plane order to Airbus a month ago.

So, why was Boeing so eager to attack Bombardier?  There’s the whiff of a story doing the rounds that Boeing and Embraer might be talking in general terms about some form of cooperative arrangement in the future.  While Bombardier really isn’t a direct competitor of Boeing’s at all, it absolutely is totally a full-on competitor to the Brazilian company, Embraer, with its fine E170/190 and more recent E175/195 jets.

Perhaps Boeing acting as a proxy complainer for Embraer might make business sense for Boeing and its possible new best friend, Embraer, but it sure extends still further the distance between Boeing’s complaint and any underlying reality or fairness, and if the actual harm is to a Brazilian company, then the US Commerce Department should have no dog in that fight at all.

Here’s some discussion about how a Boeing/Embraer tie-in might make sense.

It has always struck me as strange that Boeing and Airbus had no interest in smaller jets, and only slightly less strange that companies such as Embraer apparently had no ambitions to expand their model range to larger aircraft, too.  But it is unfortunate to see what was four independent aircraft manufacturers now pairing off into two pairs of two.

Might we ever see the two major aircraft companies reduce to one?  Probably not – many of us sense that airlines are keen to preserve some competition and might sometimes buy planes from the underdog supplier strategically to keep both companies on their toes and competing.

Plus, unspoken in this commentary (until now) is the potential impact of the Chinese aircraft manufacturers.  Or Mitsubishi.  Or, even, the Russians.

With Boeing getting ever closer to needing to retire its 737 line completely and replace it with a new design that doesn’t date back 50+ years, we can anticipate some interesting years ahead.

Passenger Boards Wrong Flight – Unexpected Outcome

Here’s one of these ‘how could this be possible’ type stories that sometimes arise.

An ANA flight from Los Angeles to Tokyo boarded its passengers and took off.  So far so good.

Four hours into its long 11 hour flight, somewhere over the Pacific, it was discovered that one of the passengers was mistakenly on board.  His ticket was on United, not ANA, and it is not clear where the passenger’s ticket was to.

The puzzlement is how this was possible.  As you know, any time you board a flight these days, your ticket is almost always scanned by a bar code reader and its validity presumably checked by the computer that drives the scanner.

This is doubly the case when flying internationally.  I know this is so because one time I missed out a gate change announcement, also at LAX, and when I went to board my flight, I was told when the reader beeped that instead of boarding what I thought to be my flight to Sydney on Qantas, I was trying to board a BA flight to London!  So how did that passenger get past the ticket scanner and board the wrong plane, operated by a different airline?

Never mind, such things sometimes happen, and you’ve probably read about such events before.  But what you’ve not read before is what happened next.

The plane turned around and flew four hours back to Los Angeles.  All passengers then had to be offloaded, and the correct passengers subsequently got to board a different flight to Tokyo, six hours after landing, and so, in total, 14 hours after their first flight took off.

No-one is saying why the ANA flight flew four hours back to Los Angeles, due to the one mis-boarded passenger.  Usually in such cases, there’s a bit of merriment all around, the erroneous passenger gets an unexpected journey to somewhere, and then is flown to the place he originally wanted to travel to.

It would be good to understand more about this mysterious action.  Details (or lack thereof) here.

Woman Bumped Out of UA First Class to Make Room for Politician from Hell?

A school teacher was flying back home to Washington DC from a vacation in Guatemala.  She redeemed 140,000 miles to get a first class ticket on United.  Her flight from Guatemala to Houston proceeded normally, but when she went to board her flight from Houston the rest of the way to DC, the ticket scanner beeped and she was told that her seat assignment – and reservation entirely – had disappeared.  Ooops.

United found her a seat further back in the plane in Economy Plus (and subsequently offered a $500 voucher as an apology).  This upset the woman, who simply wanted a no-stress no-fuss return to DC in her assigned seat, 1A.  United said it was her fault, not their fault – she must have cancelled her connecting flight.  She denied this and pointed out the ridiculousness of doing that – who would ever cancel the second leg of a two flight journey home, and choose to strand themselves in Houston instead.

When she boarded the flight, she noted that her original seat, 1A, was now taken, and another passenger told her that the lady now in 1A was Houston Congresswoman Sheila Jackson Lee.  This of course creates the impression – correctly or not – that United might have deliberately chosen to bump someone on a mileage award out of first class so as to curry favor with the Congresswoman.  United denies this, although it does seem that the Congresswoman was given a courtesy upgrade and absolutely wasn’t asked to give the upgrade back when the ‘confusion’ over who the seat belonged to became an issue.

When asked about the matter, Jackson Lee’s response was to accuse the school teacher of racism!  Most of us would think that a DC school teacher is probably an ardent Democrat and about as unlikely to be racist as anyone in the country, but the Congresswoman rushed to explain her possession of seat 1A and the rightful owner’s disappointment as being a racist act – even though, when the teacher was complaining about it at the gate, she had no idea who had taken her seat.

Details here.

But the surprising thing is that United chooses to upgrade the good (?) Congresswoman at all.  Previously, its antecedent airline, Continental, threatened to ban Jackson Lee from all their flights, and she is apparently a very high maintenance passenger at the best of times.  Details here.

More than that, it seems that the not-so-good Congresswoman is beyond high maintenance pretty much all the time, and everywhere.  Here’s an article about her, headlined “Congressional bosses from Hell:  Sheila Jackson Lee”.

But she has been returned back to Congress three more times since that article.  She must be doing something good for the discerning voters of Houston that she represents.  Mustn’t she?

Apple’s Slow iPhones Really Are Slow

Why do we replace our phones these days?  Not because they break.  Not even because there’s a newer phone with a must-have new feature.  Usually because we get fed up with what seems to be an increasingly slow phone, and with an increasingly short-lived battery, and eventually we get to the point where we convince ourselves that we ‘need’ to spend $750 – $1000 or more on a new iPhone (or Samsung or whatever).

But, why do our phones seem to go slower and slower?  There have been some fanciful excuses offered by Apple apologists in the past, basically trying to tell us either that we’re imagining it or that the slow-downs are temporary while our phones ‘rebuild their memory caches’ after loading a new OS version (a nonsense claim that back in the days of ‘real’ journalism would never have made it to print).

But now there has been some independent testing of iPhones, and it has been shown that the phones really do slow down with some of the newer versions of iOS, and Apple has been forced to confess, for the first time, that it deliberately slows down older iPhones.  Apple tells us it is doing this for our own good – it is protecting the older phones so they don’t have to work too hard, too fast, and thereby stress their old batteries too much.

So we should all be thankful that Apple is deliberately slowing down our older iPhones, it seems.  But, not everyone is grateful, and some people have even dared to think that Apple’s “We know best” unilateral imposition of undisclosed slowdowns is unfair.  Yes, you guessed it – class action lawsuit time.

The lawsuits are not just confined to the US, however.  In France, it is illegal for manufacturers to deliberately impair their products in a form of accelerated obsolescence, and a French watchdog group has filed suit there, too.

In other Apple news, several reports are hinting that the sales of their new iPhone X are failing to reach targets, with stories of Apple scaling back its future orders from suppliers.  While that has been slightly bad news for Apple’s stock price, it might be good news for us – as this article suggests, there are rumors that Apple might be lowering its ridiculously high iPhone X pricing early next year.

Mind you, the price would have to go a long way down to make sense, and in general, we’d prefer to wait until the second generation iPhone X comes out before investing $1000 plus tax into the new phone design.

Bringing Back Color Coded Security Warnings

Do you remember back in the hysteria after 9/11, how the new Homeland Security Department instituted a series of security alert statuses, and color coded them.  Not only could I (and most others) never work out whether, eg, yellow was better or worse than orange, and whether mauve was better or worse than taupe, and so on, but it seemed the warning level was stuck on burgundy with notes of earthy lavender or some such color and never ever transitioned down to sea green or ivory white or some other reassuring color.

Eventually it was abandoned, because it served no purpose.

But now we have the State Department announcing a reworking of their international travel warnings, which from about 10 January next year will be color coded, with four levels ranging from a tasteful hue of blue (as safe as it gets) up to an urgent shade of red (better pack a bullet proof vest).

Try not to burst out laughing when you read that the reason for the new color coding is to make travel warnings and alerts clearer to the public.  Details here.

An Unexpected Additional Reason to Bring Your Own Travel Blanket

I reviewed travel blankets and pillows in November, and pointed out several reasons why it makes sense to travel with your own blanket rather than to rely on the airline providing you with one.

But, short-sighted that I was, I completely overlooked one potential reason for bringing your own blanket on board.  To avoid the fate that befell two minor league basketballers, who were attempting to fly from DFW to Sioux Falls, SD.

When the players boarded, a couple of first class passengers offered them their blankets, which they gratefully accepted and took with them back to their seats in the economy class section of the plane.  A flight attendant saw them with the blankets, and immediately accused them of stealing the blankets.  This caused an argument to ensue as the two players protested their innocence, whereupon the flight attendant (who, let’s not forget, was utterly 100% and completely in the wrong, in every respect) announced he felt threatened and refused to fly with the two passengers, so they were booted off the plane.

It is a stunning situation where a rude flight attendant accuses two passengers of stealing blankets and then rather than non-confrontationally confirm with the first class passengers that the blankets were indeed given out freely, argue with the two passengers, and then cause the blameless passengers to be booted off the flight.

How can this be allowed to happen?  Details here.

So, consider yourself warned.  Don’t accept the gift of airline blankets from other passengers.  Bring your own!

And Lastly This Week….

There’s ongoing angst about whether various state driving licenses will be accepted as valid ID by the TSA, with the federal government imposing and then extending various deadlines on the states to conform to federal best practices for identifying the people they give licenses to.

But for some people, that is the least of their problems.  Their bigger problem is that, whether conforming or not, some TSA officers are refusing to accept District of Columbia drivers licenses.  Why?  Because, well, where is the District of Columbia – isn’t that a country somewhere in South America?  Some of the TSA screeners are refusing to believe that a DC license comes from a bona fide part of the United States.  Details here.

This reminds me of the time a friend of mine from New Zealand was asked for ID when we were drinking in a local Seattle bar one evening (in itself, an unpleasant experience almost entirely unique to the US).  He pulled out his NZ passport, but the server refused to accept it, pointing solemnly to a laminated placard that listed all the accepted forms of ID.  All the different state licenses were shown, and US passports and military ID were also acceptable.  But, nowhere on the placard was a NZ passport shown.  Therefore, according to the laminated placard and the server’s interpretation of same, all foreigners, without US ID, were apparently not allowed to drink in Washington state bars.  It required the intervention of a manager to get that nonsense overturned.

Some people love using the Do Not Disturb signs on their hotel room doors.  Sometimes I’ll use one myself, even as a courtesy to the cleaning staff, telling them I don’t need a change of sheets and towels.  But this thin veneer of privacy and control over our hotel rooms may be evaporating – Disney has announced that at selected hotels, it will replace the Do Not Disturb signs with ‘Room Occupied’ signs and instead of staying away, will simply knock on the door before entering if their staff see a ‘Room Occupied’ sign.  Plus, it will inspect every room, every day.

This seems to be a response to the Las Vegas shooting, but a response few of us would welcome, and a step closer to the bad old days in the Soviet Union where hotels were policed by ‘floor ladies’ who checked everyone’s coming and going on ‘their’ floor.  You couldn’t leave the floor without leaving your key with them.  Anything you wanted to do with your room had to be cleared through them first (and there were always things you’d need for your room).

Details here.  Time to consider bringing a door stop/wedge.

We sometimes hear of regional and national tourist organizations that get caught out ‘cheating’ – they’ll show images of their beautiful region, but it turns out the images are actually of a different region or country entirely.  But how about a country that uses the image of another country’s airport inside their passports?

That’s what happened with Taiwan, now in the process of destroying 200,000 passport blanks, after it was discovered that an airport featured inside their new passports was actually Dulles in the US, not Taoyuan in Taiwan.  Ooops.

Talking about brand fails, it is also common to see tourist bodies spend enormous amounts of money on slogans and logos, and usually when they already have perfectly good existing slogans and logos.  Indeed, it isn’t only travel related organizations that sometimes have costly and massive logo fails.

And talking more about brand fails, what’s not to like about the concept of a bikini branded airline?  Quite a lot, according to this article, apparently.  Alas, the article is not accompanied with explanatory photographs.

And, on that note, it is time to close the final Travel Insider newsletter for 2017.  I do hope you enjoyed some small part of our extraordinarily strong share market these last 12 months, and I hope even more that 2018 will see continued and expanded peace and prosperity for us all.

And should the stars align in a pattern that allows you to enjoy a Travel Insider Tour, then that would be a lovely added bonus for us both.

In the meantime, please continue to enjoy safe travels

 

David.

 

 

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