Weekly Roundup, Friday 1 February 2019

Good morning

While there are no attachments to this morning’s nice long newsletter, that is due to a quirk in how these emails work.  I’ve actually been very busy this last week preparing the pages of information for our lovely Loire Valley “land cruise” in late September.

You can see the main tour page here that sets out all the details.  The day by day itinerary page is here.

One thing in particular that I’m very proud of.  I’ve managed to work things out so there will be no single supplement!  We always have plenty of singles on our tours (including me) and so I’m very sensitive to the concept of keeping the single supplement as low as possible, and this time it seems we’ve achieved a perfect $0 single supplement.

There are only a limited number of single rooms that this applies to, so if you’re a single, please hurry to register your interest.

Of course, absolutely, couples are welcome too!  I’m keeping this as another small group, and hope it might fill quickly, as it absolutely should, so please do go have a look at the tour now and let me know if you’d like to come.

What else?  Please continue reading for :

• Our New Twitter Account and Newsfeed :  Correction
• Other Travel Insider Touring
• Norwegian Air Buying Itself Some Time
• The A380’s Renewed Struggle to Survive
• Why Didn’t They Think of This Before?
• Automatic Airport Parking, Too
• In Praise of Normal Tourists, Not Pretentious Travelers
• The Travel Insider Defends the TSA
• And Lastly This Week….

Our New Twitter Account and Newsfeed :  Correction

Apologies for sharing a bad link last week.  Our Twitter account, now at 825 followers, can be found here.  If you’d like to get daily digests of our tweets – a modern replacement for the former daily news feed, please join on this link (hopefully now correct!).

Other Travel Insider Touring

I hope to be able to release a preliminary itinerary for our Christmas Markets Landcruise next week.  The main week will be from Tuesday 10 December through to Tuesday 17 December, based in Munich.  There will be pre and post options – I’m thinking Vienna and Prague respectively.

We had enough response to justify developing a Holy Lands tour for about this time in 2020.  Indeed, one reader agreed with my comment about the safety for tourists, and wrote in to say that he finds Israel to be safer when he visits Israel than when he goes just a short way from home in the Chicago area!

I had some interest in our mystery vacation concept, and will progress that a bit further.  But priorities currently are Christmas Markets then Holy Lands.

Lastly, a reminder.  If you’re thinking of a river cruise, did you know that we can save you some money?  You also get to benefit from my 15 years and several dozen river cruises on most of the European rivers as well as China too, so if you’re thinking of a river cruise, let me know and maybe I can help you get the best cruise and the best price.

Norwegian Air Buying Itself Some Time

Norwegian Air had a bad year last year, with an operating loss of about US$450 million.

It is important to appreciate that an operating loss is not the same as a net loss.  It is the loss that is experienced after subtracting direct costs from the revenue earned, and then after that, to get the net loss, additional fixed expenses are also adjusted for.  A net loss is almost always much greater than an operating loss.

So Norwegian’s real net loss last year, yet to be disclosed, will be considerably greater than the disclosed operating loss.  Its problems probably relate to growing too quickly and a surge in fuel pricing.

As a result, there were a spate of headlines late last year worrying that the airline had only days to go before it might be forced to close down, and there was publicity about an apparently low-ball offer from BA’s parent holding company to buy the airline out.

Norwegian refused BA’s offer, but seems to have been disappointed that BA then played hardball and didn’t come back with an improved offer.  Additionally, the various vague expectations that other airlines might be interested in buying Norwegian have all apparently come to nothing.  Norwegian has subsequently publicly expressed an interest in discussing “consolidation” with anyone who has a big enough check book.

Why would an airline want to buy a loss-making competitor?  There are five main reasons.  The first is an often misplaced belief that the purchaser airline can bring “synergy” and “better practices” so as to make the loss-making airline become profitable as part of the purchaser’s overall operation and better business practices.

The second is as a way to suddenly and quickly grow in size and to get into new markets that it has not yet been active in.  This is another seductive lure which tempts airlines to buy other airlines when really they shouldn’t.

The third reason is to get the failing airline’s equipment – ie, its planes (and sometimes its airport gates).  This is uncommon, but sometimes it can be a great way to get more planes quickly, rather than to wait years for deliveries from Airbus/Boeing or to buy/lease whatever is available in the open market.

The fourth reason is if it is a deal that is just too good to refuse – a fire-sale where the underlying assets are worth more than the asking price.  This is another seductive lure – assets are only as valuable as they can be deployed to make or save money, or as valuable as they can be sold on to someone else for.  Just because a plane has a notional book value of, say, $125 million and is being offered for sale at $100 million doesn’t mean that a purchasing airline is making a sudden $25 million profit.

The fifth and final reason is the darkest.  To shut down a competitor.  Particularly in the case of Norwegian, its low fares have caused a weakening of all fares on the routes it serves, and it may well be that the competitive cost of responding to Norwegian is so great as to make it worthwhile for one of the major (and therefore most affected) carriers to simply buy the company and then close it down.

Anyway, Norwegian has announced it is going to raise US$350 million to help it cover last year’s loss.  It will also stop growing, close some of its bases, and slow down its purchase of new planes.  Its focus is now going to be on controlling costs and “catching up with itself” rather than on continued frenzied expansion such as we’ve seen the last several years.

With what may be lower jet fuel prices, and a general growth in air travel, it is possible that improved cost controls and no longer growing “ahead of the curve” may see the airline staunch its loss-making and move back to a profitable and much stronger state from which it could then launch a new wave of expansion in a few years time.

We desperately hope so.  Norwegian has done a careful job of balancing high quality service, not unduly excessive fees, and great value fares, and we hope they’ll stick around.  It is wonderful to see their regularly offered low fares from Seattle to London and Europe, and even when flying other carriers, to note that fares don’t seem as high as they were a couple of years ago.  Thank you, Norwegian.

If you’re planning travel to Europe in the next few months, you should see if Norwegian have flights you can take advantage of.  But perhaps also check to see if your trip insurance covers you for airline/supplier bankruptcies; if it doesn’t, your credit card company would likely at least agree to refund you the amount you paid for tickets you couldn’t use, but they’re unlikely to help you with the higher cost of last-minute replacement tickets on another airline.  One thing is for sure, if Norwegian chooses to exit one of its routes, you just know the other airlines will suddenly raise their fares.

The A380’s Renewed Struggle to Survive

The marvelous, magnificent, and passenger-favorite airplane, the double-decked A380 super-jumbo, has exceeded most expectations and proved most naysayers wrong in almost every respect.

I still remember the nonsensical predictions of doom by people who one can only presume had undisclosed vested interests.  They predicted that airports couldn’t cope with the sudden flood of passengers when an A380 arrived, the impossibility of loading or unloading an A380 in a reasonable time period, predictions of disasters beyond comprehension if (when!) they crashed, and assorted other ridiculous doom-and-gloom assertions.

All of this was clearly nonsense when it was stated, and has been proven to be nonsense in the 11 years the A380 has been in commercial service.

But there is one prediction which few people ever considered.  While passengers love the plane, airlines don’t.  The plane has been a massive commercial disappointment; as of the end of last year, after 11 years of production, a mere 234 planes have been delivered to 13 airlines.  There is about another 90 planes still on order, with three going to ANA, eight to Qantas, and 53 going to Emirates.  The other 23 orders are looking a bit uncertain.

The A380’s future is currently 100% reliant on either Emirates continuing to take its 53 ordered planes, and/or some new order surprises.  While there are rumors about some airlines possibly buying some A380s, none are thought to represent large orders, and certainly nowhere on the scale of the 747, where airlines would buy dozens at a time (and 1550 in total have been sold in its 50 years).  Instead, ignoring Emirates, it has been rare for an airline to order even ten A380s at a time.

Airbus has stoically hoped that “the market would catch up” and the A380 would become more popular over time.  To date, there has been zero evidence of this happening, and when one notes that the A380 was first ordered in 2000 (by Emirates) that means there have been 19 years of waiting for a surge of interest, and 19 years of disappointment.  Meanwhile, Airbus has reduced its production rate to a mere six a year – in contrast, it makes two A320 planes every day, and is looking at increasing the rate still further.

Now it seems that Emirates is growing increasingly frustrated with engine supplier Rolls Royce to the point where it feels it can no longer in good sense justify continuing to invest in A380s without the engine performance it feels it needs.  Rolls Royce for its part, beset with problems with several of its engine types, shows little interest in making the investments needed to improve its engine performance for an engine model with little apparent market demand.

If Emirates converts its orders to A350 planes instead, that would probably mark the end of the A380 production line.  At six a year, Airbus is losing money on the program, and with only 11 firm orders other than from Emirates, we fear that if the 53 Emirates orders go away, Airbus will end the production of the plane as quickly as it can.

What went wrong?  A combination of factors.  The huge investments into smaller twin-engined planes combined with a freeze in investments into successor A380 models saw the original thin economic benefits of the A380 erode away to nothing and end up with the A380 offering no cost benefits at all, and at the same time, a shift from hub to hub flights to nonstop flights between secondary airports lessened some of the pressure on congested hubs such as Heathrow.  With less pressure on congested hubs, there’s less need/benefit in the A380’s larger passenger carrying capacity.

With few sales and a weakening economic case to justify the plane, neither Airbus nor the two engine manufacturers have been willing to “double down” on their investment and bring out a new model A380 with better economic performance.  The basic fundamentals of the plane definitely have plenty of room for growth and improvements, but in a self-fulfilling vicious circle, without the sales, there’ll be no more investment, and without the investment, there’ll be no more sales.

We hope Emirates resolves its problems with RR and sticks with its A380 program, but we’re feeling rather pessimistic.  Some more details here.

Why Didn’t They Think of This Before?

Apologies to Wellington’s Rongotai Airport in New Zealand, for this negative way of expressing positivism for their excellent innovation.

By way of introduction, who here hasn’t at some point been on a flight that sits on the ground while waiting for its jetway to be connected to the plane.  Several times I’ve suffered from inexplicable delays due to the jetway operator being absent, and I’ve also had an experience when the jetway crashed into the side of the plane, delaying things while safety checks were carried out before the hapless operator steered it more carefully to where it should go.

On other occasions, the operator has clearly been a trainee, and the jetway has steered an erratic path at a snail-like speed before finally “finding” the plane’s door.

So, in Wellington, they have now come up with a self-docking jetway.  Someone/anyone simply pushes a button, and the jetway then steers itself alongside the plane and aligns up next to the door.  This is one of the more trivial examples of an automated system, to the point where one wonders why it took so long for someone to do it.

But how wonderful that it has now been done.  Oh, there’s a second button, too.  The “move back” button, also now automated (and, yes, in the past we’ve been delayed waiting for the operator to come and move the jetway back away from the plane, too).  Technology – sometimes, you’ve got to love it.  Details here.

Automatic Airport Parking, Too

One of the harder parts of driving a car for many people (note how I am careful not to make any gender observations) is parking it.  And for those of us who can park our cars, one of the biggest frustrations, in a congested car park, is not being able to park our car due to inconsiderate morons who take up one and a half spaces for their car.

So here’s wonderful news of a new service being trialed at Gatwick Airport in London.  Automatic parking robots.  The devices will lift up your car by sliding a shelf underneath it, and then drive it, automatically, to a car park and precisely slot your car into a parking space.  In a manner a bit like valet parking, you drop your car off at a drop off point, and pick it up there when you return.

The system not only speeds things up for travelers, but because of the precision of the robots, can fit more cars into the same space – in the trial, 170 regular car parking spaces can now hold 270 robot-parked cars.

A truly great idea.  Details here.

In Praise of Normal Tourists, Not Pretentious Travelers

Some people boast they aren’t tourists.  Oh no, they boringly claim to anyone they can talk at, they are travelers, because, you know, using a different word to describe their activities makes such a difference.  They will tell you how they make efforts to avoid “normal” tourist activities and seek “real” experiences instead.

My favorite has always been the people going to Australia who want to see a “genuine Aboriginal corroboree” and sneering at the suggestion of attending an excellent tourist show that recreates the essence of a corroboree in an approachable and quality controlled format.  These people insist they only want genuine experiences (because they are travelers, not tourists).  When I used to help people with their travel plans to Australia, I’d come across such people, several times every week.

Of course, they also want it at 8pm on Wednesday, please.  In Sydney, close to their downtown hotel.  They ignore the inconvenient truth that corroborees happen randomly, to no schedule, only in the outback hundreds of miles from roads or towns, and to which strangers are not welcome.

The same people decry tourists who visit an area for only a couple of days before moving on.  These “travelers” boast how they like to stay in a place for a week or even two, so as to experience it like a local, rather than as a tourist.  Bizarrely, they particularly like to do this in countries where they don’t speak the language; perhaps it is this total disconnect and lack of comprehension that helps them to not realize that they are indeed and exactly tourists, no matter how much they pretend not to be.

There are plenty of places, even in the modern/civilized world (I’m thinking in particular of England because I know it well) where you are viewed suspiciously as a stranger, even if you’ve lived in a place for decades, and even if you moved there from only a short distance away – the next county over.  A visitor for a day or week or month can never understand the true dynamic of such places, even if they do speak the language.  (I’m also reminded of the excellent series of books and derivative television shows about an English couple living in Provence, written by Peter Mayle – definitely recommended and outstandingly funny).

Lastly on this point, and in defense of tourists rather than pretentious travelers, I find that tourists have a more realistic expectation.  There’s a reason that some places are popular with tourists – because they give the best value overview experience of an area or region to visitors.  When I used to help people travel to NZ and Australia, my heart would always sink when people came into the agency with a sheet of recommendations from a friend of a friend who was from the country they were going to visit.  “Oh, this guy told me not to go to Rotorua/Queenstown/Sydney/Cairns/wherever; it is too touristy; he recommended these places where the locals go instead”.

How to politely tell such naive people that the reason the touristy places were popular with visitors was because they were deservedly good places for tourists to visit (and which the locals had all visited, too!)?

This article refers.  Be a proud tourist, don’t be shamed by the virtue-signaling travelers.

The Travel Insider Defends the TSA

Now there’s a headline you didn’t expect to see.

But a recent article in Forbes made some beyond ridiculous suggestions that I felt I had to rebut.  The two “experts” who wrote the article said that because the TSA managed to continue to provide service with only a slight lengthening of wait times during the government “shutdown”, maybe that means we don’t need the TSA at all!  They also pointed to the sadly incontrovertible examples of the TSA’s inability to detect guns and other banned items, and the dubious effectiveness of some of the expensive scanning technology they use in the first place, as further reasons why the TSA is not needed.

Instead, the article said that strong cockpit doors and CLEAR would give us all the safety we need.

In case you’re unfamiliar with CLEAR, it is an overpriced service offered at 40 US airports by a private company that gives its members a shortcut to the front of the line at airport security stations.  It doesn’t then excuse their members from regular TSA screening, indeed, it doesn’t even give its members TSA PREcheck privileges.  It is a useless service and costs $180/year, while giving its members an inferior service to that offered by PREcheck (which costs $17/year).

As for the cockpit door, maybe it can stop a hijacker from breaking into the cockpit these days, although that is far from definite.  But will it stop a hijacker from detonating a bomb in the passenger cabin?  Or killing the passengers, one by one?  Nope, not at all.

Sure, there are many problems with the TSA, and plenty of ways that our security could be improved.  But, as bad as it is, it is sure better than nothing at all, and clearly, for almost 20 years since 2001, the TSA has somehow succeeded in keeping our flights safe.  To suggest that the TSA could be abolished is beyond crazy.  Shame on Forbes for publishing this article.

And Lastly This Week….

Talking about nonsense, here’s some more nonsense, this time coming from an activist organization and uncritically passed on to us by CNBC.  The article worries that a new wave of supersonic jets (something which at this point still looks far from certain) could see sonic booms battering us every five minutes.

The article ignores that new SST proposals involve boom-reducing designs that change the booms to a something closer to a whisper; and back in the glory days of the wonderful Concorde, its supersonic speed was restricted to only over the water, not over land.

Oh – and that “every five minute” headline claim?  To be more exact, it seems the article is claiming that – during peak hours – there would be a boom somewhere in the world, once every five minutes.  None of us would have 12 booms passing by, every hour of every day.

Not to sound too politically incorrect, but this is an interesting video – it shows the crash when landing of a Russian Tu-22 bomber that came in too fast and disintegrated on landing.  The crash happens just after the 1 min 15 sec point.

Truly lastly this week, only in Germany would you find a sausage themed hotel, and also only in Germany would you find plans to erect a sausage museum.

Until next week, please enjoy safe travels

David.