Weekly Roundup, Friday 9 April 2021

An electric, 300+ mile range, 830 hp Hummer. Elon must be envious! (See bottom item.)

 

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Good morning

As the weather gets warmer and sunnier – I’ve even now given my lawn its inaugural mow for the year – I continue to be “caught out” – less than an hour from here, there are still occasional snow-storms raging in the mountains, making driving still a challenging experience.  I definitely must treat myself to new tires prior to next winter!

Talking about driving, but not about snow-storms (I hope) here’s the next teaser about our August/September UK touring plans.  It shows our touring route through Wales, starting in Chester and ending in either Cardiff, Llanelli, Shrewsbury (after the “Heart of Wales” train journey, shown in brown), or further north on up to Glasgow for those of us going on to the Scotland tour that follows.

I discuss that further, below.

And talking about driving some more, I’d made a comment last week about EV range, and as part of several discussions with readers on that topic, decided to write an article setting out some of the issues and variables.

If you already have an EV, you probably know most of this.  If you don’t, it might be helpful in guiding your thinking and expectations.

What else?  Thursday’s Covid-19 diary entry is also below, and Sunday’s can be seen online, here.

Plus, of course, some more :

  • Air Travel Continues to Rise
  • The Negative Implications of Less Business Passengers
  • Travel Insider Touring Update – UK, Aug/Sept 2021
  • Airbus Getting Over-Confident?
  • Airline Startups
  • What Does Biden Really Mean?
  • Responses to Starlink Satellite Internet
  • Cell Phone Changes
  • And Lastly This Week….

Air Travel Continues to Rise

We’re now under a week away from the one year anniversary of the lowest ever day in recent memory for US air passenger numbers.

On 14 April 2019, there were 2.21 million people flying.  On 14 April 2020, there were a mere 87,500 people flying – 25 times fewer than the 2019 number.  It seems likely on 14 April 2021 there will be about 1.3 million people flying, maybe slightly more.

I’ll write more about that next week; for now, as you can see, this year’s seven-day rolling average shows that numbers are now over 60% of the 2019 numbers, and apart from a drop on Wednesday, have been steadily increasing, and probably will continue to do so.

But will numbers continue to increase in the straight line they have been, all the way to 100% of 2019 and beyond?  Almost certainly not.

I was talking with Joe Brancatelli this week and he stressed that most of the growing numbers in passengers are leisure travelers – people going somewhere for a vacation, or to meet up with friends and family.  There are almost no conventions being held at present, and his sense is that business travel as a whole remains massively down on 2019 numbers.  Most of all, he does not expect business travel to surge back up to the 2019 “normal” level – not this year, maybe not next year either.

I agree with him.  So sooner or later, we’ll see the growth start to taper off.

The Negative Implications of Less Business Passengers

The likely extended absence of business travelers is really a problem for the airlines for two reasons.

The first reason is the simple one.  Fewer business travelers mean much less revenue – remember, it is the business traveler segment that pays the highest fares.

The second problem is how to respond.  They can do one of two things, and both are wrong.  The first thing is the traditional “run a sale to fill up the empty seats”.  Well, there’s nothing really wrong with that in the sense that more revenue is always to be welcomed.  But the problem is there is no way that most flights will make money for any airline if they replace high paying business fares with lowest paying sale-price leisure fares.  They’ll lose less money if the fill the otherwise empty seats at any price, but they’ll not make a profit.

So, the other strategy would be to hike all fares.  If an airline needs, say, an average of $100 per ticket, and in the past, it was getting the $100 average because one third of its passengers were paying $150 a ticket and two thirds were paying $75 a ticket, when it loses out on the $200 passengers, it now needs all 3/3rds of its passengers to be paying $100 a ticket.

These numbers are illustrative rather than exactly what is happening, but you see the implication.  There would need to be a huge fare increase to compensate for the loss of the business traveler revenue.

But, the problem with that, and it is one the airlines don’t often focus on is that business travel has been very price-inelastic.  A fare increase makes little difference to the number of business people flying, and because airlines are very focused on their profitable business travelers, they have become used to being able to rise fares without measurable problems.

But leisure travelers are very price sensitive.  A 33% increase in fares mean some people won’t travel at all, some people won’t travel as often, and some people drive instead of fly.

So now instead of having (say) 100 passengers all unhappily paying $100, the airline will only have 90 passengers willing to pay that much.  Which means it now needs to charge each passenger $111, and that in turns sees a further loss of passengers, maybe down to 80, which means that all passengers now have to pay $125, and so the numbers drop more, and the fares rise more, and so on and so on in a vicious circle.

Is it possible for the airlines to come up with a new profit model with a major reduction in business travelers?  Yes, it is, because the numbers and issues above were greatly exaggerated and simplified.  But the changes they’d make will not be good changes from the perspective of those of us who like to fly for leisure purposes.

This article has some good analysis and commentary.

The key action item for you is clear.  If you have domestic summer travel plans, indeed, if you have domestic travel plans any time in the next year, buy your air fares any time you see a good price.  My fear is that domestic fares are headed upwards.

And what about if you have international travel plans?  Well, that brings us to the next item.

Travel Insider Touring Update – UK, Aug/Sept 2021

The last week has seen continued positive news with respect to the Covid and related travel situation in the UK.

It is hard to know whether politicians are more focused on the new case rate or the death rate.  It doesn’t really matter, because both are dropping further down.  A week ago, in the UK the seven day average was 4,489 daily new cases and 45 deaths.  On Thursday this week, the averages were 2,865 new cases and 31 deaths – a drop of about one third, in a single week.

From its peak in early January, the daily new cases reported in the UK have dropped 20-fold.  That’s a tremendous achievement.  In comparison, our US numbers have dropped 3.5-fold.  Not quite so impressive!

Both case and death rates are at their lowest since September last year, and it is fair to say, the mood in the UK is moderately optimistic.  The country is continuing with its easing of controls, and on 17 May might allow its people to start traveling internationally again.  Will it also start allowing people to come to the UK from other countries (without quarantine requirements)?  That’s not yet known, and of course, is an essential question we must have answered before we can confirm our plans.

Also encouraging is the UK is starting to test their own version of a “vaccination passport”, although in their case, they will be allowing people who either have been vaccinated, or who have had an infection in the last six months, or a recent negative test, to mix and mingle more freely.

So, overall, a week full of good news with no bad news.  We continue to feel increasingly comfortable with the concept of being able to safely and pleasantly enjoy our tours this August/September.

And what enjoyment they offer!  What touring they include!  As you can see from the touring map of the “Wild Wales” tour above, we have a wonderfully varied tour through Wales.  Best of all, while we include a lot of experiences, we also have a moderately easy pace – every stay is for two nights, not one night, and we have some half days and even one whole day of “time at your leisure” (although we include some things for your leisure time if you should want to do them).

We can both include a lot and also give you generous free time because Wales is small.  It is about 100 – 125 miles from top to bottom, and 40 – 90 miles from side to side, so we don’t need a lot of travel time to cover a lot of the country.

Dates and some more details here.  More information will continue in future weeks.

What about Europe?  Europe’s most recent increase in new cases has stopped, and the last few days have seen convincing drops in numbers, so that is a very positive development too.  But we continue to feel they’re a month or more behind the UK in terms of re-opening, and they probably don’t have quite the pressure on them to open their borders further beyond the EU than the UK has.

The good news there is our Christmas Markets plans are starting to seem more likely to proceed, and indeed, we are currently helping six people go on a cruise in early November and that seems to be only a modest risk, too.  But we’re not quite at the point of recommending summer travel to Europe.

Airbus Getting Over-Confident?

As a rough rule of thumb, any time I hear any company saying “customers will pay a premium for our product because of our reputation” I cringe and mentally start counting down the days until that company has been eviscerated and become little more than a shadow of its former self.

Of course, nowhere has that been more spectacularly true than with airlines.  I still vividly remember Bob Crandall, CEO of American Airlines from 1985 – 1998, and he boasted his airline could easily command (I think it was) a 30% price premium for its fares compared to low-cost no-frills airlines such as Southwest, and professed to be totally unworried about any impact Southwest would have on his airline.

These days, of course, all airlines have become no-frills, and Southwest has become one of the “big four remaining airlines”; and unlike AA, Southwest has never been through a Chapter 11 bankruptcy nor been bought out by a smaller airline (America West/US Airways).

So I am cringing when I read this fascinating article.  It starts off by disclosing that Alaska Airlines never even asked Airbus to bother quoting on what became a new order for 737 MAX planes; that’s slightly surprising, but not astonishing.  Where it does get interesting though is when it quotes Airbus as saying it believes it can command a price premium over Boeing.

That is great news for Boeing.  If Airbus is getting greedy, airlines will flock to Boeing.  Anyone who thinks an airline will pay a single penny more than the barest minimum for anything is seriously deluded.

Airline Startups

We’ve been excitedly watching the development of the new Norse Atlantic Airways, but there are other airlines worthy of mention too.

Avelo Airlines has now announced its initial route network, with its main hub to be Burbank, CA.  They describe themselves as “America’s first new mainline airline in nearly 15 years“.  You probably haven’t heard of them before, and if you’re wondering how it is I’ve not told you all about them before, well, it is because I don’t entirely agree with their claim to be a new mainline airline.

First, the airline is only semi-new.  Its origins can be traced back to Casino Express Airlines, a company started in 1987.  Casino Express renamed itself as Xtra Airways in 2005, and it seemed to move its headquarters, grow, and shrink some in the years that followed.  It was bought in 2018 by Andrew Levy, former CFO for United Continental Holdings and CFO/President/COO of Allegiant Air, and renamed as Avelo Airlines.

Their fleet initially will comprise three leased 737-800s.  And their “mainline” route network?  One flight a day to Santa Rosa, CA and Mesa, AZ.  Three to six flights a week to Pasco WA, Bozeman MT, Ogden UT, Grand Junction, CO, Medford, Eugene and Bend/Redmond, OR, and Arcata and Redding, CA.  Some “mainline”….

I’m going to guess that Avelo’s arrival won’t impact on your travel plans all that much.

It is worth remembering that Breeze Airways is expected to start flying some time this year.  Breeze is the latest airline startup by David Neeleman, known to most American readers primarily as the guy who started JetBlue.

Which brings me to JetBlue.  No longer a startup (JetBlue commenced operations in 2000) but they are about to start their flights across the Atlantic this year, and that’s a very exciting development.

JetBlue released information about their transAtlantic A321 cabins and services this week.  It all sounds wonderful, even in coach class.

What Does Biden Really Mean?

I remember when Dan Quayle was mercilessly ridiculed for things he said, and more recently, when Donald Trump was similarly ridiculed, often for things he didn’t say.

But there’s an awkward silence that envelopes the wilder and crazier comments from our present President, whether it be him getting “tongue-tied” (I think that’s the current euphemism) or when he gets “confused”.

However, I really wonder what he meant to say when he was talking, earlier this week, of commercial passenger jets flying at 21,000 mph, and when he spoke about traveling from coast to coast on a train “close to as fast as you can go across the country in a plane”.

Whether he meant 21,000 mph or 2,100 mph, both are impossibly fast airplane speeds and outside the scope of current plans.  Yes, I did write about the fantasy being espoused by Aerion last week that would be in the realm of 2,100 mph, but it would require three or four stops to circle the globe (Biden was talking about “traversing the world in an hour” – impossible both in terms of speed and range – the earth’s circumference is 25,000 miles).  The Aerion concept is totally futuristic and unlikely to be the focus of his infrastructure legislation that he was talking about and hoping to get passed right now.

We’ll guess that when Mr Biden compared trains to planes, he means the current 550 – 590 mph planes, not the new 21,000 mph ones!  Amtrak trains currently average about 40 mph or less on coast to coast routes.  The fastest trains in the world are in (guess) China, where the Beijing-Shanghai line has trains operating at 197 mph.  For a train to cover the country in the same speed as a plane, it would need to be able to cruise at faster than plane speeds to compensate for when it has to occasionally slow down for corners and inclines and perhaps for intermediary stops.  A 600+ mph train?

It is also worth noting that the speed of sound is 760 mph, and somewhat slower in cold air such as the midwest in winter.  A train wouldn’t want to go much faster than 95% of the speed of sound, because on some parts of the train (leading edge in particular) air would move faster, and creating sonic booms at ground level would be unwanted.  So there’s a semi-hard maximum speed for a train, probably in the realm of 650 – 700 mph.

A hyperloop can go faster, because it travels in a moderate vacuum, and in a sealed tube.  But regular high speed trains seem to be topping out in the mid 300s of mph, which means operational average speeds in the mid/high 200s.  When the train speeds start to go much higher, their efficiency drops due to the ever increasing wind-resistance (which increases at a rate proportional to the square of the speed).

Meanwhile, I’m still waiting for Biden’s part of the promises made in 2010 for the US to get a high speed rail network equal to China’s to come true.

Responses to Starlink Satellite Internet

I regularly write about the promise/potential of Musk’s Starlink satellite based internet service.  His plans seem to be continuing apace, with the latest mission on Wednesday successfully taking another 60 satellites up to orbit, just under a month after its last launch, and now with 1,378 satellites in operation.

Starlink is only authorized by the FCC to have 1,584 satellites in its low earth orbit (about 340 miles up), and at its current rate, it will have that number in orbit within two or three more months.  The FCC has also allowed it another 2,825 satellites at a much higher altitude of 680 – 810 miles, and Starlink have asked the FCC to modify that to allow the satellites to be at the lower orbit (makes it easier for providing denser coverage, and also reduces the latency delays).

Starlink has already received about $900 million in federal funding.  That is a part of $9.2 billion in funds being awarded to companies to help cover the costs of rural broadband.  President Biden wants to spent $100 billion more on this worthy venture, but it seems his vision is not to help private companies but to develop a government bureaucracy to provide the service, itself.

We agree with this article, at least as far as acknowledging that government departments are seldom as efficient or effective as private enterprise, and so this is an unfortunate concept.  We don’t agree that Biden’s entire $100 billion would be wasted, but we do think quite some of it would be, and that progress would happen much more slowly.

T-Mobile announced on Thursday its plans to provide rural broadband, through its growing 5G network.  That’s an interesting concept, and possibly a good one.  But we’ll believe it when we see it.  Even though T-Mobile is headquartered in WA, its rural 5G footprint is very minimal here in WA, and probably little better elsewhere.

We understand the economic reasons why that is – like all cellular companies, Tmo first puts its infrastructure where the people are, and only as a distant second does it add infrastructure where people aren’t.  Maybe Tmo is simply aligning itself to get a place at the government funding trough.

As the linked article points out, Tmo makes 40 times the revenue from regular mobile subscribers, per GB of data, than it would with fixed wireless type internet service.  In other words, if it doesn’t make financial sense to have 5G service somewhere in the countryside at present, it still won’t make sense after considering the impact of their new service.  So, a disappointment.

I was interested at what the old stale higher-altitude satellite internet companies are doing to respond to Starlink.  Hughes and Viasat are the two main companies providing older slower and costlier satellite internet, and they must be feeling panicked at the promise of Starlink and similar new companies.

For sure, there’s not much they can do with the physical/electronic limitations of their satellites.  But even so, their attitude and approach is disappointing.  Their response seems to be to extend the minimum contract time to two years.  Sure, it will staunch their otherwise surely very fast loss of their customers, but it won’t stop it, and it surely will earn them massive ill-will.

Cell Phone Changes

Talking about T-Mobile, there was some news this week that has been expected for a while.  LG is getting out of the cell phone business.

It is a bit of a reach to say (as the article does) LG is the first major smartphone brand to completely withdraw from the market (Ericsson, for example, or Siemens, or Palm), and in addition to companies disappearing entirely, there are others such as Nokia and Motorola who have collapsed and been bought by unrelated companies, mainly for their brand name, or others (Blackberry) who have abandoned their earlier “go it alone” approach and given in to the inevitability of basing their phones on Android.

But it is interesting to see another mega-company fail in the cell phone hardware marketplace, and pause for thought when one reads in the article how LG have been out-innovated, out-designed, and out-marketed by the Chinese companies.

Also this week we noticed Samsung announcing its latest lower-priced phones – the A52 and lower numbered phones, going down to an A02 which will sell for $110.  The A02 and A12 are 4G phones, the A32, 42 and 52 are 5G phones, and the lowest priced of those, the A32, will list for $280.  (Don’t buy it, though.  Get the Google Pixel or Motorola 5g phone instead.)

We see this as confirmation that the market really doesn’t want new $1000+ phones (the new Samsung S21 family of phones have been on seemingly permanent discounts since their release just a month or two back).

Maybe the real world is finally introducing itself to cell phone makers, who are coming to realize that you can’t keep increasing prices for each new year’s models, even though each new model really does nothing more/better than the previous model, and all the new prices were doing was extending the length of time we hold on to our phones.

And Lastly This Week….

What do you do when you can’t travel?  For some of us, you watch travel videos instead.  This article talks about a particular type of travel video – many hours long, being simply the view out the front of a train while it travels its route.

As a train enthusiast, I’ll confess to having spent a few hours doing watching such videos.  I glanced briefly at this video one day, and the next thing I knew, I’d watched it almost in its 3 hr 41 minute entirety and my daughter was wondering when dinner would be!  The English countryside is so beautiful…..  Some videos have information on speeds and routes.  Some come with amazingly interesting commentary.

Talking about things which some people might consider boring, the internet is about to become a little more boring, as Yahoo shutters and destroys another part of its once wide-ranging series of content niches – the Yahoo Answers feature.

Lastly this week, surely the antithesis of boring is this example of GM channeling its inner “Elon Musk” and coming up with an EV that would not be at all out of place in the Tesla stable.  It isn’t due out until 2023, however.

Until next week, please stay healthy and safe

 

David.

 

 

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