Friday 21 May, 2004
And greetings from Moscow - very different to the lovely little Scottish town I was in this time last week. But although Moscow is different, it is also a fascinating, high energy city, full of history, art, architecture, culture, and even charm, as well as curious contradictions.
For example, when I visit Moscow, I usually rent a private apartment from a Russian man - the apartment is clean, comfortable and fairly priced. This time I am renting a more expensive apartment from an American who lives in Moscow. Although described as being of a true western standard, it is dirty, smelly, poorly fitted out, and in every way unsatisfactory and inferior to the cheaper apartment from the Russian landlord.
Several readers wrote in last week to say they received multiple copies of the newsletter. It seems this only happened to people with Microsoft's Hotmail or MSN type email accounts. I don't know what is causing this, and hope it was a one-off Microsoft problem - if you get multiple copies this week, please let me know so I can try and continue to troubleshoot the problem.
I'm finally succumbing to the pressures of travel, and this week will see a short newsletter and no feature column.
Dinosaur Watching : Mixed signals from United. They have asked their bankruptcy court judge to extend their special $1 billion bankruptcy financing, currently valid through 30 June, to now run through 31 December.
But strangely, a UA spokesman said this did not mean there would be any delay to UA's planned emergence from Chapter 11, currently expected to occur 'this summer'. This extension in financing is costing UA $1.25 million up front.
Talking about bankruptcy, should we care if US Airways re-enters bankruptcy? As taxpayers, yes we should. Their $1 billion government guaranteed loan is secured by 10% of their stock, which based on Thursday's closing price represents a $9.9 million value. One would guess that, if the company were to default and/or enter bankruptcy again, this $9.9 million value would drop substantially.
Challenge : Try walking into any bank and asking for a $1 billion loan guarantee and offer less than 1% of the value of this as collateral. Unless you're an airline, and your banker is the government, I don't give much for your chances!
As we all know, US Airways is in trouble because its operating costs are too high. But while management seems to be strongly focused on staffing costs, here's an interesting article pointing out that US operates its planes an average of only 9.5 hours a day - by comparison, Southwest operate their planes an average of 12 hours a day. US pilots blame the company for poor scheduling and say they've been pointing this out to management for years.
Still talking about bankruptcy, the ten major US airlines lost a total of $1.62 billion for the first quarter this year. Not a good result, but better than the $1.94 billion loss in Q1 2003. Three of the ten airlines (American, America West and Southwest) posted profits.
And north of the border, Air Canada staggers from crisis to crisis as it attempts to emerge from its bankruptcy, with the threat of liquidation now being held over the company's head by their bankruptcy judge if they can't resolve differences between them and their unions. However, there may be underlying good sense in the union's obduracy, because it is believed that they may have brokered an alternate deal with Donald Carty (former AA CEO) and a group of investors that would be better for their members than the current deal being proposed by Deutsche Bank.
American Airlines had their annual meeting earlier this week and union members packed the meeting, complaining that management was not bearing their share of cost-cutting and haven't yet found a way to increase revenue. Many of the workers wore T-shirts with the message "Show Me the Shared Sacrifice."
It was a different story at the Southwest annual meeting where employees cheered the management. The airline announced it would be paying its 111th consecutive quarterly dividend to shareholders on record at the close of business on June 10. The dividend will be paid on June 30.
Southwest said it would probably add one new city to its service in 2005 but did not expect to add another one this year. It could add $1-2 to ticket prices because of fuel costs and it expects to post a profit for the year.
Delta's Song subsidiary is giving away free tickets to passengers who are nice to one another. Passengers could earn one of 5,000 roundtrip tickets the airline will give away in June. Each flight attendant will get four tickets to give away to passengers at his or her discretion. The free tickets are good for travel September 7 through November 10 to any of Song's destinations.
Suggestion to Delta : How about first motivating your employees to be nice to us, too?
Last week I mentioned that BA had added a fuel surcharge to their fares, and had controversially backdated the surcharge so even people who had already purchased tickets would have to pay more.
This week, BA announced new discount fares (complete with fuel surcharge), and extended some current discount promotions. Wouldn't it have been easier simply to not impose the fuel surcharge?
A Chicago area couple are suing American saying they were enticed to buy their tickets to Paris from the airline two years ago because American advertised generous legroom. They complained that they were so jammed in their seats during the nine hour flight that they suffered back and leg pain throughout their vacation. They are seeking more than $100,000 for their pain and suffering. More details here.
Are you booking travel on the internet? More and more people are, and with the rise in bookings is coming a rise in problems when people make accidental mistakes in their bookings. A recent study suggests that 5% of all internet bookings are or contain mistakes! Fixing mistakes can be costly - for example, Orbitz charges $30 plus any applicable airline fees to change a ticket.
Not only can internet booking mistakes be costly, but so too can internet booking be expensive even when there are no mistakes. A new study, this time commissioned by the Canadian Corporate Travel Association, showed that Canadian companies booking business travel online were spending an average of C$676.41 per ticket, while the same ticket, booked through a travel agency, would cost an average of C$617.02. This is closely in line with studies in the US, too.
This Week's Security Horror Story : Thousands of bags are being loaded onto planes at Newark every day without being scanned, even though this is now the universal mandatory procedure. Under federal rules all commercial airports must manually test checked bags for explosive residue or pass the bags through bomb-detection machines. The airport has 50 bomb-detection machines but is not passing all checked luggage through them due to manpower shortages.
Notwithstanding the federal requirement, it is apparently TSA policy not to examine 'certain low-risk luggage', and instead to simply verify that the passengers who checked those bags have actually boarded their flight.
One of the four 9/11 hijacked planes originated in Newark, one of the nation's busiest airports. Newark was also one of five airports to miss an extended deadline at the end of 2002 to have 100% luggage screening in place.
Lastly this week, a security story of a different nature. A drunk 22 year old woman eluded security at Aberdeen Airport in Scotland and enter a jet. She managed to get past airport security and local police patrols, climb a barbed wire fence, and walked around the runway before entering the plane and falling asleep in the cockpit.
One would have thought she would have been noticed. The comely lass works as a lap dancer and was wearing only a G-string and skimpy T-shirt at the time.
All going well, I'll be writing to you from home in Seattle again next week. Until then, please enjoy safe travels
David M Rowell aka The Travel Insider
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