27 June 2008

How did I miss this one - I live in a town with a real SLUT

Officially its a Streetcar - but they were calling it Trolley for a long time before it because that was a cooler name than a Streetcar.

So have a look here - nothing needs any explanation. But some folks in the City of Seattle have some red faces.




The US Government shows itself to be - well not very energy smart.

So at the risk of sounding like an anti-government person - which I am not - I have to point out ways that the US Government is doing a fine job of screwing up.

Since today I also showed some wonderful examples of EURO-screwed up-ness, I have to look at the US for a counter balance.

Lets consider Solar Power. I think everyone (except the current occupant of 1600 Pennsylvania Avenue NW DC and his neighbour at the U.S. Naval Observatory on Massachusetts Avenue), believe that renewable energy sources are a priority. Well the US BLM - Bureau of Land Management today put on a 2 year moratorium on building new Solar Power plants. DUH!!! Couple this with the removal of the tax credit on solar energy for the home and you have a rather stupid state of affairs.

So kick me if I am wrong but just at the time when America needs to encourage new forms of energy source and preferably renewable - the government comes along and kills it for you. I thought airlines were dumb but this shows they are not alone.

I have just come back from Greece where water and energy are a very scarce commodity. There are a whole host of homes and public buildings that take advantage of solar power to cool, power and heat their users. Units that are low cost AND unsubsidized.

This country - Greece - has power that is not always on in some of the Islands and fresh water is a really scarce resource. If they can do it on the cheap why not the USA?

Inquiring minds want to know.....



Confused about fees? Bo so no longer... The T2 Challenge

Rick at the excellent site - FareCompare.com - has done the leg work for you. So here is a challenge for someone to build a solution for the consumer.

With the airlines doing such a great job of confusing everyone with their messages and changes - it is good to know you have a resource to go and help you check the REAL add on price to the basic "Fare" for your flight.

Since an all in price no longer exists - then you need to know what is what. Rick's chart does that for you. With grateful thanks and kudos to Michele McDonald of TTU - the last true newsletter for Reservation System geeks - for pointing this out to me and boos to ASTA net for hiding this behind their firewall.

Here is the link:


Now all we need is some smart alec to put this into an interactive format and then make it available as a mashup and put it into a meta search engine and the airlines will be in serious crapola.

I will award ANYONE who does this a bottle of fine wine or a $25.00 paypal voucher for you to buy - on proof of delivery. If the coder doesn't do it - I will award the bottle to the first person who sends me the link (and of course assuming that it works).

Let me know.... there has to be some bright spark who is already working on it (actually I know because one of my spies told me) BUT this is for the first person who can demonstrate a live version on the web.

Full conditions? Choose any 8 airlines and 2 scenarios from Rick's table that show all the fees. One of the airlines has to be Southwest.



Mr Bill's last day as FTE

Today is a momentous day in anyone's life. It is the last full time day at Microsoft for Chairman Bill Gates. He hands over the corner office to CEO Steve Balmer.

As he probably reflects on his departure - let me add 2 cents as a Microsoft former employee and a stockholder.

Time to split the company.

In the good old days at company meetings it used to be that the devoted throng would yell SPLIT! SPLIT! meaning the stock. Now we need the company to split into parts. It is too big. There is almost no way to see the massive appreciation for stock that employees and investors alike would like to see happen.

Now we need to free the entrepreneurial spirit and the enterprise needs to be smaller, leaner and meaner. Massive companies such as Microsoft do not serve the market and their stakeholders well. I don't buy that argument that scale matters in software.

So Bill - best of luck and please put the beast out of its misery. We don't need a 8 million pound gorilla. We could really use a bunch of smart 800 lb gorillas about now though.



The Fed was right to worry about inflation.

The US Federal Reserve Bank monthly meeting minutes reveal that there is a big concern about inflation. They are spot on and need to keep a tight lid on this.

At the current moment the travel industry is experiencing extensive inflationary pressures driven by the dual factors of the declining dollar and of course the high price of oil.

Perhaps no where is this more apparent than in the current wunderkind of the business - the MENA geography. Today Jordan reported inflation soaring to 12.7%. Inflationary pressures throughout the Gulf is coming back to bite everyone.

There is some real pressure ahead and the Fed will be reluctant to hold interest rates down.

Friday Frivolity - Euro MP Style

For all of you who think that European Legislators (Members of the European Parliament known more formally as MEPs) are a bunch of wine swilling freeloaders, you just might be right.

Thanks Mike for this one!

So if you want to know why European taxes are high and why there is a strong anti-Federalist movement in certain countries such as the UK, this might be a clue. For the record - I am a strong believer in the European Community but have always felt that the American system of balance (3 instruments - Executive, Judiciary and Legislature) was optimal. However the EC system makes the Commissioners effectively Judge Jury and Executioner. For background, at the present time there is a strong move by the EC to pass a new constitution which further centralizes power. The so called Treaty of Lisbon was voted down by the Irish this month and replaces the previous effort called the Treaty of Mastricht which resulted in a show down and was voted down by the French amongst others. So the EU is suffering from a lack of leadership at the center and the need for a new constitution is evident with the expanded membership of the EC. But not at any price.

The view of the man in the street is that he suspects that there is a giant gravy train in Brussels and Strasbourg which is adding up to higher taxes for the common man. If this video is anything to go by - he may be right.

Watch it yourself and see




26 June 2008

DOJ nabs guilt pleas from 5 more airlines nets $504 million

Nearly doubling the fines it had levied on bad airline behaviour in coluding on cargo rates earlier this decade, the US DOJ announced that 5 more airlines have now copped a plea.

In this latest round AF-KL Group comes out as the bad guys. Of the 5 airlines named and shamed (and fined) they paid the lion's share of the fines $350 Million for Air France, KLM and Martinair. The balance of the fines came from 2 other airlines - Cathay Pacific and SAS.

The airlines also agreed to cooperate with the DoJ which would indicate that there are more guilty parties waiting to be caught and fined. Whether one of them will end up in jail like the Qantas man remains to be seen. For sure there is likely to be some civil suits filed once the criminal cases are all done.

So the US Government was funding part of today's fight in Iraq courtesy of some foreign airlines. I am sure there is a moral in here somewhere.



Should US Airlines be allowed to hold onto Dormant Authority?

The principal of US airline service used to be USE IT OR LOSE IT. Back when there was domestic regulation - this meant that dormant authority had specific rules for use it or lose it abandonment or even failing to take up the authority provided.

Recently the airlines (US Majors) petitioned for a suspension of the current rules so that they can hold onto current route authority and wait out the recession. I believe this is fundamentally wrong.

If a carrier is not able to provide service, delays service or reduces service to a level less than what was bid on their application for international traffic rights then the carrier should be forced to forfeit the service and route authority can go back into a pool for the back up carrier or other carriers to fly the route.

US Airways has announced that it wishes to delay the start of US-China authority. At the same time it has canceled leases on 2 A330s it could have used for the service. So now it is claiming it doesn't have the aircraft to fly the route. OK I am game explain why this is a non-sequetor? United has canceled the DEN-LHR route. - There are many more examples of this. Both airlines are party to the petition to allow dormant authority to rest with the airline until such time as the economic climate improves.

The US airline business needs new blood. Lets stop this feather bedding and coddling of the incumbent and inefficient airlines.



Airlines detail specifics about cuts in service

United released its story to the public. Being the most detailed amongst the airlines that have announced cuts - United today announced that they would cut service at several airports and include at least one international route.

LHR-DEN will be dropped effective the fall season. Despite being only started in March, it leaves BA as the sole incumbent on the route. However LH now operates 2 flights a day MUC and FRA to DEN.

United will further drop service at 2 South Florida airports, FLL and PBI. So far the only increase in service has been announced for Direct Hawaii markets. United is clearly not shifting resources around.

We believe that United will announce even further cuts.

American has announced major cutbacks at its hubs. Having previously announced a significant scale down of service out of Puerto Rico - today it announced at several hubs would be cut back with reductions in both mainline and commuter service. Perhaps one of the hardest hit will be STL where in recent years AA has dropped almost all mainline flights in favor of American Eagle service. Southwest must be sending bottle of bourbon to Mr Arpey in gratitude.

It is not getting better folks

FlyDubai announced today!

The world's newest LCC got its naming rights today and like its surrogate parent Emirates - it promises to change the way we see airline offerings in this case LCCs.

It is expected that FlyDubai will launch its first flights "by mid-2009." FlyDubai will initially focus on regional flights within the GCC area and surrounding countries. Its operations will be completely "separate from Emirates Airline and Group."

Ghaith al Ghaith, the designated Chief Executive of FlyDubai said since the government announced the formation of Dubai's new low cost airline in March, "We are recruiting for key positions, evaluating aircraft options and routes, working out our pricing and distribution strategy, and putting in place the structure and operational resources for the business."

Watch for some key announcements in the coming weeks about the first routes - FlyDubai will potentially cover a market of "2 billion people". Wow that's one heck of a lot. So I am assuming that we are talking a focus on Regional as they stated and this screams India as the prime target. So I am going to suggest that the market is India and the MENA area as the geographic focus. However that is pure speculation on my part so don't read anything else into it! It does tell us who they see as competition, namely it is Air Arabia and Jazeera as key targets.

Best of luck guys. Lets hope you are true to the model! It could really make a huge change in the flows of traffic. If I was sitting in the LCCs of India as well as Air Arabia and Jazeera - I would be pretty nervous.



25 June 2008

Merrill Lynch issues caution on UAE Real Estate

Despite taking in a chunk of money from external sovereign wealth funds, ML is turning bearish on the GCC Property Boom. This has impact on our sector.

According to UK based Oxford Business Group, US financial services giant Merrill Lynch has issued a word of caution against over-supply in the coming years. Predicting that Dubai may switch from under to over supply within the next two years, a recent report on the GCC warns that "oversupply in Dubai may result in relocation away from the Northern Emirates".

As the economy in the GCC is being based on the property value boom itself built on (what used to be called) petro dollars, this is a worrying trend and an indication that the bubble may have a finite time before it deflates. Couple this with rampant inflation (it just topped 10% in Kuwait officially. Unofficially it is higher than that in certain sectors and countries), and this is just not a good situation.

For travel this could occur at an inopportune time. Airlines in the Region represent the only market where significant growth is occurring without concern for the economics. India's growth has already moderated due to rapid rise of crude and despite strong demand the current crop of Indian Airlines are not making money. If we discount China for the moment - the whole Airline market is in recession already. Airbus and Boeing are going to start looking at their order books and production rates nervously if the Middle East market fizzles out.

Food for thought.



24 June 2008

Las Vegas drops traffic again

Sin City is not so attractive it would seem in these hard economic times.

Total traffic (visitor count for April was down 1.5%. OK bad enough - but Gaming revenues are down nearly 5%. Gaming taxes collected as Nevada state revenue were down 3.5% in April, marking the seventh month of the past 11 months that gaming tax revenue declined.

Air Traffic is way down at higher than 5%. Why? US Airways has dismantled their late night hub formerly the America West midnight flyer hub. So US airways total traffic was down more than 28%. All the other players (except traditional contrarian Southwest)

So the US market continues its downward spiral. Sad....

Change Partners. Stardate 5302.09

With Stephen Stills ringing in your head - GetThere announced today that they have snagged SAP as a business partner.

Those of you who were still in breeches in 1999 when Amadeus and SAP first delivered their solution. Now it seems that SAP wants to branch out and sleep around with Sabre's GetThere subsidiary as well.

Can Galileo and Worldspan be far behind?

Southwest introduces "No Surprise Fees"

Southwest is running a great series of newspaper ads showing its pricing vs legacy airlines pricing.


This is the irreverent and fun "poke you in the eye" Southwest we have been missing for a while.

At least finally someone is saying enough. Just get the fares right. It is amazing to me that someone would have to even SAY this sort of thing. Why can't the US Airlines do what the European and Asian carriers have been doing for years - actually publishing a fuel surcharge and being transparent about it. NAH, that's way too hard and smart and.... However the Grand Order of Lemmings - the GOoL Airlines - are marching in lock step to the cliff.

Will anyone else follow WN's lead? I doubt it.

Well guess what - I can almost guarantee that WN will post more passengers (vs declines in traffic on the other airlines) higher load factors and greater profits (vs losses on the other airlines). Thank you GOoL team - you just saved WN's bacon for at least a year.

I wonder how those wunderkinds on Wall Street will feel about that when the Q3 and Q4 numbers come in?



Delta's new form of marketing: Non-refundable Refunds

From those nice people who brought you Song (as in Fly for a..) comes there latest way to develop a marketing push without having to pay for it.

The folks at Delta's marketing group have happened on a nice little marketing scheme underway with the latest offer to rebate the $25 fee for a second checked bag that was charged to passengers who bought tickets before April 9th and flew after May 5th when the charge was implemented. (I hope you are following the story so far...) In order to get the rebate, passengers must provide Delta with some information, including a Passenger Receipt Number for the ticket and method of payment for the baggage charge. Does anyone recall or record his Passenger Receipt Number from a flight completed 45 days ago? OK So let's go to the Delta website and see if we can find this information. Hmmm not on the home page..... let's try search - input "Baggage $25". There it is buried at the bottom of the baggage conditions page:


And the full conditions are here:


It would be one thing if you could find out these number from your frequent flyer account, but that's not possible. You wont find it from your credit card statement - oh yes and Delta doesn't store that information beyond the expiry of the PNR which will be midnight the day after you traveled.

Required areas include (but are not limited to) the following:

Passenger Name
Passenger Address
Baggage receipt number
Date fee paid
Departure date
Airport location
Flight number
Form of payment
Email address
Skymiles number

So if you don't have a DL Skymiles number you are screwed. More importantly if you didn't get a baggage receipt number that you remember - then the same situation applies.

So, the folks at Delta have a nice media burst and marketing ploy, whilst the customer is left to scramble and is unlikely to recoup charges added after the ticket was purchased. So for $25 there is unlikely to be a class action suit filed - but since there are a lot of lawyers looking for something to do - then maybe there is. Delta describes the offer to refund the fee as a "business decision".

Perhaps we can put the same people in charge of the Mariners baseball team. They can't do any worse than the current lot.



23 June 2008

787 Power on - FINALLY

So Boeing managed to turn on the lights. Finally one built (and rebuilt and rebuilt...) 787 actually works with electricity. I wonder if they can turn it off ;-)

This is very good news for Boeing if for no other reason than it is a great morale booster.

There are challenges ahead. The most significant is that all the customers are being told to plan for significant delivery delays. In the case of a small airline - though an early buyer - the date for delivery for Monarch is now 2013. Ouch!

The gap between the projected deliveries and the full on production is a gaping hole. There is a significant capacity gap in the 767/330/787 sector, new builds are scarce and Boeing is being tight-lipped about any 767 production rate ramp up. With the Tanker decision again about 12 months away, Boeing is going to be in no hurry to add capacity to this sector. As Airbus has seen with the recent inability to reach Wave 2 for the A380 - this logistics thing is not easy.

What can be learned from this? Lots of things. Now I guess we all understand why Microsoft is/was always late with its versions of Windows.



22 June 2008

Is IATA nuts or just its DG?

The latest missive from IATA's Director General (yes Martha he is Italian), takes aim at the GDS providers.

The International Air Transport Association has called on GDSs to cut their fees – or risk losing air product. IATA director general and chief executive Giovanni Bisignani said its partners in the value chain “must deliver similar efficiencies to airlines”. “Why can China TravelSky charge US$0.50 per segment
while the western GDSs charge over USD$4?,” he said. “The industry is in crisis and they must come to the table with better efficiencies or we will use other ways to distribute products.”

OK - so the theory is Travelsky can do it for 50 cents but the Western GDSs charge too much. Either he is nuts or he is mad or he has another agenda. Frankly this cannot possibly be a good way to start a dialogue with your "partners".

Please note I am not defending GDS costs. Far from it - I believe wholeheartedly that the GDSs need to do something about their cost structures and about their technology and processes. Airlines need to just transform their cost structures - however you have heard me rail against that set of issues before. But he clearly knows nothing about China and Travelsky as to why they charge that fee, nor does he understand the issues facing GDSs.

Where I will agree with him - is that there needs to be a transformation in the cost structure for distribution. This is essential. What he is attacking is the headline number. There are many more costs which are dependent on this number which need addressing. At the same time no one seems to be paying attention to the new cost structure which is even worse than the old one with a certain company's new hosted product that the Lemmings are buying.

So perhaps he has a secret pact to attack the GDS model while preserving the new hosted reservations system model? I for one do not understand why he is taking this tack because to those who understand the economics of distribution - he is barking up the wrong tree at the wrong time.

Perhaps he just knows something more than the rest of us. OK - I will buy that... just share a little please.......... If you know - please help me out from my misery of understanding his position.