The current financial crisis which has resulted in scarce credit and slumping oil prices has forced international financiers to dump assets in Dubai city, Bloomberg reported."Dubai is more precarious than it has ever been,” said Christopher Davidson, a professor of Middle Eastern affairs at Durham University."If the property industry collapses in Dubai, it will be finished. Dubai's relative autonomy will come to an abrupt end," added Davidson, the author of "Dubai: The Vulnerability of Success.He added that Dubai's push into luxury property developments was a mere diversification on "paper sand".On Saturday The New York Times reviewed of his book, Dubai: The Vulnerability of Success. An extract from the review:
Mr. Davidson further contends that unstable neighbors threaten Dubai’s success, but here he may have matters reversed. When Egypt and Iran stifle their entrepreneurs, many of them find a wide berth in Dubai. When Saudi Arabia imposes cultural restrictions on its population, Dubai offers a place to drink and let loose. When India and Pakistan have trouble creating jobs for their large populations, Dubai absorbs labor migrants. When Iraq or Lebanon descends into war, Dubai profits from rebuilding them.In short, until a vast arc of countries from East Africa to Southeast Asia changes substantially, Dubai will remain poised to benefit by providing a relatively open, secure, low-tax, business-friendly alternative.I've read Davidson's book and the reviewer is on to something here. Indeed, all these points about the advantages Dubai gets from its neighbors are made by Davidson. With respect to Iran, these advantages trace back many years, and Davidson traces this history well. And while the subtitle, "the vulnerability of success", sounds prescient Davidson did not see the vulnerabilities in the sense of the present problem a leveraged system in an environment of a systemic breakdown in willingness to lend.The NYT review sees a silver lining in the financial crisis:
It was also written before the credit crisis and global contraction, and he makes no mention of Dubai’s economic vulnerabilities. In fact, the world’s searing financial debacle could turn out to be salutary for an overleveraged Dubai, reining in local inflation as well as an insane real estate market.Whatever the short-term pain, the U.A.E. is awash in liquidity, and Dubai’s hefty investments in infrastructure appear likely to persist and to yield future dividends. Above all, accumulated expertise should enable Dubai to continue aggressive pursuit of global market share across its service industries. That growing prowess abroad, no less than pathologies at home, is a central story about Dubai that has been missed amid the glitz. Of course, in the quote at the beginning of this post Davidson could still be right in his recent comments quoted in Bloomberg that "If the property industry collapses in Dubai, it will be finished. Dubai's relative autonomy [i.e., from Abu Dhabi] will come to an abrupt end." For example, the rumor that Abu Dhabi wants an interest in Emirates Air "as the price of a multi-billion pound cash injection" to Dubai. The UAE stock markets have been closed for the holidays. Will an announcement come after the markets reopen?
http://emirateseconomist.blogspot.com
Tuesday, December 9, 2008
One Emirate, Two Emirates, Three Emirates, Four
I recently traveled to Abu Dhabi to assist an international architectural firm create a concept and a program for a boutique, luxury resort. I was particularly struck by the differences between Abu Dhabi and Dubai, to which I had traveled four or five years ago.Dubai, as we all know, is always in the (industry) news, for its grand scale of new hotel developments, including those on the Palm and the World and Bawadi, Burj Al Arab, etc. It is the Middle East’s version of the Las Vegas Strip: faux, over-the-top and always adding something new and more grandiose.In the United States, except for the rare few, when we hear of the United Arab Emirates, we think of the excesses of Dubai. It is little known that Dubai has relatively small oil reserves, that the Sheiks of the Makhtoum family have been beneficiaries of the oil wealth in the Emirates and have used that wealth to develop Dubai into the destination it has become. What we don’t know – generally – and don’t realize at all is that the most oil in the Emirates is produced in the largest emirate, Abu Dhabi, that the Al Nahyan dynasty has both overseen the growth of Abu Dhabi and was a principal mover in the creation of the UAE. Its Ruler, Sheik Khalifa bin Zayed al Nahyan, is the president of the UAE, and is known for far-sighted and progressive leadership.Abu Dhabi itself is a modern city; it has none of the excess of Dubai (well, maybe, one). It is well planned, the streets are clean, the citizens and residents (approximately two-thirds of the population in Abu Dhabi is comprised of expatriates) are industrious. Except for the new Emirates Palace, there is little over-the-top development (and, I suppose the ungodly rich are entitled to one playground!).Just as the states that make up the United States have different characteristics, so, too, the Emirates.In more ways than one, we – as individuals, as an industry and as a country – would be well-served to learn, understand and respect those differences. President-elect Obama, I (and the Emirates, from what I can tell in the newspapers there) hope you are reading.
Posted by Michael Shindler on November 20, 2008 Comments (3)
http://.hotelsmag.com/blog/630000663/post/500036850.html
Posted by Michael Shindler on November 20, 2008 Comments (3)
http://.hotelsmag.com/blog/630000663/post/500036850.html
Emirate's Superluxe Airbus A380 Makes Flying Fun Again. If You're Loaded
SAN FRANCISCO -- The world's biggest jetliner brings back the golden era of air travel, when flying was an event so grand men wore ties and women wore furs. That is, it will bring it back if you've got $14,000.
That kind of cash buys a first-class ticket for a New York-Dubai round trip on Emirates airline's new A380, a 489-seat behemoth where the 14 people rich enough to sit in first class enjoy hot showers, massaging chairs, 1,000 channels and seven-course meals served on china and linen. Oh -- there's also a bar with a waterfall.
If you're like the rest of us and have just $1,500, you get a seat sandwiched between nine other people, a 9-inch TV screen and space in an overhead bin. But the seat's comfy, there are 500 channels, and the cup holder's gyroscopic.
Dubai-based Emirates is adding 58 A380 super-jumbo jets to its fleet as fast as Airbus can build them. It picked up the first one last week and made the maiden voyage from Dubai to New York on Friday. Emirates is adding service from Dubai to San Francisco and Los Angeles by the end of the year, and even though it's using the more conventional Boeing 777-200 on those runs, it brought the A380 to San Francisco Monday to show people how the other half lives.
Huge doesn't begin to describe the A380. It's 238 feet long, it weighs 560 tons and it carries 82,000 gallons of fuel. The airline says the plane burns just 3.1 liters of fuel per passenger per 100 kilometers (a little more than three quarts of fuel per passenger every 60 miles), a figure it boasts is "better than most hybrid passenger cars."
Just how big is it? The KLM Boeing 747 next to it looked dinky, and the American Airlines Airbus A300 that taxied past looked like a Smart car alongside a Hummer. Despite its size, the A380 is said to be quite nimble, very fast and a dream to fly.
"It's like driving a Ferrari," says Abbas Shaban, chief pilot for Airbus and captain of the three flights the plane's made since Emirates picked it up last week. He's been flying commercial jets for 28 years and says the A380 "is much better than any plane I've flown. It's more responsive, more powerful and more stable."
It's also more ostentatiously over the top than anything in the sky. If Steve Wynn built airplanes instead of Vegas casinos, they'd look like the Emirates A380. First-class passengers sit in leather seats that fold flat at the push of a button. They watch first-run movies on 23-inch flatscreens. Their private suites -- seats are so plebeian -- are trimmed in polished wood and brass. There are two showers with faux marble floors, fluffy towels and the biggest assortment of shampoo this side of a Beverly Hills salon. (With just 50 gallons of water for 14 people, you're limited to five minutes.) Lighting that mimics sunrise and sunset is said to keep your internal clock in sync and minimize jet lag.
One of the 76 business class seats will set you back $9,000. They're almost as swanky as those up front, but you don't get the showers, the TVs are a little smaller and there's no waterfall -- but there is a well-stocked bar that'll seat 25 people and apparently was hopping on the flight from Dubai. Even the 399 seats in economy class -- which, at $1,500 a person round-trip, is a bit of a misnomer -- is nicer than anything you've flown recently. The cloth seats are wide and supportive, the entertainment system offers so many choices it's overwhelming. and your meal doesn't come in a box.
Emirates is flying the A380 only on its Dubai to JFK route, but it's got two more planes on the way for its Dubai to London and Sydney-Auckland runs. It has $18.8 billion worth of A380s in the pipeline and may bring them to other U.S. cities in the future. All those planes will add more than 25,000 seats to the airline's fleet, which makes you wonder who's going to fill them.
Emirates isn't worried. The airline's grown by 20 percent annually since it was founded in 1985 (and, according to Senior VP Nigel Page, done it without any government subsidies). With air travel expected to triple in the next two decades and landing rights at airports getting tougher to secure, airlines need to pack as many people into every flight as possible. Adel Al Redha, executive vice president of engineering and operations, said the demand is there. "The only thing holding us back is the planes," he says. "We can't get them fast enough."
That kind of cash buys a first-class ticket for a New York-Dubai round trip on Emirates airline's new A380, a 489-seat behemoth where the 14 people rich enough to sit in first class enjoy hot showers, massaging chairs, 1,000 channels and seven-course meals served on china and linen. Oh -- there's also a bar with a waterfall.
If you're like the rest of us and have just $1,500, you get a seat sandwiched between nine other people, a 9-inch TV screen and space in an overhead bin. But the seat's comfy, there are 500 channels, and the cup holder's gyroscopic.
Dubai-based Emirates is adding 58 A380 super-jumbo jets to its fleet as fast as Airbus can build them. It picked up the first one last week and made the maiden voyage from Dubai to New York on Friday. Emirates is adding service from Dubai to San Francisco and Los Angeles by the end of the year, and even though it's using the more conventional Boeing 777-200 on those runs, it brought the A380 to San Francisco Monday to show people how the other half lives.
Huge doesn't begin to describe the A380. It's 238 feet long, it weighs 560 tons and it carries 82,000 gallons of fuel. The airline says the plane burns just 3.1 liters of fuel per passenger per 100 kilometers (a little more than three quarts of fuel per passenger every 60 miles), a figure it boasts is "better than most hybrid passenger cars."
Just how big is it? The KLM Boeing 747 next to it looked dinky, and the American Airlines Airbus A300 that taxied past looked like a Smart car alongside a Hummer. Despite its size, the A380 is said to be quite nimble, very fast and a dream to fly.
"It's like driving a Ferrari," says Abbas Shaban, chief pilot for Airbus and captain of the three flights the plane's made since Emirates picked it up last week. He's been flying commercial jets for 28 years and says the A380 "is much better than any plane I've flown. It's more responsive, more powerful and more stable."
It's also more ostentatiously over the top than anything in the sky. If Steve Wynn built airplanes instead of Vegas casinos, they'd look like the Emirates A380. First-class passengers sit in leather seats that fold flat at the push of a button. They watch first-run movies on 23-inch flatscreens. Their private suites -- seats are so plebeian -- are trimmed in polished wood and brass. There are two showers with faux marble floors, fluffy towels and the biggest assortment of shampoo this side of a Beverly Hills salon. (With just 50 gallons of water for 14 people, you're limited to five minutes.) Lighting that mimics sunrise and sunset is said to keep your internal clock in sync and minimize jet lag.
One of the 76 business class seats will set you back $9,000. They're almost as swanky as those up front, but you don't get the showers, the TVs are a little smaller and there's no waterfall -- but there is a well-stocked bar that'll seat 25 people and apparently was hopping on the flight from Dubai. Even the 399 seats in economy class -- which, at $1,500 a person round-trip, is a bit of a misnomer -- is nicer than anything you've flown recently. The cloth seats are wide and supportive, the entertainment system offers so many choices it's overwhelming. and your meal doesn't come in a box.
Emirates is flying the A380 only on its Dubai to JFK route, but it's got two more planes on the way for its Dubai to London and Sydney-Auckland runs. It has $18.8 billion worth of A380s in the pipeline and may bring them to other U.S. cities in the future. All those planes will add more than 25,000 seats to the airline's fleet, which makes you wonder who's going to fill them.
Emirates isn't worried. The airline's grown by 20 percent annually since it was founded in 1985 (and, according to Senior VP Nigel Page, done it without any government subsidies). With air travel expected to triple in the next two decades and landing rights at airports getting tougher to secure, airlines need to pack as many people into every flight as possible. Adel Al Redha, executive vice president of engineering and operations, said the demand is there. "The only thing holding us back is the planes," he says. "We can't get them fast enough."
A ‘Climate Change Crime,’ Or… ?
American Airlines is the subject of a modest row across the Atlantic, where environmentalists are furious that the company proceeded with a flight from Chicago to London with only five passengers.
The issue arose when AA’s Flight 90 was delayed more than 12 hours on Feb. 8 at O’Hare. Given the enormity of capacity to London these days, most passengers had made other arrangements by the time the 777 was ready to depart for Heathrow. By then, five people remained, and American needed the plane in England to collect passengers who planned to fly to the states.
“It is a climate change crime,” Norman Baker, a member of Parliament and a transport spokesman for the Liberal Democrats, was quoted as telling London’s Daily Mail in today’s editions. “It shows the ludicrous nature of the aviation industry. For an airline to think it sensible to fly aeroplanes which are virtually empty and where the crew outnumber the passengers is madness.”
According to the newspaper’s math, the average car would need to travel 123,000 miles to match the carbon footprint of the American flight to London.
American spokeswoman Anneliese Morris said the decision to fly the mostly-empty plane was made after the company carefully deliberated the repercussions to other passengers. “We had to consider the knock-on impact cancelling this flight would have had on our schedule out of London on a weekend when all of the flights were extremely busy,” she said.
This is, fortunately, a very rare occurrence in the airline world and one can see fine points raised by both sides. Those five people who had tickets to London are just as valid as any of American’s other passengers – and yes, each was reportedly upgraded to business class, if you were curious. (Wonder how luxurious that flight was? Consider: Given the average crew size on a 777, each of the five had an average of two flight attendants assigned to him/her.) And why would the airline cancel the flight and assume the cost and burden of rebooking all those now-irritated U.S.-bound passengers when that was avoidable?
And yet… the fuel burn for the flight was not insignificant. One thinks American could have made alternative arrangements for its London passengers to reach their destinations. Moreover, it is the winter lull season, when loads typically drop across the industry. So maybe the activists are onto something. Perhaps this case is just further evidence that the environmental impacts of our travel have not reached a critical mass for most of us. Does the issue of one’s “carbon footprint” play absolutely any role at airline operations centers? Should it? Do we want or need airlines considering this issue when it comes to making a call about which flights to scrub and which to push? I’d be fascinated to hear from anyone who works in operations on this.
So what do you think: Did American do the right thing?
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=amr&submit.x=18&submit.y=16
The issue arose when AA’s Flight 90 was delayed more than 12 hours on Feb. 8 at O’Hare. Given the enormity of capacity to London these days, most passengers had made other arrangements by the time the 777 was ready to depart for Heathrow. By then, five people remained, and American needed the plane in England to collect passengers who planned to fly to the states.
“It is a climate change crime,” Norman Baker, a member of Parliament and a transport spokesman for the Liberal Democrats, was quoted as telling London’s Daily Mail in today’s editions. “It shows the ludicrous nature of the aviation industry. For an airline to think it sensible to fly aeroplanes which are virtually empty and where the crew outnumber the passengers is madness.”
According to the newspaper’s math, the average car would need to travel 123,000 miles to match the carbon footprint of the American flight to London.
American spokeswoman Anneliese Morris said the decision to fly the mostly-empty plane was made after the company carefully deliberated the repercussions to other passengers. “We had to consider the knock-on impact cancelling this flight would have had on our schedule out of London on a weekend when all of the flights were extremely busy,” she said.
This is, fortunately, a very rare occurrence in the airline world and one can see fine points raised by both sides. Those five people who had tickets to London are just as valid as any of American’s other passengers – and yes, each was reportedly upgraded to business class, if you were curious. (Wonder how luxurious that flight was? Consider: Given the average crew size on a 777, each of the five had an average of two flight attendants assigned to him/her.) And why would the airline cancel the flight and assume the cost and burden of rebooking all those now-irritated U.S.-bound passengers when that was avoidable?
And yet… the fuel burn for the flight was not insignificant. One thinks American could have made alternative arrangements for its London passengers to reach their destinations. Moreover, it is the winter lull season, when loads typically drop across the industry. So maybe the activists are onto something. Perhaps this case is just further evidence that the environmental impacts of our travel have not reached a critical mass for most of us. Does the issue of one’s “carbon footprint” play absolutely any role at airline operations centers? Should it? Do we want or need airlines considering this issue when it comes to making a call about which flights to scrub and which to push? I’d be fascinated to hear from anyone who works in operations on this.
So what do you think: Did American do the right thing?
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=amr&submit.x=18&submit.y=16
Free flights (no kidding)
You can fly for free one of two ways: By accruing enough frequent-flier miles, or simply by buying tickets at the right time. And that time is now. With oil at $108 a barrel, airlines are anxious to drum up traffic – so much so that they’ll give you a free ticket for future travel. Members of Virgin America’s frequent-flier program, EleVAte, who purchase two paid round-trip flights between March 5 and May 4 will earn a free round-trip ticket good for use through June 1. And the amazing thing is there isn’t much fine print on this deal. Simply refer to the “FLY2GET1” promotion. Virgin America serves San Francisco, Las Vegas, LA, New York, San Diego, Seattle and Washington D.C.
Uh Oh: Airlines' Premium Traffic Falls
As if oil just a whisper under $130 isn’t enough to make an airline executive cry, another stroke of bad news emerged that is potentially even more worrisome. Premium traffic, the folks who populate business and first class, dropped 3.9% in March – the biggest amount in five years, according to data released May 20 by the International Air Transport Association.In fact, if corporations and the well-heeled decide to spend less on flying, for whatever reason, this rapidly becomes the worst-case scenario for major international network carriers. Airlines the world over, and nowhere more than in the U.S., have been staking their path to sustainable income on the high-end segment. The decline follows a 5.1% gain in February, which was distorted by an extra Friday because of leap year. But even on an adjusted basis, the decline was 1-2% in March. “The airlines obviously make a lot of their money from the front of the cabin, so that’s a key part of many airlines’ business models, especially internationally,” IATA spokesman Steve Lott says.
Internationally, the fares are far more robust, the margins far cushier. For example, on May 19 Delta announced new service this fall from Atlanta to Kuwait – a route clearly geared toward business. It’s a continuation of a long trend by airlines toward high-growth business areas such as India, Russia, China, Dubai, Brazil, and Israel. The new city pairs the airlines are planning to fly literally follow the money: Houston to Dubai, via Moscow; Washington D.C. to Moscow; D.C. to Kuwait; New York to Amman; Seattle to Beijing.
“Given the importance of premium passengers for airline profitability the absolute decline in numbers is bad news, particularly since the price of jet fuel rose 170% over the year to March reaching $130 per barrel,” the group said. (That may qualify for an understatement of the year award.) Oil futures hit a new record high of $129.60 Tuesday on the New York Merc.
But, one may quickly interject, what about the credit crunch, the turmoil for the big banks, the threat of recession, an overall weak economic state for North America and Europe? That unease has certainly diminished the amount of corporate business-class flying between the continents, right? Not quite. “The pattern of passenger growth across the regions does not, at first sight, appear to support the idea that the U.S. economic downturn is the principle driver behind the sharp slowdown in the growth of passenger numbers,” the association said. North Atlantic travel remained strong: premium traffic in that region is up 4.6% year-to-date over 2007 and rose 0.7% in March compared to the same period last year. The region also still accounts for the lion’s share of total premium revenues, at 26.5%. Europe to the Far East is next, at 15.7%.
IATA notes a diverging tale on traffic flows. While the weak dollar has helped boost U.S. exports and the flow of business traffic from America abroad, the leisure market has seen the opposite trend. Tourists from Europe flock to the U.S. for bargain holidays and shopping, while Americans are likely to stay home because of their reduced purchasing power in the euro zone.
One key thread in the March decline seems to rest largely within Europe, where a slew of budget carriers on short-haul flights stripped off premium traffic. I mean, for a 90-minute flight from Frankfurt to London, how much would you pay for a posh seat, a cocktail and a canapé? The longer-haul is still where the money and people are, and that’s why March premium revenues did not fall as steeply as the traffic, which dropped 17.1% compared to March 2007. Year-to-date, premium traffic within Europe is down nearly 11%, trailing only Europe to the Southwest Pacific in terms of decline.
It will be worth watching the premium data for April, and airlines will look eagerly to a new financial report on the industry that IATA plans to release in early June. Right now, the airlines' wager is that economically expanding regions will continue to fuel premium travel. If that bet turns wrong, no amount of capacity chopping and fare cutting will save the industry from a bleak trip through drastic reorganizations.
UAL: Farewell 737s, Ted, and 1,600 Others
The long-awaited next shoe dropping at United Airlines just fell. The Chicago carrier is shedding 1,600 employees and grounding 100 planes by the end of next year, including its older fleet of 737s. The domestic capacity cuts total almost 15% by the end of 2008. The company also will kill its Ted unit, the all-coach, yellow-and-blue Airbus 320s that flew to leisure destinations, opting to install first-class cabins on those planes.
The 737s handle medium-stage routes, to smaller and medium-sized cities. This is the sort of smaller operation everyone predicted for an industry that has no real strategy for coping with crude oil above $120. “This environment demands that we and the industry act decisively and responsibly,” CEO Glenn Tilton said in a statement, five days after the company said it would forge ahead solo, unable to broker a merger deal with US Airways. This downsizing isn’t the first such announcement, and it definitely won’t be the last. Still, it’s not fun to watch.
The 737s handle medium-stage routes, to smaller and medium-sized cities. This is the sort of smaller operation everyone predicted for an industry that has no real strategy for coping with crude oil above $120. “This environment demands that we and the industry act decisively and responsibly,” CEO Glenn Tilton said in a statement, five days after the company said it would forge ahead solo, unable to broker a merger deal with US Airways. This downsizing isn’t the first such announcement, and it definitely won’t be the last. Still, it’s not fun to watch.
JetBlue's Expansions
Two bits of news from JetBlue this morning. First, the company’s LiveTV subsidiary has agreed to buy Verizon’s Airfone network for an undisclosed amount. This is the in-seat handset business Verizon shut down two years ago when it realized that everyone has a mobile, and no one was interested in the device. The deal gives JetBlue 100 air-to-ground communications towers, vital capacity that will expand its in-flight e-mail and wireless messaging options.
Secondly, JetBlue also said it will beef up its schedule to San Juan, Puerto Rico in the face of a rather steep reduction there by AMR’s American and American Eagle. That’s a page from the same playbook Southwest uses, akin to the low-fare king’s decision to add new nonstops from Denver in the face of a retreat by United. But JetBlue is not Southwest and Denver is not Puerto Rico. It is not clear that new flying to San Juan – seven daily flights from JFK, four from Orlando and two a day from Boston this winter – will translate to profits. (No matter how many blizzards may wrack the Northeast.)
http://businessweek.com/lifestyle/travelers_check/archives/2008/06/jetblues_expans.html
Secondly, JetBlue also said it will beef up its schedule to San Juan, Puerto Rico in the face of a rather steep reduction there by AMR’s American and American Eagle. That’s a page from the same playbook Southwest uses, akin to the low-fare king’s decision to add new nonstops from Denver in the face of a retreat by United. But JetBlue is not Southwest and Denver is not Puerto Rico. It is not clear that new flying to San Juan – seven daily flights from JFK, four from Orlando and two a day from Boston this winter – will translate to profits. (No matter how many blizzards may wrack the Northeast.)
http://businessweek.com/lifestyle/travelers_check/archives/2008/06/jetblues_expans.html
Feeling the Love from United
If you still harbor any quaint notions that major airlines consider all their customers VIPs, here’s a funny little factoid to help disabuse you. United, as many predicted, is following American and will impose a $15 fee to check a bag for travel on or after Aug. 18. OK, to fess up, I was wrong about predicting when this would happen, thinking the rest of the pack would wait to see how the experiment goes at American before jumping in. As blogger and columnist Joe Sharkey put it today on his blog, “All truly bad ideas, it seems to me, eventually prevail.”
So the United release hits PRNewswire at 10 a.m. EDT. Less than four hours later, the airline starts e-mailing its most frequent fliers to tell them not to worry. “It is our pleasure to inform you that you and any companions traveling with you on the same reservation can each still check two bags free of charge, up to 50 pounds (23 kg) per piece. As always, you can skip check-in lines at the airport by using EasyCheck-in Online, even when checking bags.”
The love continues: “Also, if you are traveling in United First or United Business, you are invited to be among the first to board your flight so you can find ample space for your carry-on bags, by using specially-designated Premium Boarding lanes marked with a red carpet. Or choose to board at your leisure, knowing that you’ll have front-of-the-line access at any time.”
So here’s a question: Are new fees to check a bag an inducement to get and keep one’s status in a mileage plan? Or do they just annoy even further?
http://businessweek.com/lifestyle/travelers_check/archives/2008/06/feeling_the_lov.html
So the United release hits PRNewswire at 10 a.m. EDT. Less than four hours later, the airline starts e-mailing its most frequent fliers to tell them not to worry. “It is our pleasure to inform you that you and any companions traveling with you on the same reservation can each still check two bags free of charge, up to 50 pounds (23 kg) per piece. As always, you can skip check-in lines at the airport by using EasyCheck-in Online, even when checking bags.”
The love continues: “Also, if you are traveling in United First or United Business, you are invited to be among the first to board your flight so you can find ample space for your carry-on bags, by using specially-designated Premium Boarding lanes marked with a red carpet. Or choose to board at your leisure, knowing that you’ll have front-of-the-line access at any time.”
So here’s a question: Are new fees to check a bag an inducement to get and keep one’s status in a mileage plan? Or do they just annoy even further?
http://businessweek.com/lifestyle/travelers_check/archives/2008/06/feeling_the_lov.html
Should BA-American Be Immune?
The long-awaited ABI (American-British Airways-Iberia) tango became official today when the trio said it will seek antitrust immunity for its trans-Atlantic flying. My colleague Kerry Capell has a thorough post today on the deal. The oneworld alliance’s dominance at Heathrow is the prime sticking point in the craw of some, namely Virgin boss Sir Richard Branson, who put out a new statement today calling the deal “a monster monopoly” which would decrease competition and raise fares.
Naturally, BA and American argue that the Open Skies treaty has exposed Heathrow to further competition and that their bid to coordinate fares and capacity will not harm the traveling public. Indeed, executives took the exact opposite tack in their statement. Said BA chief Willie Walsh: “This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better aligned schedules and frequencies.” Ah, the benevolence. Of course, Delta, Northwest and Air France KLM enjoy the same perks in Paris and Amsterdam, while Lufthansa (with United) essentially owns Germany via antitrust immunity. The five oneworld airlines involved with the effort have also launched a new site to help sell the deal and encourage travelers to write to U.S. transportation officials to lobby for approval.
Still and all, I prefer to think about this in a common-sense fashion, more along the lines of how the Wall Street Journal expressed it …
... in an Aug. 11 article about the proposal. “The approval, for what is known as antitrust immunity, allows airlines to cooperate internationally on pricing, scheduling and marketing in ways normally deemed collusive and illegal.” In other words, what is now illegal may be deemed legal, because aviation circumstances change and a greater good may be achieved.
Now, one can argue forcefully that such a change in the current trans-Atlantic situation is net good or net bad, depending on where you sit and your particular political and economic bents. The greater good is… higher fares to strengthen oneworld airlines’ poor financial health? Branson, who stands to bear a direct hit if the proposal is granted, says fiscal turmoil for AMR and British Airways should not be a factor. Or should we consider, and I mean seriously consider, the prospect of greater passenger choice on connections? That may now be a problem. I have no idea, not being a regular international jetsetter connecting through Heathrow. Better use for all those miles frequent travelers accrue? It’ll be interesting to watch this play out. Regulators are likely to demand some concessions, as they have in the past, and the alliance will strive to keep those to a minimum. But my hunch is that the third time will be much more charming for oneworld.
Naturally, BA and American argue that the Open Skies treaty has exposed Heathrow to further competition and that their bid to coordinate fares and capacity will not harm the traveling public. Indeed, executives took the exact opposite tack in their statement. Said BA chief Willie Walsh: “This strategic relationship strengthens competition by providing consumers with easier journeys to more destinations with better aligned schedules and frequencies.” Ah, the benevolence. Of course, Delta, Northwest and Air France KLM enjoy the same perks in Paris and Amsterdam, while Lufthansa (with United) essentially owns Germany via antitrust immunity. The five oneworld airlines involved with the effort have also launched a new site to help sell the deal and encourage travelers to write to U.S. transportation officials to lobby for approval.
Still and all, I prefer to think about this in a common-sense fashion, more along the lines of how the Wall Street Journal expressed it …
... in an Aug. 11 article about the proposal. “The approval, for what is known as antitrust immunity, allows airlines to cooperate internationally on pricing, scheduling and marketing in ways normally deemed collusive and illegal.” In other words, what is now illegal may be deemed legal, because aviation circumstances change and a greater good may be achieved.
Now, one can argue forcefully that such a change in the current trans-Atlantic situation is net good or net bad, depending on where you sit and your particular political and economic bents. The greater good is… higher fares to strengthen oneworld airlines’ poor financial health? Branson, who stands to bear a direct hit if the proposal is granted, says fiscal turmoil for AMR and British Airways should not be a factor. Or should we consider, and I mean seriously consider, the prospect of greater passenger choice on connections? That may now be a problem. I have no idea, not being a regular international jetsetter connecting through Heathrow. Better use for all those miles frequent travelers accrue? It’ll be interesting to watch this play out. Regulators are likely to demand some concessions, as they have in the past, and the alliance will strive to keep those to a minimum. But my hunch is that the third time will be much more charming for oneworld.
http://businessweek.com/lifestyle/travelers_check/archives/2008/08/should_ba-ameri.html
Airlines to Public: Time to Get Real
A shocking bit of news today as United Airlines (UAUA) reported $252 million in red ink, not counting its unrealized losses on underwater fuel hedges: The fees are here to stay, at least on United, just as the golden era of loosy-goosy bargain fares is dead. Here’s John P. Tague, United’s COO, responding to an analyst query on any customer resistance over baggage fees and other revenue-boosting changes:
They are ubiquitous amongst the legacy carriers now. Certainly customers are frustrated in becoming accommodated to this but at the end of the day, we’ve got to run this business to make a real margin, and the revenue model has been broken around contributing an appropriate amount to the margin. And if that means the business has to be smaller in order to drive to that outcome, so be it. So I mean, these are just things that are going to be necessary if we’re going to be a real industry.
A real industry. We could argue for eons whether U.S. airlines can, should or ever will be a real industry — if anyone could even agree on what that means. But at least I think we can lay to rest the illusion that the revenue hunt has any fundamental connection to Jet A prices.
http://businessweek.com/lifestyle/travelers_check/archives/2008/10/airlines_to_pub.html
They are ubiquitous amongst the legacy carriers now. Certainly customers are frustrated in becoming accommodated to this but at the end of the day, we’ve got to run this business to make a real margin, and the revenue model has been broken around contributing an appropriate amount to the margin. And if that means the business has to be smaller in order to drive to that outcome, so be it. So I mean, these are just things that are going to be necessary if we’re going to be a real industry.
A real industry. We could argue for eons whether U.S. airlines can, should or ever will be a real industry — if anyone could even agree on what that means. But at least I think we can lay to rest the illusion that the revenue hunt has any fundamental connection to Jet A prices.
http://businessweek.com/lifestyle/travelers_check/archives/2008/10/airlines_to_pub.html
Delta Adopts First-Bag Fee
The charge for checking a bag has made it to all six legacy carriers. Delta Air Lines (DAL) announced today that effective Dec. 5 it will assess a $15 fee to “align” itself with Northwest Airlines, which it acquired last week. The actual wording of the release is an exercise in public-relations contortion, worth a glance: “Delta Aligns Policies and Fees to Offer Consistency for Customers Traveling on Delta- and Northwest-Operated Flights.”
Interestingly, Delta says its cabins have been filling up with suitcases and that it concluded it had not reaped any benefit from being the sole holdout on charging to check. “The increase in bags being carried on board Delta aircraft this year tells us that customers are not differentiating Delta as the only major airline not charging for a first checked bag,” Steve Gorman, Delta’s chief operating officer, said in the release. “As we align customer policies and fees to simplify the travel experience for our customers throughout the merger, Delta is adopting proven practices from both Delta and Northwest that have been broadly accepted in the marketplace.”
However, it’s not all gloomy news. Delta is also cutting the $25-$100 fuel surcharge on tickets from SkyMiles and WorldPerks mileage redemption, bowing to the reality of falling oil prices and the quirk that a “free” ticket from earned miles was no longer free. The fee for calling a reservations agent falls from $25 to $20, and Delta is dropping its $3 fee for curbside check-in. Northwest did not have that fee. The airline is also adopting Northwest’s “choice coach seat” structure, allowing purchase of less-onerous seats such as exit rows and bulkheads for $5-$25
Interestingly, Delta says its cabins have been filling up with suitcases and that it concluded it had not reaped any benefit from being the sole holdout on charging to check. “The increase in bags being carried on board Delta aircraft this year tells us that customers are not differentiating Delta as the only major airline not charging for a first checked bag,” Steve Gorman, Delta’s chief operating officer, said in the release. “As we align customer policies and fees to simplify the travel experience for our customers throughout the merger, Delta is adopting proven practices from both Delta and Northwest that have been broadly accepted in the marketplace.”
However, it’s not all gloomy news. Delta is also cutting the $25-$100 fuel surcharge on tickets from SkyMiles and WorldPerks mileage redemption, bowing to the reality of falling oil prices and the quirk that a “free” ticket from earned miles was no longer free. The fee for calling a reservations agent falls from $25 to $20, and Delta is dropping its $3 fee for curbside check-in. Northwest did not have that fee. The airline is also adopting Northwest’s “choice coach seat” structure, allowing purchase of less-onerous seats such as exit rows and bulkheads for $5-$25
http://.businessweek.com/lifestyle/travelers_check/archives/2008/11/delta_adopts_fi.html
Southwest Takes a Bite at the Big Apple
We’re now seeing one spot where Southwest (LUV) aims to mine revenue when its vaunted fuel hedges expire in 2010: New York City. The airline has a relatively thorough account of its bid to serve New York’s LaGuardia Airport beginning next year, here on its corporate blog.
The first questions are where it may fly with the seven daily round trips being acquired from bankrupt ATA, and how would this work for Southwest’s model given the congestion of the New York air travel market, the world’s most lucrative but also the most delay-ridden. However, despite its bad press, LaGuardia is not the operational nightmare so many like to bemoan — when the weather cooperates. Its slots system generally works. If the place were constant, utter chaos Southwest would never be interested. The damage to its brand wouldn’t be worth it, regardless of the revenue at stake.
As for routes, it seems a safe bet one would see a flight or two to Southwest’s hub at Chicago Midway, given the strategic importance of business travel and the fact that only Delta (DAL) currently flies there from LaGuardia. A Florida city or two also seems logical. However, based on Southwest’s decision to serve only one route (Chicago) from its newest destination of Minneapolis, LaGuardia could be a one-destination town at the beginning, as they work out the kinks. But all this is pure speculation. The bankruptcy court hasn’t granted approval, and the airline won’t say yet where it would fly. Southwest CEO Gary Kelly will be in Manhattan next month for a speech at the Wings Club, so expect he’ll be pressed for more detail then.
The first questions are where it may fly with the seven daily round trips being acquired from bankrupt ATA, and how would this work for Southwest’s model given the congestion of the New York air travel market, the world’s most lucrative but also the most delay-ridden. However, despite its bad press, LaGuardia is not the operational nightmare so many like to bemoan — when the weather cooperates. Its slots system generally works. If the place were constant, utter chaos Southwest would never be interested. The damage to its brand wouldn’t be worth it, regardless of the revenue at stake.
As for routes, it seems a safe bet one would see a flight or two to Southwest’s hub at Chicago Midway, given the strategic importance of business travel and the fact that only Delta (DAL) currently flies there from LaGuardia. A Florida city or two also seems logical. However, based on Southwest’s decision to serve only one route (Chicago) from its newest destination of Minneapolis, LaGuardia could be a one-destination town at the beginning, as they work out the kinks. But all this is pure speculation. The bankruptcy court hasn’t granted approval, and the airline won’t say yet where it would fly. Southwest CEO Gary Kelly will be in Manhattan next month for a speech at the Wings Club, so expect he’ll be pressed for more detail then.
How to Make Money (Even When Business Stinks)
More than a dozen airlines trooped to New York this week for a Credit Suisse aviation conference, where they outlined current business conditions and their plans for 2009. The big news? Domestic capacity cuts and dramatically lower fuel costs may have helped unearth the Holy Grail for this messy industry: How to operate in a counter-cyclical fashion to the economy. While next year looks extraordinarily weak in terms of global economic conditions, most carriers plan to cull seats further — and are likely to turn a profit. Has that ever happened for them during a recession?
“Net net, domestic capacity cuts of roughly 8-10% suggest airlines are estimating the supply-demand dynamic approximately right,” CS airline analyst Daniel McKenzie wrote Wednesday in a note to clients. “The industry does need to cut 5-10% more capacity on our outlook, but the collapse in fuel prices remains a good earnings shock absorber.” But wait – there’s more.
This dynamic is playing out at the same time airline consolidation seems to be winning friends and defusing enemies. Northwest is history, now part of Delta (DAL), and British Airways and Qantas are talking about a merger of some sort. On Dec. 3, Lufthansa announced that its board had agreed to acquire a controlling 41.6% stake in ailing Austrian Airlines, barely two months after buying an 80% stake in UK airline bmi. Those deals came after Lufthansa acquired SWISS last year, and bought 19% of JetBlue (JBLU) – a stake practically no one thinks will be its last in the New York budget carrier. And the list continues: Ryanair (RYAAY) remains on the prowl for Aer Lingus and Iberia would like to dispose of itself in a sale to British Airways. The basket case that is Alitalia will soon be history, as an investor group takes over and either Air France or Lufthansa likely to become an international alliance partner of one sort or another.
In the U.S., United (UAUA) and US Airways (LCC) both look like large players ripe for a takeover – or sale of a sizable stake – in 2009 or 2010, if hard times squeeze them further. So, the point being, consolidation in the airline industry is alive and well. An Obama administration, friendly to organized labor or not, is simply not going to jump in and obstruct many airline deals for the sake of ideology. That era is over.
Over time, consolidation points to higher fares and a focus by huge network airlines on capacity discipline to a degree we’ve never seen before. They’ve got religion when it comes to the business side. So when a deep recession, or even depression, roils these new business models, it’ll be intriguing to assess how the carriers’ newly cost-shorn, consolidated, ancillary-revenue-fed balance sheets measure up against that pressure.
http:///investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=BAY.L
“Net net, domestic capacity cuts of roughly 8-10% suggest airlines are estimating the supply-demand dynamic approximately right,” CS airline analyst Daniel McKenzie wrote Wednesday in a note to clients. “The industry does need to cut 5-10% more capacity on our outlook, but the collapse in fuel prices remains a good earnings shock absorber.” But wait – there’s more.
This dynamic is playing out at the same time airline consolidation seems to be winning friends and defusing enemies. Northwest is history, now part of Delta (DAL), and British Airways and Qantas are talking about a merger of some sort. On Dec. 3, Lufthansa announced that its board had agreed to acquire a controlling 41.6% stake in ailing Austrian Airlines, barely two months after buying an 80% stake in UK airline bmi. Those deals came after Lufthansa acquired SWISS last year, and bought 19% of JetBlue (JBLU) – a stake practically no one thinks will be its last in the New York budget carrier. And the list continues: Ryanair (RYAAY) remains on the prowl for Aer Lingus and Iberia would like to dispose of itself in a sale to British Airways. The basket case that is Alitalia will soon be history, as an investor group takes over and either Air France or Lufthansa likely to become an international alliance partner of one sort or another.
In the U.S., United (UAUA) and US Airways (LCC) both look like large players ripe for a takeover – or sale of a sizable stake – in 2009 or 2010, if hard times squeeze them further. So, the point being, consolidation in the airline industry is alive and well. An Obama administration, friendly to organized labor or not, is simply not going to jump in and obstruct many airline deals for the sake of ideology. That era is over.
Over time, consolidation points to higher fares and a focus by huge network airlines on capacity discipline to a degree we’ve never seen before. They’ve got religion when it comes to the business side. So when a deep recession, or even depression, roils these new business models, it’ll be intriguing to assess how the carriers’ newly cost-shorn, consolidated, ancillary-revenue-fed balance sheets measure up against that pressure.
http:///investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=BAY.L
Airlines and Crisis
It’s become nearly a cliché in just a few short weeks: “You never want a serious crisis to go to waste.” Thus spoke Rahm Emanuel, President-elect Obama’s chief-of-staff, in an interview last month. A crisis, Emanuel explained, represents “an opportunity to do things you think you could not do before.” And it’s true, a crisis galvanizes focused debate and action like few other events can do. Sir Richard Branson had a slightly different spin on the sentiment Tuesday, where he hinted that his Virgin Group and Lufthansa (LHAG) may seek closer ties as a counterbalance to recent moves by British Airways (BAY) to bolster its market position.
“I would urge governments to beware of companies who use what is going to be a temporary financial crisis to try to bring about mergers that would be against the public interest,” Branson said at a conference in Paris, according to the Associated Press. Now, of course, Branson did not become a billionaire by being a zealous guardian of the commonweal, and his comments on BA are, naturally, enormously conflicted by self-interest.
But Branson did build a business empire anchored by a firm customer orientation, with a view to the long-term, and the public responded. I think his caution is worth heeding, given the steady stream of weak revenue outlooks besetting the industry, including the dour prediction Dec. 9 by the International Air Transport Association of a $2.5 billion global loss next year. In the first three quarters of 2008, airlines lost $8 billion, the group said. “Deep recession and the most challenging revenue environment for fifty years will lead to larger losses during 2009 in all regions except the U.S.,” according to the report. The very same day, the U.S. ATA scrubbed a major two-day conference planned for early March, citing “the extremely fragile state of the U.S. economy and the uncertainty facing the aviation community with fuel price volatility and softening demand.” (Registration fees were as high as $1,200, and that was just for ATA members.)
So it’s quite possible that the current recession could be nasty, brutish and long. Let’s just hope that fundamental structural changes aren’t permitted in haste, under the pressure of crisis, as airline executives, politicians, and unions strive to accomplish certain things they thought they could not do.
“I would urge governments to beware of companies who use what is going to be a temporary financial crisis to try to bring about mergers that would be against the public interest,” Branson said at a conference in Paris, according to the Associated Press. Now, of course, Branson did not become a billionaire by being a zealous guardian of the commonweal, and his comments on BA are, naturally, enormously conflicted by self-interest.
But Branson did build a business empire anchored by a firm customer orientation, with a view to the long-term, and the public responded. I think his caution is worth heeding, given the steady stream of weak revenue outlooks besetting the industry, including the dour prediction Dec. 9 by the International Air Transport Association of a $2.5 billion global loss next year. In the first three quarters of 2008, airlines lost $8 billion, the group said. “Deep recession and the most challenging revenue environment for fifty years will lead to larger losses during 2009 in all regions except the U.S.,” according to the report. The very same day, the U.S. ATA scrubbed a major two-day conference planned for early March, citing “the extremely fragile state of the U.S. economy and the uncertainty facing the aviation community with fuel price volatility and softening demand.” (Registration fees were as high as $1,200, and that was just for ATA members.)
So it’s quite possible that the current recession could be nasty, brutish and long. Let’s just hope that fundamental structural changes aren’t permitted in haste, under the pressure of crisis, as airline executives, politicians, and unions strive to accomplish certain things they thought they could not do.
Saturday, December 6, 2008
Airbus A320 Crashes in the Mediterranean Sea
An Airbus A320 has crashed in the Mediterranean Sea on 27NOV2008, just 2.5 km offshore Canet-en-Roussillon in Perpignan, southern France. Reports say this was a test flight, with three people found dead and four missing (but feared dead), which would mean none of the 7 people onboard would have survived the crash…
The aircraft plunged into waters just off the French coast after taking off in late afternoon with a crew of seven from Perpignan, France, where the plane was being overhauled. The accident occured at around 5pm local time, as the plane was preparing to land after the two-hour test flight. The plane belonged to Air New Zealand and had been leased to the German carrier XL Airways for the last two years. It was to have been returned in the coming days to Air New Zealand, thus it has been repainted to Air New Zealand colours when the accident happened.
The Airbus A320 in XL Airways colors and registration (c by Roger Andreasson at airliners.net)
Air New Zealand chief executive Rob Fyfe told a news conference in Auckland that two of the crew were German pilots from XL Airways. (Some reports say they were actually piloting the plane on this flight, but this is not yet confirmed.) The others were a pilot and three engineers employed by Air New Zealand and an inspector from New Zealand’s Civil Aviation Authority, he said.
Three bodies were recovered from the water, and though French Navy boats, planes and a helicopter were continuing rescue search efforts, a spokesman for the French Coast Guard said that it was very unlikely that anyone had survived the crash.
The aircraft plunged into waters just off the French coast after taking off in late afternoon with a crew of seven from Perpignan, France, where the plane was being overhauled. The accident occured at around 5pm local time, as the plane was preparing to land after the two-hour test flight. The plane belonged to Air New Zealand and had been leased to the German carrier XL Airways for the last two years. It was to have been returned in the coming days to Air New Zealand, thus it has been repainted to Air New Zealand colours when the accident happened.
The Airbus A320 in XL Airways colors and registration (c by Roger Andreasson at airliners.net)
Air New Zealand chief executive Rob Fyfe told a news conference in Auckland that two of the crew were German pilots from XL Airways. (Some reports say they were actually piloting the plane on this flight, but this is not yet confirmed.) The others were a pilot and three engineers employed by Air New Zealand and an inspector from New Zealand’s Civil Aviation Authority, he said.
Three bodies were recovered from the water, and though French Navy boats, planes and a helicopter were continuing rescue search efforts, a spokesman for the French Coast Guard said that it was very unlikely that anyone had survived the crash.
What Do DVD Rentals and Airport Security Have In Common?
Both are provided by companies offering cash prizes in exchange for new business ideas. Just as Netflix announced plans to pay a $1 million prize to anyone who comes up with an algorithm for movie recommendations that is 10 percent more accurate than its own, airport security company Clear is now offering $500,000 to whoever comes up with the best new technology to speed up the security checkpoint process. The company, founded in 2005, is a membership service that promises subscribers the ability to fast-track through security in 13 major U.S. airports.
Clear founder and C.E.O. Steve Brill (who also founded American Lawyer magazine and CourtTV) told Freakonomics that the winner will be “the first party to come up with technology that we decide works, and the [Transportation Security Administration] approves, that shows speed improvement of at least 15 percent at the [airport security] lanes.” Once a winner is chosen, Verified Identity Pass, Clear’s parent company, plans to buy the technology for use as soon as it receives TSA approval.
The idea, said Brill, is to allow anyone with a good idea to bring it to fruition: “Going through airport security is one of the most frustrating experiences we all share, so we figured there must be lots of people out there with good ideas, who may be hesitant to try to sell their product to the government.” While the company has promoted the contest mostly to tech companies, Brill stressed that, “[the winner] could come from anywhere.”
Companies have been working for years to develop technology that will streamline the airport security process. GE, in conjunction with Clear, has been developing a platform that scans passengers’ shoes for explosives and metals while they’re standing on it, while X-ray makers are developing improved picture machines that would presumably enable X-ray readers to see laptops clearly while they’re still in their cases. But so far, nothing has emerged as the winner for increasing safety and efficiency, while waits and delays at airports just keep getting worse. Given the current state of affairs, it can’t hurt to solicit innovative ideas from the general public — at the very least, it could give frustrated passengers a way to pass the time while they wait.
If you’ve got the winning idea, you can submit it here
http://freakonomics.blogs.nytimes.com/tag/airlines/
Clear founder and C.E.O. Steve Brill (who also founded American Lawyer magazine and CourtTV) told Freakonomics that the winner will be “the first party to come up with technology that we decide works, and the [Transportation Security Administration] approves, that shows speed improvement of at least 15 percent at the [airport security] lanes.” Once a winner is chosen, Verified Identity Pass, Clear’s parent company, plans to buy the technology for use as soon as it receives TSA approval.
The idea, said Brill, is to allow anyone with a good idea to bring it to fruition: “Going through airport security is one of the most frustrating experiences we all share, so we figured there must be lots of people out there with good ideas, who may be hesitant to try to sell their product to the government.” While the company has promoted the contest mostly to tech companies, Brill stressed that, “[the winner] could come from anywhere.”
Companies have been working for years to develop technology that will streamline the airport security process. GE, in conjunction with Clear, has been developing a platform that scans passengers’ shoes for explosives and metals while they’re standing on it, while X-ray makers are developing improved picture machines that would presumably enable X-ray readers to see laptops clearly while they’re still in their cases. But so far, nothing has emerged as the winner for increasing safety and efficiency, while waits and delays at airports just keep getting worse. Given the current state of affairs, it can’t hurt to solicit innovative ideas from the general public — at the very least, it could give frustrated passengers a way to pass the time while they wait.
If you’ve got the winning idea, you can submit it here
http://freakonomics.blogs.nytimes.com/tag/airlines/
Here’s a picture I snapped out the window at Newark (Liberty International) Airport not long ago. It’s a Continental Boeing 777 whose nose, as you can see, features the name of former Continental chairman and C.E.O. Gordon Bethune. I wondered: Do all Continental planes from Bethune’s era carry his name?
No. According to a Continental spokesperson, this is the one and only Gordon M. Bethune, christened when he retired in late 2004. Read more…
Should Thinner People Fly Cheaper?
A story on Yahoo news mentions that the Philadelphia newspapers are running advertisements for a fake airline, Derrie-Air (get it?). The airline advertises that it is carbon-neutral, and that it charges per passenger pound — $1.40 from Philadelphia to Chicago, $2.25 from Philadelphia to Los Angeles.
Screen shot from flyderrie-air.com.
While quite mythical, this pricing structure is not unreasonable: the heavier people cost more to ship; and at a time when fuel prices are so high, this seems especially important and a good way of letting price reflect marginal cost.
Also, heavier people spill over onto their neighbors’ seats, generating negative externalities for the other passengers. So I hope a few real-world airlines take notes and think about charging heavier passengers extra.
Shoulder Straps on Airplanes
On a recent United Airlines flight I was surprised to see that their new planes are equipped not just with lap belts, but shoulder restraints as well.
This just cannot make any sense.
First, planes virtually never crash. Second, when they do crash, it is unlikely that a shoulder restraint will be the deciding factor in whether you survive. Many crashes have an “all or nothing” flavor to them, with no chance at survival or almost everyone surviving.
Third, the evidence from car crashes suggests that lap belts are about 85 percent as effective as lap and shoulder belts — and a car crash is just the sort of impact where you might think a shoulder belt would be most useful because it keeps occupants from smashing into the windshield or steering wheel.
This just cannot make any sense.
First, planes virtually never crash. Second, when they do crash, it is unlikely that a shoulder restraint will be the deciding factor in whether you survive. Many crashes have an “all or nothing” flavor to them, with no chance at survival or almost everyone surviving.
Third, the evidence from car crashes suggests that lap belts are about 85 percent as effective as lap and shoulder belts — and a car crash is just the sort of impact where you might think a shoulder belt would be most useful because it keeps occupants from smashing into the windshield or steering wheel.
Are You Better for the Environment if You’re Tall or Short?
KLM Royal Dutch Airlines is increasing the space between rows of seats on its planes. I’m not surprised — the Dutch are the tallest people on earth these days, as I discovered when I had to crane my neck around the Brobdingnagians in front of me in an Amsterdam movie theater.
Like many Europeans, the Dutch are also very concerned about the environment. As the KLM example illustrates, though, the good nutrition that makes them (and other Northern Europeans) so tall imposes negative externalities on the environment: Fewer Dutchmen per plane flight means more fuel consumed per passenger, and more pollution. The higher weight that goes with extra height requires more calories to maintain, generating more pollution to produce the tall person’s food.
So maybe we Americans are doing our part for the environment by being relatively short. Now if we could also reduce our weight, so that we consume fewer calories (the average American adult is officially classified as overweight, and 30 percent of Americans are classified as obese), we could actually contribute to environmental protection in a way that the tall Europeans cannot!
http://freakonomics.blogs.nytimes.com/tag/airlines/
Like many Europeans, the Dutch are also very concerned about the environment. As the KLM example illustrates, though, the good nutrition that makes them (and other Northern Europeans) so tall imposes negative externalities on the environment: Fewer Dutchmen per plane flight means more fuel consumed per passenger, and more pollution. The higher weight that goes with extra height requires more calories to maintain, generating more pollution to produce the tall person’s food.
So maybe we Americans are doing our part for the environment by being relatively short. Now if we could also reduce our weight, so that we consume fewer calories (the average American adult is officially classified as overweight, and 30 percent of Americans are classified as obese), we could actually contribute to environmental protection in a way that the tall Europeans cannot!
http://freakonomics.blogs.nytimes.com/tag/airlines/
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