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| 3rd and 4th Qtr 08 |
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AIR FAIR (to middling) |
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| Last issue we likened the experience of flying budget airlines to shopping at Kmart -- but without the customer satisfaction! Now, its low-cost Tiger's turn to spill the beans on itself. Analogous to fast food, airline chief executive Tony Davis is quoted as saying ““It’s like McDonald’s. It’s not the best way to eat but you never come out disappointed,” |
While we do not discount the importance of cheap fares, we despair at the continuing downgrading of service. Discount carriers masquerading as full service airlines is one of our pet peeves. We wonder when global networks like Star Alliance and One World will tweak that minimal standards are slipping badly. Aging, indifferent service greets the North American flying public on any blue ribbon carrier. Just witness the latest antics, where American Airlines charges for the first piece of checked in luggage, plus ever-lower baggage weight allowances. Likewise, over-weight tariffs bilk the flying public, and Air Canada now charges extra for efficient telephone assistance, even when a flight has been cancelled by weather. Thankfully, United Airlines has dropped plans to bill transatlantic passengers for meals. But no kudos, just the same. |
| Now there is further proof that cost cutting hurts the core airline business sector, as well. Long lines, flight cancellations and delays, hassles with security, lost luggage and other airport problems deters many. The Travel Industry Association (TIA) finds that US air travelers avoided 41 million trips in the last 12 months. "That’s 100,000 trips a day and the cost impact to the US economy is a whopping 26.5 billion dollars," claims Roger Dow, TIA President. |
Personally, Morrison and Robert are lucky to fly largely in the Australasia sphere, and laud Qantas and Singapore particularly, but also Cathay, Emirates (and most any Trucial carrier, from Qatar to Ethiad, plus Gulf). We hope their excellent service and high loads will set the world benchmark, rather than by thrift carriers. We also regularly fly Thai Airways, which is improving its livery.
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Our last newsletter highlighted safety concerns on discount carriers, also mentioning Indonesia's national airline Garuda as a casualty.
The EU ban of all Indonesian carriers is nearing an end, as Garuda recently passed an international safety audit. The ban, which was inflicted in June last year, was a response to several fatal aviation incidents, by three separate carriers. |
| 3rd and 4th Qtr 08 |
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Airports |
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| The ink was barely dry from reviewing Singapore Changi's Terminal 3 premier, when news of T1's revamp hit our desk. The $350 million upgrade finishes in 2011. T1 is synonymous with Changi's own debut in '81, and Singapore Airline's prestigious growth. We recently criticized lack of lounge shower facilities in T3, and now learn that management tender for T3 is an independent contractor, instead of the Singapore's government and national airline. Changi Airport handles almost 40 million passengers annually, ranking as the world's 21st busiest airport by passenger numbers. More importantly, it regularly tops charts for being the world's best -- and we heartily agree! |
| The alleged service improvement at Heathrow's T5 have been cast in doubt, as almost 1000 bags are still lost daily. The initial phases of the £4 billion terminal opening in March witnessed some 250 flights cancelled on the first day, and an estimated 28,000 lost bags in the ensuing weeks. |
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| Despite these claims, Willie Walsh, the chief executive of British Airways, asserts “Every day I get emails, letters or comments from customers telling me how much they enjoy using the terminal.” |
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| 3rd and 4th Qtr 08 |
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Fuel surcharges |
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| With fuel surcharges reaching ridiculous heights this year, and oil prices up and down like a yoyo, CEOs of 12 major U.S. airlines banded to outline a single strategy to tame the beast: regulations controlling market speculation and manipulation. Considering England just banned short selling by hedge funds, oil could be next! |
| To quote the manifesto: "Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. Over seventy years ago, (US) Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper." |
| 3rd and 4th Qtr 08 |
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Green Miles |
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| The cost of new environmental legislation could lead to a price hike of almost 20 per cent on a flight to Europe, a leading tourism academic has warned. But we are even more alarmed to read that ocean freighters annually contribute twice the greenhouse gasses than the entire world aviation industry! |
| In order to combat global warming, SAS airlines is reducing speed and emissions! By slowing jets from 860 kph to 780kph, the airline has saved $12 million. Moreover, SAS also taxies its planes to gates on one engine while other engines are turned off after landing and before take-off to save more fuel. |
| 3rd and 4th Qtr 08 |
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Luggage Loads |
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| Luggage Loads Checked-in baggage allowance is fast becoming the lost battle of consumer rights -- perversely as carry on restrictions mount. Although North America has long applied a two piece per customer rule, Europe and Asia kept to a 20 kg/44 lbs total limit, with hefty penalties per kilo thereafter. Up till now, a maximum weight of 32 kg/70 lbs applied per bag anywhere, ostensibly to ensure luggage carriers were not injured. This weigh is now lowered to 23 kg/50 lbs per bags -- both for international and US domestic. |
| Adding consumer injury, United Airlines and some other North American carriers, now (as of 8 May) domestically apply a surcharge for a 2nd checked bag -- and at the new/lesser maximum weight. (Insultingly, the press release explains this as "Out of its dedication to offer customers “choice, flexibility and low fares.”) All bags between 26 kg and 32 kg are slugged additionally. As these new imposts now apply to international carriers flying to and from North America, this results in a potential decrease of 12 kg/28 lbs. Considering that some airlines charge $30 to $40 per kilo excess, that's potentially a whopping $500 payable at check in! We also note British Airways no longer accepts surfboards and other sports gear at check in, requiring them to be shipped as freight -- again at hefty surcharges. Recently we were charged overweight after a mere 15 kg/35 lbs when flying a domestic Asian flight on a thrift carrier -- resulting in absolutely no saving compared to a full service airline, offering us the additional 5 kg free. Where will it all end? And with the average empty suitcase weighing about 5 to 7 kg, where are the consumer watchdogs guarding the public interest? |
| United Airlines, alone, expects to profit some $100 million annually from these new weight charges. |
| 1st and 2nd Qtr 08 |
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Fear of Flying How safe are discount carriers? |
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| In 2006, the growth of low-cost flights operating to and from Asia increased 666 percent from the year prior. Yet a spate of crashes by these carriers in '07 put safety in spotlight. And it is not just the cheapie companies at risk. In many markets across Asia, fares have dropped so low that analysts question viability. For instance, AirAsia X and Jetstar initially offered promotional flights from Malaysia to Australia for just RM10 (about US$3). We recently bought a similarly cheap 99Baht/$3 domestic flight from Bangkok but were flabbergasted to see the grand total at nearly B1000/$30 -- including a questionable B500/$17 VAT component. |
| Industry experts contend budget carriers offer cheap prices because they cut expenses to the bone, with minimal turn around time resulting in longer aircraft flying hours per day; frugal fuel consumption; and examples like last year's One Two Go crash in Phuket, where pilots attempted to land under considerably lower tolerances. All detrimental to customer safety. Even more worrying is when carriers pare back routine maintenance and safety inspections resulting, for example, in the present ban of all Indonesian carriers to Europe, including flagship Garuda. An audit of that country's airlines revealed that out of the 51 low cost carriers there, 11 did not fulfill civil aviation requirements and seven others were considered ‘least safe’. |
| But worse is yet to come, with an imploding pilot shortage. Chinese and Indian aviation sectors alone require some 4,000 new pilots each year, but out of the 1.2 million pilots in Asia today, only 14 percent have qualified for a Professional Airline Pilots License. |
| 1st and 2nd Qtr 08 |
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Airports |
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| There has been a run of new airport terminal openings this season. Heathrow V flubbed it -- badly; Singapore T3 won raves; Bangalore's new aerodrome delayed a month; and Hyderabad's off the map all together -- infamously causing a KLM pilot to skip the destination (http://www.traveldailyasia.com/IndustrySpecific/Detail.aspx?Section=4558); and Shanghai's Pudong just passed the mark in time for the Olympics. So which is the world's best today: Singapore's Changi, or Hong Kong IA? SKYTRAX ranks Hong Kong tops in passenger surveys, but it's a tight race. Hong Kong wins in the architecture stakes, but Singapore's hub continues to grow, with its third terminal opened in Jan. It's connected by convenient rail between the three terminals, and soon a Crowne Plaza Hotel. Inexplicably, the new T3 business class lounge lacks showers, and unlike T1 and T2, security check is per terminal, not per gate, potentially slowing things dramatically when rushing late to a plane. (That is one of our pet peeves about Bangkok's new Suvarnabhumi!) Singapore's old T1 is now slated for a May revamp. We also like Seoul's new Incheon airport, but Sydney's infrastructure is fast aging since the 2000 Olympics. (A+ for the SYD immigration clearance speed, however -- right up there with Singapore!) Worse yet, the Australian hub has absolutely no free pick up rank for international arrivals, and hefty A$1000 fines for collecting arrivals from the departure drop off. Parking is A$6 minimum for the first 15 minutes, and taxis are now slugged a surcharge as well. Where is the consumer watchdog? |
Luggage Loads Checked-in baggage allowance is fast becoming the lost battle of consumer rights -- perversely as carry on restrictions mount. Although North America has long applied a two piece per customer rule, Europe and Asia kept to a 20 kg/44 lbs total limit, with hefty penalties per kilo thereafter. Up till now, a maximum weight of 32 kg/70 lbs applied per bag anywhere, ostensibly to ensure luggage carriers were not injured. This weigh is now lowered to 23 kg/50 lbs per bags -- both for international and US domestic. |
| Adding consumer injury, United Airlines and some other North American carriers, now (as of 8 May) domestically apply a surcharge for a 2nd checked bag -- and at the new/lesser maximum weight. (Insultingly, the press release explains this as "Out of its dedication to offer customers “choice, flexibility and low fares.”) All bags between 26 kg and 32 kg are slugged additionally. As these new imposts now apply to international carriers flying to and from North America, this results in a potential decrease of 12 kg/28 lbs. Considering that some airlines charge $30 to $40 per kilo excess, that's potentially a whopping $500 payable at check in! We also note British Airways no longer accepts surfboards and other sports gear at check in, requiring them to be shipped as freight -- again at hefty surcharges. Recently we were charged overweight after a mere 15 kg/35 lbs when flying a domestic Asian flight on a thrift carrier -- resulting in absolutely no saving compared to a full service airline, offering us the additional 5 kg free. Where will it all end? And with the average empty suitcase weighing about 5 to 7 kg, where are the consumer watchdogs guarding the public interest? |
| United Airlines, alone, expects to profit some $100 million annually from these new weight charges. |
| 1st and 2nd Qtr 08 |
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Fuel Surcharges |
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| It's not just motorists who should be complaining about fuel prices these days. Let's hope the flying public soon gets in on the act, to challenge the airlines profiting from oil hikes. |
| Fuel surcharges are an absolutely disgrace, with airlines arbitrarily applying this fee irrespective of the actual cost. Indeed, it is subterfuge to avoid paying agents commission on the total fare. Australian wholesaler Flight Centre recently compared this surcharge flying Sydney-London. The worst offender was Japan Airlines, with a round trip A$803 slug, compared with cheapest Emirates who charged nothing, and second best Korean at $204. National carrier Qantas was mid range at $404. "The widespread practice of applying fuel surcharges and other component pricing elements creates a misleading environment for travelers and hides the true cost of air travel," says Flight Centre director Graham Turner, noting that nearly two-thirds of the collected surcharges go back to the airlines, not government taxes. "Fuel, like maintenance, taxes and labor costs, is obviously an integral component of air travel expense, so it is difficult to see why it should be treated as a separate surcharge.” |
Air Ticket prices are fraught -- especially with questionable extras, hidden taxes and hefty miscellaneous costs -- and the final price can be several times higher than the actual "flight" component. Recently, we heard of one airline automatically billing a credit card slug, even when payment was in cash!
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| We note some countries require full costing when advertising flight prices, but this is not the case in many. Laurels to Singapore Airlines for its world-wide policy of advertising air ticket prices on an all-inclusive basis, effective Jan '08. This means SQ lists the full price payable by the customer at the time of sale, inclusive of all taxes, surcharges and fees |
| “In some markets, this may mean we look more expensive than our competitors at first glance," explains Huang Cheng Eng, SQ Exec VP of marketing and regions. "But we think consumers understand that there are a variety of extras that form part of the ticket price now. And we think it’s time the industry moved to do this across the board." Customers will still see a breakdown of what they pay when they book online – the separation of fare, taxes, surcharges and fees. |
Surprisingly, there is no terminology in travel agency jargon to describe an all-inclusive airfare. Gross applies to fares including commission, while net means a small transaction fee may or may not be levied on top of that fare, and even more confusingly, "net net" is totally non-commissionable.
None of these fare terms include taxes and surcharges. |
A few countries still levy taxes at the airport when departing, which can only be paid by the passenger. Otherwise, most countries include departure taxes within the ticket itself. A few laggards include New Zealand, Indonesia, Philippines, Brunei and Turkey, plus Laos and Cambodia. We are chuffed to see Thailand abolishing its exit tax window with the opening of Suvarnabhumi last year. |
| 1st and 2nd Qtr 08 |
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