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November 4, 2009

What does Warren Buffett’s train investment say about airlines?

Filed under: Budget airlines, Flights v. Trains, Ryanair, The Travel Business — Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , — ja @ 8:09 am

So, Warren Buffett has invested some $26 billion buying American freight operator BNSF, with news commentators hailing this as an ‘all-in’ bet on the future of the US economy. But there’s more to it than that - it is, of course, a huge leap of faith into the future of railways, even if lumping coal isn’t exactly as glamarous as swish new high speed train sets. But Buffett has never been about style over substance, and trains in Europe are usually associated with massive subsidies.

In typical long-term Buffett style, he has talked about growth potential of rail in the USA over the next 3 decades, and even if this investment is in freight railways, there is no doubt that passenger rail networks will also see substantial development over this period.

Compare this to Buffett’s attitudes towards airlines, after he lost 75% of his $385 million investment in US Airways back in 1995. He pointed out that the he didn’t think the US airline business had ever made money - and this was in an industry without the kind of state carrier subsidies which were common elsewhere in the world. Buffett is quoted as saying, in respect of the Wright brothers’ first flight:

“If there had been a capitalist down there, the guy would have shot down Wilbur. One small step for mankind, and one huge step for capitalism.”

Has anything changed in the airline industry since 1995? Well, there’s been plenty of deregulation across the pond, and plenty of former big names are no longer with us. In Europe, we have Ryanair’s Michael O’Leary echoing many of Buffett’s sentiments, describing the current situation facing European airlines as a ‘bloodbath’, and the ‘perfect storm’. Of course, Ryanair are one of the few airlines to buck the trend, whereas this morning’s announcement from Lufthansa that they can’t find a suitable bidder for bmi, and that consequently bmibaby are shedding jobs hardly comes as a surprise.

Despite all this, Warren hasn’t been put off from investing in flying alltogether, having ditched his own private jet, aka ‘The Indefensible’ back in 1998, in favour of buying private jet hire company NetJets.

October 5, 2009

Airport Neighbours put Heathrow in the Dragon’s Den

Filed under: Environmental Issues, The Travel Business — Tags: , , — ja @ 6:16 am

Well, naturally you’d expect people living near Heathrow to be the first ones to declare ‘we’re out’ - except of course that Heathrow employs vast numbers of people in the immediate vicinity.

To give a true assessment of neighbours attitudes, we’d have to look at Heathrow in comparison with other London airports. Here, Heathrow doesn’t fare so well, as aircraft usually approach over Central London, giving a much wider noise footprint  than any other London airport, when measured in terms of people disturbed per passenger carried. Of course, the quietest option would be an airport out in the Thames Estuary (aka Boris island), but before that idea gets Londoners running for their cheque books, one has to consider the costs involved, estimated last week at £40bn, or £4,000 per head, assuming a division between 10,000,000 people living in and near London.

As the main argument in favour of a Thames Estuary Airport (TEA) is one of nuisance minimisation, rather than the facilitation of growth per se, should the costs of such  a proposal be loaded onto the 400,000 or so people who are most affected by Heathrow’s current noise? If so, the cost moves up to £100,000 per head, so I think this idea gets thrown overboard very quickly when using this argument!

Verdict: Turkeys will never vote for Christmas, and airport neighbours will never vote for expansion. The first group to say “We’re out”.

Heathrow’s third runway in the Dragon’s Den

Filed under: Airlines, Aviation Economics, British Airways, Business Travel, Environmental Issues, Regulation, Routes & News, The Travel Business, Virgin — Tags: , , , — ja @ 6:03 am

Last week, I attended a discussion organised by CIMTIG regarding the future of Heathrow Airport, and the aviation industry in general. Sadly, because of limited time, and the attempt to discuss the whole industry, rather than just Heathrow’s third runway, they didn’t explore as many of the issues as I would like them to have done - but it was still a very informative evening.

This week is the Conservative party conference, and we expect some further discussion from the government-in-waiting about why they believe there are better ways of handling demand than building another runway.

I’d like to put Heathrow’s third runway into a ‘virtual Dragon’s Den’ and see how it gets along. Prior to last week, I’d say I was probably against the plans, but the presentation from the BAA director responsible for the third runway gave a very strong case, so I’m firmily back on the fence. Let’s see if the proposal can survive in the den. So here we have it - billions sitting on the table, rather than the usual £250,000, and I think we need a majority of the ‘Dragons’ to ‘invest’, rather than just the usual one or two.

Introducing the dragons.

In other parlance, they might be known as ’stakeholders’ or ‘investment solutions partners’, but as I hate both of those terms, I’ll definetely stick with Dragons!

  1. Airport neighbours
  2. Passengers
  3. The Economy
  4. The Environment
  5. Airlines

The article will follow later in the week. What do you think? Would you ‘invest’?

October 2, 2009

Don’t fancy flying all the way to Australia? Why not go by bus?

Filed under: Aviation Economics, Budget flights, Environmental Issues, Flights v. Trains, General Travel (non-flights), Routes & News, The Travel Business — Tags: , , , — ja @ 6:45 pm

When I first read about Oz-bus.com, I thought that April fools day had come early. A long distance bus service running all the way from London to Sydney - someone had to be taking the xxxx!

But it turns out that the service is real - and that they will take you by bus as far as the prevailing conditions will allow. This should essentially mean an overland journey to Iran, a possible flight across the border into Pakistan and then again to get through Burma, and a final flight between Bali in Indonesia and Darwin in Australia - but the rest of the journey is exactly as it says on the tin, by comfortable long distance coach, apparently limited to 35 passengers per trip, so I would presume a little bit more roomy than your average scoot through London on a crowded #73 Boris-baiting bendy bus!

With a one-way journey starting at £4399, you are going to spend a lot more than a business class flight, but we think this journey is going to be more about what you see on the way than what you do when you get there, so for a three month trip, this works out at a very reasonable £50 per day, including breakfast and basic accommodation.

I’ll have to admit to being a bit ‘bussist’ myself. If I’m going to do long distance surface transport, I’d rather go by rail or sea - but given a choice between a professional bus driver and the company of a 35 strong group, or going by car, I’d still take the bus any day. Oz-bus also offer an eastbound journey to New York - via China and Alaska, and journeys through Africa, so it really does look like they are carrying on where Eurolines and Greyhound leave off. It will be interesting to see if this kind of travel ‘takes off’ (very lame pun I know) as people look for low-carbon alternatives to flying, and it will certainly be an indicator of the ability for different countries to stimulate cross-border co-operation. Iran, Pakistan and Burma might be problem areas for now, but how long before the Facebook generation catches up and reaches parts Heineken can’t reach! Twitter has certainly lead the way in Iran at least, so let’s see!

September 9, 2009

The BNP v Eco-fundamentalists - both are equally fascist

Filed under: Aviation Economics, Environmental Issues, Flights v. Trains, The Travel Business — Tags: , , , , , , , — ja @ 1:52 am

I have no problem with the vast-majority of environmental campaigners, but there are a dangerous few out there who seem to think it is perfectly reasonable to impose a total ban on all domestic flights within the UK. More worrying than this opinion being widespread is the way it is allowed out on news reports without any kind of counter-argument. Yet whenever there is a suggestion of the BNP getting more air time, there is uproar.

So what is so wrong with suggesting a ban on domestic flights, in the name of the environment?  As the United Kingdom is made up of many islands, a sizeable portion of travel within her borders is always going to be made by air. Even over-land, there are many journeys which are totally unrealistic to make by rail, especially for business travellers wanting to head to important meetings and make it back in a day. People who think that it is an easy switch from air to rail tend not to be the ones that take the trains all that often.

Where rail services have improved, such as between London and Manchester, the proportion of people travelling by train has increased, but there will always be some people who will want to choose to fly, or who want to take a plane because the next step of their journey is an onward flight to another destination. As the network currently stands, travelling by train from Manchester to Heathrow is a great deal less convenient than flying.

Of course, some communication can be done by electronic means, but if travel broadens the mind, then those people who seek to prevent people from travelling must have very narrow minds. Except that they masquerade as intelligent, educated people acting in our best interests. At least we know what we are getting with the BNP - mindless thugs who want to see certain sectors of the population sent away. But we should never forget that freedom to move within our borders is just as important as the freedom to cross borders. I have spent time in Saudi Arabia, where we had to get a ‘50k pass’ to travel internally, and it was a bureaucratic nightmare.

The environmental damage caused by flying is already healthily compensated for by existing APD (Air Passenger Duty), which is levied twice on internal flights - both on the outbound, and on the inbound journey. Even moderate increases in APD, when not counter-balanced by our European neighbours, result in a huge discouragement to travel within the UK, as flights abroad are proportionally taxed at a lower rate.

So by all means, let’s have a reasoned debate about choices in travel mode, and about their environmental impacts. But let’s not be fooled by people who think an outright ban on domestic flights, or even steep increases in their taxes, is remotely in the UK’s best interest.

September 6, 2009

Who would you like to see Flightmapping interview?

Filed under: General Travel (non-flights), Media issues, Routes & News, Site updates, The Travel Business, Uncategorized — Tags: , , , — ja @ 4:18 pm

Over the next few weeks, we plan to start interviewing some of the key movers and shakers who inspire us to travel. And we’re not just talking about tired old airline hacks like Ryanair’s motormouth Michael O’Leary, who we’ve already done to death, we want to talk to the musicians, architects and politicians who put destination cities on the map. And we might have a few words with the odd sportsperson or two, if they’ll talk to us.

I know who is top of my list - ok, he is a rich bigwig if that’s not too much of a giveaway, but we’d like to hear from our users who they’d like us to speak to. Anyone who has an influence on transport and the tourism industry is fair game, and they don’t just have to be UK based, our expense accounts like to give MP’s a good run for their money!

June 17, 2007

Aviation v. Environmentalists - has the PR battle been lost?

Filed under: Aviation Economics, Environmental Issues, Media issues, Regulation, The Travel Business — ja @ 7:16 am

The debate over aviation’s contribution to climate change and other environmental problems was well under way when I started Flightmapping.com almost 5 years ago. I’ve never been one to pretend that this isn’t a serious issue, but it does appear that most industry bigwigs are finally waking up to this.

Earlier this month, Leo Van Wijk, who is vice-chairman of Air France-KLM, the world’s biggest airline by turnover, lashed out at the annual IATA conference, claiming that the industry was doing too little, too late.

I have always felt that the cost of flights should cover the so-called “externalities” of pollution, and that this can still be done whilst making sure that aviation also make a reasonable contribution to the exchequer. Prior to December’s doubling in Air Passenger Duty, I would have argued that there was still room for these costs to be accounted for, and that they should be done in a manner which was proportional to the pollution caused, or at least to the cost of the ticket.

Then Gordon Brown decides to not only double APD overnight, but to apply the increase to tickets which had already been purchased. So where was the public outcry over this extremely vindictive move? There wasn’t any - all we got was the green lobby telling us that this increase wasn’t enough. Judging by the carbon offset costs produced by DEFRA, and endorsed by websites like Climate Care, which puts the climate cost of a domestic flight at less than £1, this increase was more than enough, even if the government itself has already admitted that APD is a very “blunt instrument”.

My biggest gripe with the £10 APD is that it is levied in both directions on domestic sectors. Try telling a family of four living in Belfast that they should take a weekend break in (already expensive) London (£80 goes to Gordon), when they could drive down to tax-free Dublin, and fly three times further to Malaga, paying a mere €5.78 each for the return journey.

Unlike many within the aviation industry, I don’t think that global warming is a hoax, but I do like to try and understand as many angles to the argument as possible. One thing I am sure of is that there are more effective ways of reducing CO2 output than going after aviation.

We might be an easy target, but how many politicians realise that they can only ever exercise limited control over an industry that is inherently international. Perhaps that’s why we’ve suffered here in Coventry, but that’s for another debate.

If even a fraction of the extra billions raised from APD was diverted towards investing in better facilities for walking and cycling - including safe routes to school, then we’d all be better off. For all the unproven talk about radiative forcing at higher altitudes, vehicle emmissions at ground level are indisputable, and one way to limit these is to make the walking environment as safe and attractive as possible.

That’s what the Dutch and Swiss do, and it is no wonder that their levels of obesity are a fraction of ours. Unfortunately, both countries tend to operate under a much gentler form of democracy, whereas we have to sex everything up to keep the tabloids busy.

Sex up self powered transport anyone? Somehow the walk-a-mile-a-day club is never going to be as salacious as bashing the mile high club.

June 10, 2007

Multimap - how to ruin a really good website

Filed under: The Travel Business, Travel websites — ja @ 7:37 pm

If there’s three things that I hate, then Multimap has just scored a hat-trick:

  1. Pointless website revisions, for no good reason.
  2. Pop-up surveys asking what I think.
  3. Pop-unders (but I might just forgive that if that is really needed for commercial survival).

Well, I’m not going to waste my time being another statistic. Far easier to say it here, where it might just get one or two people reading it. So, I used to love Multimap - no surprise here, it was simple, easy to use, and I loved the ability to zoom in to the 1:25,000 Ordnance Survey maps.

Move on to June 2007, and what have they done? If the new version wasn’t fiddly enough, they then want to test my patience with a survey asking me what I think. Let me tell you - Multimap to me was an excellent supplement to Ordnance Survey printed maps, and saved me having a vast library of sheets I wouldn’t use very often.

All I wanted to do on this particular visit was check a village name for a caption I wanted to put on a photo. Sure, that won’t earn Multimap any money, but nor would most of my visits. I would assume their revenue model works by having enough visitors that they can earn revenue from banner adverts. Capturing data about their users can help boost revenue, but all they needed to do was ask me to log in, and they could have add all the info about me that they wanted. Instead, I’ll be off to find another website. I could just go back to the old version, but I’m sufficiently annoyed by the (constant) popping up of surveys and other junk that I think I’ll do some hunting around first.

In the meantime, I simply want to acquire some ordnance, and explode it in their survey maker’s office.

I really hope we never make the same mistake here at Flightmapping!

JA, Coventry

Ex Multimap user.

 

May 22, 2007

Flightmapping’s MD to speak at Eye For Travel

Filed under: Site updates, The Travel Business — ja @ 11:14 am

I will be speaking at the Eye For Travel summit in London tomorrow. Below is my reply to some questions sent by the conference organisers. 

1.    What in your opinion have been the latest trends when it comes to affiliate marketers using search in an optimal manner?

I suppose the one basic trend is that affiliate marketers are often much better at SEO than merchants!  This might sound arrogant, but it is simply a question of resource allocation. Most travel companies are in business to put bums on seats - but actually providing these services, or even providing booking technology, is not the same thing as creating relevant content and playing the never ending Google game.

With the constant cat and mouse race between white hat and black hat (ethical and allegedly unethical) SEO techniques, it is always going to be far easier for affiliates to take risks, than it is for large-scale corporate merchants. Ultimately, there will always be some merchants out there who view affiliate marketing as an unnecessary cost, but I certainly think that affiliates are a very good value proposition, and an excellent return on investment, compared to outsourcing search engine marketing activities, which can often be extremely risky.

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