Friday, March 15, 2002

Travel Agents Hammered By Delta
A while back I wrote about travel agents who did not like cheaper internet pricing of airline tickets. Now Delta has decided to stop paying any ticket agent commissions:

In perhaps the biggest blow to travel agents since the airlines were deregulated 24 years ago, Delta Air Lines said Thursday that it had stopped paying commissions to agents booking its domestic flights--and other airlines are expected to quickly follow suit.

Delta, citing its $1-billion loss last year and the growth of Internet ticketing sites, scrapped commissions for tickets sold in the U.S. and Canada.

I'm glad to see this happening. If I can use technology or the telephone to make my own travel arrangements, I save money. If someone else needs help, they have to pay a fee to a travel agent. We both pay for the services we are using but I pay less as I'm using fewer services.

One economic reality that people don't like to face is that sometimes businesses become obsolete and fail. Is this was the early 1900's we might be reading about all the poor blacksmiths going out of business because people had cars instead of horses.
Arthur Andersen
Though I don't think I blogged about it, I remember thinking that Arthur Andersen was effectively dead when the Enron shredding came to light. Now that they have been indicted the world seems to agree. Here is the LA Times take:

Andersen's chances of survival narrowed dramatically Thursday, accounting experts said, after it was indicted by a federal grand jury in Houston on suspicion of obstruction of justice for shredding tons of Enron Corp. documents.

Andersen had tried to stave off the indictment in a letter to prosecutors Wednesday that called the criminal proceedings a potential death sentence because of the devastating effect on the firm's reputation.

Another LA Times story talks about the reactions from Anderson employees:

Andersen workers said that until Thursday, they had felt mounting irritation at the lack of information they were getting from the firm's top executives. The employees found out more from newspaper accounts than they did from the firm, said Nathan Matthews, 30, an auditor in the Woodland Hills office.

"I was livid," Matthews said. "I found out about the [potential] merger with Deloitte when I picked up the paper Monday."

Top Andersen executives helped turn that fury outward at an 11:30 a.m. conference call Thursday in which they vowed to fight the criminal proceedings.

"I'm tired of people taking shots at us," Matthews said. "Enron did not go bankrupt because we shredded some documents."

If that is the view of Andersen workers, then they need to go out of business. No, Enron did not go bankrupt because of the shredding, but your company was supposed to be an independent voice warning investors that things were not in order at Enron.

Thursday, March 14, 2002

One More Milage Note
I'm not surprised that the American companies lobbied like crazed weasels to stop the milage bill in the Senate. With Toyota selling the Prius hybrid at 52 mpg city and 45 mpg highway and Honda with the Insight at 61 mpg city and 68 mpg highway the US companies have trouble. Not because either the Prius or the Insight are great cars. The Prius is homely looking and the Insight is a two seater. But you can go to your dealer and buy them right now. Plus it is giving both Honda and Toyota real world data on the systems.

And it is going to get worse, because Honda has already decided to selling a hybrid Civic starting next month. The hybrid Civic will be more expensive than the regular gasoline version, but it says something about the technology that Honda is willing to put it in one of its bread and butter cars. Certainly Toyota can't be far behind.

The American companies are being responsive to their consumers of the moment. People want SUVs and big cars with horsepower. But I hope they have a plan for what to do if gas prices raise and people start to make mpg ratings one of their decision points. That happened in the 1970s with horrible consequences for the US Big Three.
More Government In The Car Marketplace
The California Energy Commission (an agency I've never heard of) is considering offering incentives to car dealers that sell high gas milage vehicles:

Now suppose a dealership could make as much money — or more money — selling a lower-priced car that provided good gas mileage. Then the salesperson might give his sales pitch a different spin.

A new proposal submitted to the California Energy Commission (CEC) would do just that — motivate dealers to sell cars that provide higher fuel efficiency. The plan would provide a cash incentive system to dealers that voluntarily sign up for the program and sell cars that have high mile-per-gallon ratings. Additionally, there might be some sort of state award for the dealership that improves the most each year.

According to the proposal, submitted by California-based Ecos Consulting to the California Energy Commission, dealers would be rewarded not just for selling hybrid and electric cars, but also for conventional cars with high mpg ratings.

This sounds like an iffy idea to me. As described in the article, the money is paid to the car dealerships on a yearly basis. I doubt that a yearly bonus from the state is going to have much impact on the day to day car salesman. Unless the owners of the dealerships include that in the commission structure of the salesman nothing is going to change. Instead you will probably see dealers collecting the money just because MPG ratings tend to improve incrementally anyway. Unless the money has a significant impact on the price the consumer pays for the vehicle the added incentive won't convince anyone to buy a car.

Wednesday, March 13, 2002

Cars And Milage
The Insurance Institute testing in the story below is all about damage to the vehicle. If you follow such things most vehicles seem to suffer tons of damage in just about any collision. I wonder how much of that is related to the CAFE milage standards? Lighter vehicles are more easily crushed.

In what I see as a good move, the Senate rejected an increase in the milage standards.

The Senate rejected tough new automobile fuel economy requirements Wednesday amid sharp disagreement over safety and whether the new standard would force "soccer moms" to abandon their SUVs and minivans.

Instead, senators approved by a 62-38 vote a more industry-friendly proposal that would direct the Transportation Department to develop new fuel economy rules, but sets no specific increase for the automakers to meet.

For once, there were Senators who got it:

"I don't want every American to have to drive this car," declared Minority Leader Trent Lott, R-Miss., pointing to picture of a two-seater, bubble-like subcompact. He said the fuel economy rules amounted government mandate of to the government mandating consumer choice.

One of the things that bugs me about Washington DC and the east coast in general is that many people there have no conception of the importance of the car and truck to the states in the west. If you need to travel out west often a car is your only option. People who have a concept of distance defined by the smaller spaces on the eastern seaboard lack an understanding of what it means to travel in the space beyond the Mississippi River. The car that might be an excellent choice in a crowded city is a poor choice for someone on a ranch in Montana. Or in the suburbs. And I'm glad to hear that Washington DC is not going to get any more involved in telling the automakers what kind of cars to build.
Crash Tests
One of the big stories on the radio this AM was the fact that the Kia Sedona minivan did lousy on crash tests:

The 2002 Kia Sedona performed worse than any minivan ever put through bumper crash tests conducted by the Insurance Institute for Highway Safety, the group's testing chief said Wednesday.

The Sedona, by the Korean automobile manufacturer Kia Motors, suffered average damage of dlrs 2,437 in four tests conducted at 5 miles per hour (8 kph), earning a "poor" rating.

The worst damage — dlrs 4,305 — occurred when the minivan was driven into a flat barrier. Both front air bags deployed, cracking the windshield and the top of the instrument panel.

This is ironic because Kia's current TV ad touts the Sedona's crash worthiness. Kia's ad shows a big concrete battering ram heading toward the minivan, then talks about how they got a great test rating for passenger safety (something the current study is not addressing). Now note Kia's complaint with the study:

Automakers complain the tests do not represent what happens in real accidents.

"They are running these cars into a 325,000-pound (146,000-kilogram) concrete barrier with about 3 inches (7.5 centimeters) of steel on the front of it," said Kia spokesman Geno Effler. "It's not reflective of the real world at all."

So when Kia uses a concrete and steel object to smash their van and likes the results, that is real world. When someone else does it and they don't like the results, that is fantasyland.

Having driven Kia vehicles at a test drive event, I would never buy one. They were the worst handling new cars I've ever driven. As my girlfriend said after she say Kia's commercial, "It had better do well in a crash because their brakes stink."

If you want you can read Kia's press release about the earlier crash test.
Naval Blind Spot
The US Navy has always been weak when it comes to anti-mine warfare. This is one area that we have let our allies take the lead. Something to keep in mind as we plan for options against Iraq. Remember than during the 1991 Gulf War two US warships were heavily damaged by mines. As Strategy Page points out:

The U.S. built 26 mine hunters ships in the 1980s and 1990s. In the late 1990s a marine amphibious ships was converted to a mine warfare support ship. But, as usually happens to American mine clearing forces, naval commanders have a hard time taking naval mines seriously. Part of this comes from the fact that through most of the Cold War, the USN concentrated on high seas operations, away from any potential naval mines. Despite having two ships heavily damaged by Iraqi naval mines in 1991, the navy has a hard time taking the threat seriously. For example, 15 of the 26 mine warfare ships are manned by reservists and training exercises are not frequent, or realistic, enough to keep everyone ready for action.
Movies, Music, and Piracy
Good LA Times article offering advice to the movie industry:

You can't simply protect the status quo. A whole generation of consumers has come of age who experience entertainment through computers, MP3 players, I Pods and other convenience-oriented devices. Soon they'll demand similar portability for their film collections. Modern-day technological innovation, from the Walkman to the cell phone, is all about convenience. If you put your entertainment in a lock box, you're swimming against the tide.

As RIAA chief Hilary Rosen put it: "You need a business strategy to go with a legal strategy. You can't wait to put movies on line until you have absolute security. There's no silver bullet. It's a circular problem that you'll never solve or get ahead of."

Tuesday, March 12, 2002

More DSL Troubles
Well Pacbell had fixed my problem, whatever it was. Unfortunately Pacbell didn't think they had. They managed to knock my out of action today in their attempts to repair something that was no longer broken. Spent a good part of the morning getting things straightened out. Back up but posting will be light as I try to catch up on work.

Monday, March 11, 2002

Reader Mail
Thomas Roedl whose Instapundit letter I commented on last month writes to point out that the Mako advanced trainer and light attack aircraft by EADS would be an interesting option for smaller airforces.

The concept looks good, escpecially for the combat version. Countries like New Zealand, Norway, and Belgium which do not have a pressing need for first line fighters could have a few squadrons of these to maintain some defense credibility (especially NZ, which recently retired all its fighters).

I think he is on to something. I'm not sure someone like Belgium who can't maintain its armed forces can afford to buy a high cost replacement for its F-16 force. Something like the Mako might be the way for them to maintain an airforce at a lower cost. Wonder if they will be willing to deploy something less than first rate.

He also comments on the Eurofighter question:

As for the Eurofighter, it is arguable as to whether the countries which will be purchasing them will need it to be as good as the best US products. They are hardly likely to be going up against the US, and it boggles the mind to think of the circumstances in which Germany or France would become involved in a major shooting war in European airspace. In any case, they can hardly be criticized for trying to develop a homegrown product. My only beef is that they cut too many corners and did not order enough of them.

I mostly agree with that. But the lack of capabilities compared to other fighters is hurting export sales of the Eurofighter and driving the price per unit up. On the other hand, that is not entirely the Eurofighter's fault. It is a slightly older design and was started before some of these other programs, namely the JSF. And it will be in operation before the JSF. If an airforce needs aircraft now, the choice probably won't be the JSF. If they can wait, the JSF looks like the better package.
Kmart's Death Row
Out of morbid curiousity I took a look at the list of Kmart stores to be closed. One of the caught my eye:

Store 3334, Big Kmart, 1600 East Foothill Blvd., La Verne, CA

That is the store my grandmother always shopped at. That is a busy stretch of road but it must have suffered from the competition.

I note that most are Big Kmart with a few Super K's tossed in. If you don't have any stores called just Kmart, then what does the Big mean?
Airport Security Summary
Good LA Times article that summarizes several incidents. Wanted to comment on this bit:

Frank Horrigan said random searches of 3-year-olds like his daughter Caroline divert resources from real security risks. "There was no acknowledgment that this was a silly exercise," Horrigan said of the Feb. 11 incident in Orlando. "My wife did ask the agent if he realized [Caroline] was 3, and he said he'd done several 3-year-olds that day."

Perhaps security had received one of those warning that a group of 3 year olds were planning a terrorist act?

In all seriousness, this is what is starting to annoy people:

Even experts who believe the government is doing as well as can be expected say officials have failed to spell out passengers' responsibilities and rights. Another gap is a lack of clear protocols for dealing with minor incidents. Without such guidelines, even a sarcastic comment from a frustrated traveler can escalate into a federal felony charge.

Before I took my one and only post 9/11 plane trip I tried to find out what the rules were on what I could carry on the plane. No two sources had the same information. That was in early January. It has been over two months since then and I bet I'd have the same results today.