OP-ED: Dan Zukowski

The Customer-Friendly Skies of JetBlue

2006-11-03T15:22:35-08:00

Photo courtey JetBlue

Earlier this week, in an article about the latest trends in customer service ("Beyond Satisfaction," Oct. 30, 2006, page R4, subscription required) The Wall Street Journal quoted a JetBlue executive describing the company's policy as one of "anticipating the customer's needs." That's certainly true, and it's a lesson other airlines and transportation companies should learn.

Yesterday, I received an e-mail from JetBlue advising me that an upcoming flight I'm booked on -- three weeks from now -- has had a minor schedule change, with a new departure time 15 minutes earlier than when I booked it. To be sure I got the message, a customer service representative called last night as well.

I frequently travel JetBlue from Southern California to Washington, D.C. and New York's JFK Airport, and to Oakland. The planes are clean, on time, and the crews have a positive attitude. I happened to ride in a hotel shuttle with a JetBlue crew to OAK recently, and the camaraderie was evident. There's usually ample legroom, the seats are leather and every seat features a personal LCD monitor with access to 30-plus channels of DirecTV.

A recent business trip took me to four different cities in two weeks, logging over 6,100 air miles on Ted (United's low-cost subsidiary airline) and American Airlines. In contrast to JetBlue, American's planes -- mostly B-737's and MD-80's -- are old, noisy and cramped. The airline provides no snack at all in coach, except for an inedible box of cheese and crackers which they will sell to you for four dollars.

Ted was better: the Airbus A320's were new and comfortable, and the airline offers a $34 upgrade to seats with additional legroom toward the front of the cabin. It's well worth it.

For consistent, customer-focused air travel though, you can't beat JetBlue.

Housing Prices Must Adjust to Incomes

2006-08-26T18:01:00-07:00

The home real estate bubble of the past few years benefited those who got in early enough to enjoy the jump in prices, but the market has run so far ahead of incomes that a significant downward adjustment is all but inevitable. The sound you hear is the real estate rocket falling back to earth.

As Michael Grunwald writes in today's Washington Post, "One-third of Americans now spend at least 30 percent of their income on housing, the federal definition of an 'unaffordable' burden, and half the working poor spend at least 50 percent of their income on rent, a 'critical' burden."

Last week, as reports showed July new-home sales off by 4.3 percent and existing home sales reaching their lowest level in two years, the slide in the housing market threatened to fall off a cliff. We've been warning about this for almost a year:

March 21, 2006 -- ABC World News Tonight reports, "Interest rates for nearly a quarter of all mortgage debt, or $2 trillion, will be reset in 2006 and 2007, according to Moody's Economy.com." Further, "As interest rates steadily increased over the past year and the explosive growth in housing prices declined, more Americans started to fall behind in their mortgage payments."

January 28, 2006 -- Our concerns about the housing market were confirmed this week when the National Association of Realtors reported the third straight month of decline in existing-home sales ... Consumer debt is further piled on top of ever-burgeoning federal government debt ... So here's something for analysts to remember: an economy built on a house of credit cards can easily collapse like a house of cards.

December 3, 2005 -- Consumers have been willing to take on debt as they see their net worth boosted by rising real-estate prices, but as the housing market cools, they could find themselves in a credit crapshoot.

November 18, 2005 -- The housing market is gearing down, which could occur in an orderly fashion or could implode on a mountain of consumer debt ... The problem is that homeowners have been using their homes to print money, which they've been spending freely.

September 6, 2005 -- Consumers across the nation will feel the effects [of Hurricane Katrina] in long-term higher gasoline prices and higher home heating fuel costs this coming winter. The expected demand for building materials, from cement to lumber, are already driving up raw materials prices, and that will have an effect on housing costs across the country.

As Grunwald points out, poor choices in zoning and land use have forced homeowners further and further from their jobs and pushed lower-income renters to overcrowd apartments and houses to make ends meet. "This creates all kinds of lousy outcomes -- children who don't get to see their parents, workers who can't make ends meet when gas prices soar, exurban sprawl, roads clogged with long-distance commuters emitting greenhouse gases," he writes.

Economists -- most of which likely own their homes -- and other homeowners aren't yet ready to accept the possibility of a wrenching realignment of housing costs versus household incomes. The market, however, isn't equipped with such a psychological defense mechanism.

The Good Old Days of $3 Gas

2006-04-29T17:25:00-07:00

April 29, 2006 -- A few years from now, I want to be able to reminisce fondly about the low gas prices we had back in 2006, so I thought it was time for a short road trip. I had to go to Phoenix on business anyway, and the hassle-per-mile quotient of an hour flight from Los Angeles is more than I can handle.

The highest price I paid was $3.23 per gallon for regular. That was just off the I-10 freeway in Indio, where gas is usually high. I found $3.09 gas in Southern California and in Phoenix for the return trip.

Drivers everywhere are complaining about the rocket-like rise in the price of gasoline, but they're not doing the one thing they could do to save fuel: slow down. On most long trips in my V-6 powered Chevrolet TrailBlazer, I get 20-21 miles per gallon. On the return trip in light traffic, by maintaining but never exceeding the speed limit (which is as high as 75 mph in parts of Arizona), I achieved 22.1 miles per gallon. That's a 5-10% increase.

Additional advice, from someone who once won a BMW fuel economy run and who organized a Honda Insight fuel economy competition:

- Maintain a steady speed. Use cruise control where it's safe to do so.
- Avoid jackrabbit starts.
- Avoid excessive idling.
- Keep your vehicle serviced according to the owner's manual.
- Check your tires and tire pressures regularly. A good, reliable tire pressure gauge is less than ten dollars.
- Plan your route carefully and combine errands wherever possible.

The prevalence of mapping software and GPS systems can help you prepare the most fuel-efficient route, especially on longer drives. Use any of the online mapping programs or purchase a comprehensive software package such as Microsoft Streets & Trips. The cost of portable GPS units is also coming down; if you do a lot of medium and long-distance trips or drive in unfamiliar territory, these can be a worthwhile investment. You can even take them with you when you rent a car.

Think conservation, and you can still enjoy driving.

U.S. Airlines Flying Into Stall/Spin

2006-04-01T14:39:00-08:00

...And What It Means for Passenger Rail

April 1, 2006 -- U.S. airlines lost $10.8 billion in 2005 and are projected to lose another $5.4 billion this year. The last year the industry turned a profit was 2000. Since then, they've lost a total of more than $33 billion. And while some industry analysts are making rosy forecasts, others see trouble ahead. We see greater opportunity for intercity passenger rail.

Stall/spin accidents are among the most deadly of aircraft accidents. They occur when the wings lose lift, most often in a tight turning maneuver. If it happens at low altitude, it's almost impossible for the pilot to recover before spiraling into the ground.

Even in its best years, the airline industry doesn't cover its cost of capital. In 11 of the last 26 years, U.S. passenger and cargo airlines have failed to show a profit. That means that they were already flying at low altitude when they were hit by the combination of new low-cost carriers, 9/11 and high jet fuel costs. And just as some observers are hoping they'll pull out if it, along comes new trouble.

As The Wall Street Journal (subscription required), the Chicago Tribune and others have reported, new small jets will begin taking to the skies this year. At a cost of between $1 million and $2.5 million, and seating four to six including the pilot, these aircraft will be used by business owners, corporate executives and affluent leisure flyers: commercial airlines' most profitable customers. The FAA predicts that 5,000 of these "very light jets" or VLJs will begin flying in the next 10 years.

New air taxi services will charge on a per-mile basis and may be competitive with commercial airlines while offering the advantages of point-to-point flights, flexible schedules and fewer airport check-in and security hassles.

"Airlines have lost the loyalty of a good number of those customers," reports Joe Sharkey in The New York Times, referring to frequent business flyers. The perks they've enjoyed -- upgrades to first class and preferred coach seating -- have become less available, making their frequent flyer status less valuable.

Thousands of small jets flying small numbers of passengers around will also put a strain on airports and the air traffic control system, creating more delays for commercial airline passengers. According to The Wall Street Journal, "Thousands of new small jets about to hit U.S. skies will likely add hundreds of additional flights each day in big cities like Las Vegas, Chicago and Dallas, leading to airport congestion and flight delays...Light jets could push traffic at some of them up 25% from today's levels."

Ground Support Magazine, an industry journal, concurs: "As the plane size continues to shrink and passenger numbers rise, there will be more flights creating more workload, not only for the FAA but the entire industry." More delays will also increase airlines' costs.

Opportunity for Intercity Rail

To cope, airlines will continue to push fares higher while cutting services. Coupled with increased delays and the inevitable airport hassles, more and more travelers will seek an alternative to flying. Ridership on Amtrak has grown for three years in a row nationally, and corridors in California,Illinois and the Pacific Northwest are seeing record ridership.

Historically, market forces have helped Amtrak gain passengers. Ridership jumped during the 1973 Arab oil embargo and again when Middle East oil supplies were threatened by the Iranian revolution in 1979. Security concerns during the 1991 Gulf War and following 9/11 also led to a bump in passenger levels. Increasing fuel costs may be responsible for recent gains in train ridership on Amtrak and commuter rail lines.

Perennially underfunded, Amtrak has little capacity to expand and take advantage of the current market forces turning in its favor. The federal government, as Amtrak's shareholder, has a chance to seize this business opportunity by investing responsibly to repair and upgrade trains and infrastructure and to expand services.

Investing in intercity passenger rail will allow market forces to work, and it is likely they will work in Amtrak's favor. Better intercity rail will give Americans the choice they want for travel. The irresponsible alternative is to continue preferential funding for aviation while all of us cram into tiny seats and pray that the industry can pull itself out of a nosedive.