Wednesday, April 23, 2008

Goodbye to DJ and AJ

Looks like DJ and AJ will be leaving the longhorns for the NBA. I'm sure it's a tough decision, but at least for DJ, it's a hard thing to pass up. If you are going to be a lottery pick, it's almost reckless to keep playing in the NCAA. If you really like school, you can go back to school when your NBA career is over. Maybe even during your career like Vince Young is doing (although he's playing football). A lot of folks are crying about this ruining college basketball.
Some folks have suggested raising the NBA age to 21. That's just wrong. If someone has the ability to work for a lot of money, you shouldn't deny that person from the ability to earn. What's a better way? How about giving a stipend to the players? Something comparable to a TA's salary, around $1000/month during the season. The players are putting a lot of time into the playing (time they could be spending working) and a lot of folks pay good money to watch them play. How to pay for it: how about a salary cap on coaches? Wouldn't this hurt the small schools? Maybe, but they are already at a disadvantage, and anyway. If you are worried about competition, let more money accrue to the smaller schools.
You might argue that $1000/month isn't much closer to $1,000,000 than $0, but I would argue it is. $1000/month for a student is a lot different than $0. The less money you have, the greater that value of a single dollar. It won't stop everybody from leaving, but it might convince a few more to stay, especially the bubble cases like AJ.

Monday, April 14, 2008

Delta Northwest

The pundits are saying it's for real this time. They do have some good complements. Delta is big in Europe (especially FRA) and Northwest is big in Asia (especially NRT). The are also part of the skyteam alliance.

What to do first? Complete the shrinkage of the MEM hub (covered by CVG and ATL) and the retirement of the DC-9's. What about the other hubs? DL already pulled out of DFW. I'm not sure they will shrink any other hubs. Looking at a map maybe CVG could be a candidate for the axe.

Problems: besides the pilot's agreement, despite the great diversity in DL and NW's fleets, they have almost nothing in common. NW's old planes are DC-9's, 747's and they are about half way to a very slow process of converting to Airbus. Delta's old planes are MD-80's and they are much further along to Boeing's new planes. The only thing they have in common is the discontinued 757-200.

Add to Technorati Favorites

Sunday, April 13, 2008

Revenue managment on TV

CNBC did a two hour show on AA sunday at 9pm EDT. They actually interviewed the head of revenue management and tried to explain it. One neat thing, they featured a BDL DFW flight and spoke to the man who paid the most to fly, more than anyone in first class. When they interviewed him (clearly packed in coach), he said "I'm just glad to get on a flight". Almost exactly like Robert Cross' story in Revenue Management. CNBC didn't make it explicit that if AA hadn't jacked up the price, the flight would have been sold out.

Friday, April 11, 2008

Run your car with water

Type that into google, and you will actually get a lot of adds for sites that are offering "conversion kits". Since google doesn't give ads for free, that much mean that some folks are actually buying these products. What's even more concerning is that some of these products have apparently been featured on actual TV news shows (not just infomercials made to look like TV news, there are multiple news videos yotube). I'm not journalist, but shouldn't folks doing news do some filtering for things that at least make some sense?

If we were actually able to suspend the laws of thermodynamics, here's a question to ponder: If you could buy a car like would actually run on just water, and it was just as reliable as a real car, and it was just a powerful as a real car, how much extra would you be willing to pay for it? From a purely economical standpoint, probably not much more than $20,000. A typical car will work for about 120,000 miles and will burn about 4000-6000 gallons of gas. At today's rate of about $3.50/gallon, that's about $14,000-$21,000 over the life of the car. Back when gas was $1.00 a gallon, that was obviously much less. Of course, there's a niche market for people who would pay for the good karma of helping the environment, or wanting to buy less foreign oil, but that's a small niche.

Back in the real world, it's very hard to get a car to run on less fuel while maintaining the same power and reliability. You can see why most folks never paid much attention to the fuel efficiency of their car. That $14,000 number is an upper bound for what auto manufacturers could make by making their cars more efficient. Even that $14,000 number is in danger because the price of gas could fall back down by the time the technology was able for production.

Thursday, April 10, 2008

Aircraft Inspections

Enough with the American Airlines cancellations. AA has flown more than a million departures a year with no fatalities since 2001. AA is a safe airline, lax inspections by the FAA or not. Does anyone really think that anything would have happened if AA was given a few weeks to do the inspections? The MD-80 has fewest fatal accident rate of any mid-size airplane (maybe at least partially because AA flies so many of them). It's probably more likely that someone will die while driving somewhere because their AA flight got canceled. What's the cost of this, to AA and to their customers?
What we don't need is a return to the regulation days of the 70's that apparently Rep. James Oberstar (D-Minn.) is thinking about. Here's an idea. Why not make AA disclose the issue, offer refunds to passengers and pay a fine until they do all the inspections?

Thursday, April 3, 2008

Congestion Pricing in New York

There's a food cart near Central Park that rents for $300,000 a year. That's more than 120 quarters per hour. Yet parking spaces near that cart rent for much less and they are free on nights and weekends. I like the concept of congestion pricing, but we don't need the mayor's complicated system. Instead of begging the state legislator for permission to set up a complicated camera system, why not rationalize the on-street parking?
First, eliminate parking on the avenues and major cross streets, at least between 6am and 8pm during the week. Just get rid of it Raise the prices of the rest of the on-street parking in the city to the point where it's possible to find a spot (queuing theory suggests an 85% occupancy rate). This will cut back on the cars in Manhattan (at least cut back on the practice of driving around looking for a spot) and maybe give the buses a chance to move faster than walking speed.
There are quite a few other things that could probably be done without approval from that state. Why is alternate side of the street parking suspended when it snows? If anything, the laws should be enforced more strictly because that's exactly when it's more important to get equipment like snow plows through. Pedestrians have to deal with piles of snow all winter because cars are in the way of the snow plows. The city could also increase the taxes on parking garages.
Other things that might require approval, but wouldn't be as radical: how about charging market rates for the Bridges and Tunnels (and adding tolls to the east river bridges). If the revenue raised went into improving the subway, or lowering taxes in the other borrows, it might be politically feasible. Sit at a restaurant on 9th avenue and 50th street on a weekend and you'll see cars queuing up for the Lincoln tunnel entrance on 30th street.

ATA shuts down

Wow, Hawaii seems to be a bad place for Airlines these days (or a good one if you are still left). ATA has finally shut down. Back in 2004, Southwest kept the ATA brand alive by making an interesting deal that infused ATA with cash, warding off a buyout from AirTran. I'm not sure if AirTran is better off or not, but the Southwest/ATA deal seemed like it was just delaying the inevitable. It was a win for Southwest which got some needed gates at Midway, prevented a stronger competitor from encroaching on what is probably its best city, and got this domestic code-share agreement. ATA, on the other hand, got to stay alive, but had give up their best assets in exchange for a code share agreement. ATA flew to stations that Southwest didn't want to deal with (like DCA and HNL), but that were popular with travelers. It was a brilliant move by Southwest, but I have to give credit to AirTran by stepping away from the deal, rather than overpaying for an asset.
ATA had a bizarre fleet: 29 planes total, but 5 different plane types, including inexplicably, both a DC10 and an L1011? What was up with that. Why did ATA shut down so quickly? There's not much of value in the airline and they were bleeding money every day. There's apparently at least one exception, however. They had some folks taking pride in their work down in Hawaii, who apparently worked past the airline shutdown time to get the last flight back to the mainland off the ground.