Can Someone Explain Australia?

OK. First up, it's a cute song, and I've nothing against seeing some of Ms Minogue.

But... here's the things they show in the ad:-

- beaches
- sports
- bit of modern art
- fishing
- restaurants
- wines
- pubs

You can go to France, Italy or Spain and do all that, can't you? So, why spend a couple of days and a grand flying there and getting jetlagged, when you can nip over the channel?

Another piece of the Thomas Cook puzzle

As I mentioned a couple of weeks ago, there were/are lots of groups with an interest in seeing Thomas Cook's operations keeping going. What tourists are paying £1,000 for is to  be somewhere nice and hot for a week, the flying there and back - which is what Thomas Cook was in charge of - is a pain in the bum. The marginal/average cost of flying a plane full of UK tourists to their destination in Europe and back is about £100 per passenger, the value/cost to everybody concerned (of the actual holiday, using up limited days' leave from work) is far in excess of that.

The BBC report a good example of such a group, which hadn't occurred to me before:

The sudden collapse last month of one of Europe's biggest travel groups, Thomas Cook, ruined the holidays of 600,000 stranded tourists. Hundreds of thousands more had trips booked when the news was announced.

But for parts of Spain's tourist sector, Thomas Cook's demise is also an existential threat... The Spanish Confederation of Hotels and Tourist Accommodation has said that 1.3 million autumn and winter visitors will be unable to fly into Spanish destinations.

This will result, it says, in the shutting down of at least 500 hotels, generating losses to the tourism sector running into the hundreds of millions of euros.

Spain's government has announced a package of measures worth €300m (£260m; $330m), including emergency credit lines and a reduction in airport fees, particularly for hubs in the Balearic and Canary islands, plus plans to spend €500m in improving tourism infrastructure.

Surely, that €300m (or €800m, or whatever) would have been more than enough to take over Thomas Cook's airline business (plus whatever other bits they need) and keep it going, maybe even turn it round? Stuff like the leases on the planes; staff wages (it's a lot cheaper keeping a team going than assembling a new one); the take-off and landing slots; all the information about who's going where and when.

Thomas Cook's 2018 accounts show that it (they?) had a decent operating profit/positive cash flow from operating activities. What tipped it (them?) into big losses were interest costs and the usual 'cost of intangible assets' nonsense. The new owners of the business don't need to take on the ghastly debts, that's Thomas Cook's old creditors' problem (many of whom will be entirely innocent in the whole mess; some of whom will be complicit and it serves them right).
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To cut a long story short, the Spanish government could simply run the airline which takes UK tourists to Spain. Everybody wins.

Don't just book it...

From The Torygraph:

As many as 150,000 Thomas Cook passengers have been left stranded abroad awaiting repatriation after the travel giant ceased trading.

The company was unable to secure the extra £200 million needed to keep the business afloat following a full day of crucial talks with the major shareholder and creditors on Sunday, leaving thousands of travel plans in chaos.

This morning, the last Thomas Cook flights landed in the UK, with staff in tears and passengers coordinating a 'whip round' of donations. Transport Secretary Grant Shapps said dozens of charter planes, from as far afield as Malaysia, had been hired to fly customers home free of charge and hundreds of people were working in call centres and at airports.

I really don't get it.

Thomas Cook (not sure which bits, the corporate structure is unclear to me) went bankrupt and the administrators pulled down the shutters. Sacked their staff, cancelled future flights etc.

This leaves lots of people who have to get home somehow. A lot of them ended up paying extortionate ticket prices to get home. This illustrates my point that a large part of airline ticket prices is pure rent. They could get away with it because of temporary scarcity. Thomas Cook's jets were parked somewhere, their slots left unused with all their pilots and crew out of work - while planes and crews "from as far afield as Malaysia" were being hired at huge cost. Why not use what's nearest to hand?

'Somebody' has to pay for the stranded passengers to get home. For the purposes of this discussion, it does not matter whether that is the passengers themselves, their holiday insurance companies, ATOL, the UK government. And that cost should be kept as low as possible.

My question is, why didn't the UK CAA or ATOL simply chip in for one or two week's operating costs, long enough to get everybody home? That would be a lot less hassle than sorting out a hundred thousand individual insurance/compensation claims (and "hundreds of [extra] people... working in call centres and at airports"). It would work out far cheaper for the 'somebody' who ends up footing the bill, that saving being equal and opposite to the super-profits/rents which surviving airlines have just collected, plus the reduction in admin and hassle for all concerned.

This unexpected response was mentioned in 'Freakonomics'.

From the BBC:

Fining parents for taking children out of school in term time in Wales has had no effect on overall absence rates, a review has found. It shows the number of unauthorised family holidays actually increased after fixed penalty notices were introduced in 2013...

Several respondents said that the level of the fine was too low to encourage behaviour change. They said this was particularly the case for unauthorised absences for holidays in term time because some parents preferred to pay a £60 fine compared to the price of going away in the school holidays.

One respondent said "in this deprived area many families cannot afford the costs of a holiday out of term time. If they can, they soak up the cost of the fine as part of the holiday cost (which means the fine has zero effect)".

This phenomonen was mentioned in the book 'Freakonomics', here's an article from 2013 explaining it:

In Haifa, day care centers almost uniformly closed at 4pm, and simply depended on the good intentions of parents to pick up their kids on time. Somehow, this worked: parents picked up their children on time and rarely, if ever, came after 4:30pm.

Why were parents rarely late? As Uri will tell you in our book, being late meant relying on the generosity of one teacher, who would inevitably stay late to look after your child. Being late meant facing that same teacher and having to apologize to her for the inconvenience of waiting.

All of which prompted us to wonder: what would happen if these day care centers stopped relying on generosity and started relying on a financial incentive — like a fine — to discourage parents from showing up late? Few would have predicted what we found: introducing a financial penalty for showing up late actually caused parents to do just that. Parents stopped showing up on time entirely.

To come to our surprising conclusion, Uri ran an experiment: Out of 10 daycare centers across Haifa, they randomly chose six and introduced a small fine for parents who showed up more than 10 minutes late in each of them. In day cares where the fine was introduced, parents immediately started showing up late, with tardiness levels eventually leveling out at about twice the pre-fine level. That is, introducing a fine caused twice as many parents to show up late. What about the remaining four day care centers that remained fine-free? Tardiness didn’t change at all.

The picture that emerged from this experiment, co-authored with Aldo Rustichini, was that parents had a whole set of non-financial incentives for being on time – incentives that were completely incompatible with money. Like, for example, avoiding the guilt of inconveniencing the day care workers. As soon as parents had the option to pay a small fine and avoid that guilt, they took it en masse.

Fun Online Polls: Rhymes; Bank Holidays

The results to last week-and-a-half's Fun Online Poll were as follows:

The word "seam" rhymes with... (choose all that apply)
"Beam" - 43 votes
"Seem" - 29 votes
"Seam" (the word itself) - 27 votes

Total - 46 voters

I am deeply, deeply troubled by that. Clearly "seam" rhymes with "beam" and also "seem". For example:

"Things aren't always what they seem,
It's not a joist; it is a beam"

Is surely a perfectly acceptable rhyme? Three out of 46 think it isn't.

Similarly:

"Things aren't always what they seem,
It's not a zip; it is a seam"

Is also a perfectly acceptable rhyme. Why do over a third disagree?

As to words rhyming with themselves, that is an abhorrence. I challenge the 27 out of 46 who think that "seam" rhymes with "seam" to knock up a half way decent stanza.
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Here's someone who agrees with The Stigler on the topic of bank holidays:

I’m not a Gradgrind. I don’t want to stop workers seeing daylight. I just think they should choose their own holidays, instead of politicians choosing for them. Today, all UK workers have a right to 28 days’ paid annual holiday. Nobody has an automatic right to paid leave on public holidays, but in many sectors, it is the norm...

Why can’t we choose our own holidays? Why can’t Jews or Muslims take their own holidays instead of Christian ones they don’t recognise? Why should we be funnelled into traffic jams and overcrowded airports? Why can’t we take holidays when the weather’s likely to be better, rather than when politicians dictate?

Workers of the world dis-unite! Denationalise our holidays!

I can't remember exactly what The Stigler's Killer Argument was, but I have to agree. I know what we like clinging to tradition, even if that tradition is everybody is stuck in the same traffic jam on a rainy Money, but surely common sense/liberty should prevail?

Vote here or use the widget in the sidebar.

Nobody move or your holidays get it!

From BBC Reality Check:

Claim: Leaving the EU would make an average holiday for four people to the EU £230 more expensive in two years.

Reality Check verdict: It would be reasonable to expect a weaker pound to make foreign holidays more expensive, but it is hard to predict a precise figure.

We do not whether and by how much GBP would fall (or rise) relative to EUR post-Brexit, if it were to fall, then yes, the GBP price of holidays in the Euro-zone would go up slightly. Big deal. The amount you spend on a holiday is a fairly arbitrary figure, you can always go self-catering instead of full board; or camping instead of a hotel; or eat McDonalds not a four-course with wine; go for a walk or to a museum instead of to a theme park etc. Over the years, GBP has been a lot lower relative to EUR than it is now, and people still went.

But exchange rates are just one factor in the price of holidays.

As we well know, resorts set prices according to demand, and it is significantly cheaper during term time than during school holidays, so we could more than alleviate this perceived problem by having more flexible term times, i.e. having school holidays at a time when most other European countries don't.

Which brings us to this article from The Daily Mail:

Tourists are facing a shortage of sunshine holiday spots this year as British families turn their backs on previously popular destinations.

Travel agents say that thousands have switched to ‘safe haven’ resorts such as Spain, Portugal and Italy – apparently in response to terror attacks elsewhere.

However, there are simply too few hotels, apartments and villas to cope with the surge in demand. Even if people can find a holiday in Spain, analysts suggest they are paying a ‘safety premium’ of up to 20 per cent compared to destinations including Tunisia and Turkey.

Surely this will also push up prices and by considerably more than fluctuations in exchange rates?

New personal best time for the Schwarzwald to London run

We set off from Karlsruhe this morning at 7 am European time, went via Aachen/Belgium and arrived home at 6.30 British time = twelve and a half hours.

If you knock off an hour for waiting in the queues in Calais, an hour and a half for the ferry crossing and half an hour for a detour to the supermarket for milk etc on the way home, I make that an average speed of about 60 mph.

Greek debt crisis solved: Greece to issue "Sun and sea vouchers"

In round numbers, seeing as Greece makes up a lot of statistics anyway:

* Greece owes the Troika €200 billion
* 20 million tourists per year.
* Average spend on air fares and hotels €1,000 each = €20 billion per year.
* Half of this is actual incremental costs.
* The other half of what tourists pay for is stuff which Greece gets for 'free' or which are already in existence/paid for i.e. airport infrastructure, hotel buildings, landscapes and historical sites, beaches, blue sea and sunshine.
* Additional cash spend by tourists €500 per holiday.

So what Greece could do is issue the Troika 400 million "Sun and sea vouchers" entitling the bearer to €500 off the cost of airfares and hotel stays, pre-dated 20 million a year for each of the next 20 years. So Greece will be redeeming its national debt by giving away value which they themselves get for free.

We can assume that balance of what tourists actually spend more than covers the incremental costs (the airport and hotel staff, the food and drink they consume and other tourist tat like fridge magnets), so that's a break even.

All the creditors - the IMF, banks, the ECB and so on - will be given the appropriate number of vouchers and they can sell these to travel agents for something approaching face value, who then pass on the discount to people who want to go to Greece on holiday, so over the next 20 years the creditors will get their money back (albeit indirectly).

A sunshine backed currency. What can possibly go wrong?

Price rationing.

From The Daily Mail:

Tourism bosses have claimed that a ban term-time breaks is costing the holiday industry £87 million a year.

The new rules, introduced by former education secretary Michael Gove in 2013, mean families can be fined up to £60 a day for taking their children out of school. Parents who don't pay up can be prosecuted and face a £2,500 fine and three months in prison...

Previously, head teachers were allowed to grant up to ten days leave for children to go on holiday outside school breaks - when prices can be considerably higher... The figures come from research by the Nationwide building society, which also found the current system means a family can expect to pay an extra £1,347 for a foreign break in Spain.

Caveat 1. I would argue that prices are not 'higher' during school holidays, but that they are 'lower' during term time.

Caveat 2. To the extent that you agree that taking children out of school during term time disrupts their and other children's education and should be discouraged...

Solution: Just allow parents to 'buy' days off school, on a sliding scale, let's say £50 for each of the first five days per academic year, £100 a day for the next five and so on; possibly with a discount for families who holiday in the UK.

So if you take two children out of school for a week, that costs you £500 'fines' but you save £1,347 on your jaunt to Spain, so still well worth doing.

Having criminal penalties strikes me as absolutely outrageous; if the parents ensure that the child catches up with missed lessons (or gets them printed out in advance to take on holiday), then where is the harm? Surely this is far less bad than parents who consistently don't bother making sure that their children do their homework and revision etc.

The search for the elusive Poor Widow cools down again.

MBK and Thomas B Hall both alerted me to this statistic:

New research released by Barclays shows that the over 65s added £37 billion to the UK economy through spending on the Hospitality & Leisure sector in the last year.

Based on LVT/Domestic Rates of average 3% - 3.5% of the value of your main residence, pensioners' main residences would incur bills of about £40 billion a year.

So that's "ability to pay" sorted.

UPDATE: To put this in perspective, UK pensioners receive approx. £100 bn a year in state pensions, pension credit and other bits and pieces; £30 bn a year in public sector/civil service pensions; and £40 bn in private sector pensions, total = £170 bn.

According to HMRC, £14 bn is deducted in income tax (i.e. public and private pensions x 20%).

Fun Online Polls: Back to work & Dry January

The results to last week's Fun Online Poll were as follows:

On which of the following days will you be at work over Xmas and New Year?

Monday 29th - 27 votes
Tuesday 30th - 27 votes
Wednesday 31st - 26 votes
Thursday 1st - 13 votes
Friday 2nd - 29 votes
Saturday 3rd - 16 votes
Sunday 4th - 16 votes
Not back to work until Monday 5th Jan - 16 votes
Other, please specify - 5 votes

Thanks to the 61 people who took part. Today is my first day back at work since Xmas, so I guess I'm one of the lucky 25%.
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The question on everybody's lips and foremost on everybody's mind is no doubt how much they will reduce their alcohol consumption during Dry January.

So that's this week's Fun Online Poll.

Vote here or use the widget in the sidebar.

Fun Online Polls: Where Santa Claus lives & Xmas holidays

The results to last week's Fun Online Poll were as follows:

Where does Santa Claus live?

He's retired to Florida. Amazon do all his deliveries nowadays - 49%
North Pole - 23%
Lap's retired to Florida. Amazon do all his deliveries nowadays - 49%
Other, please specify - 14%

Ho hum, I tend to disagree. The only evidence we have for Florida is a cheesy TV film sequel starring Steve Guttenberg. Most Xmas films assume he lives at the North Pole but this is surely nonsense, that area is constantly being spied on by satellites and criss-crossed by explorers/'climate researchers'. It's fairly thin ice, so he would be restricted to very light buildings and cannot hide under the surface.

Which leaves Lapland as the least unlikely place, it being a suitably large and vaguely defined area of northern Scandinavia, sparsely populated with fairly good tree coverage and fur coats and reindeers aplenty.

Please note: pointing out that Santa Claus is a mythical/fictitious character is missing the point.
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This week's moderately topical Fun Online Poll: on which days will you be at work over Xmas and New Year?

Vote here or use the widget in the sidebar.

Holiday Prices

From the Telegraph

David Cameron has accused travel companies of "deliberately" putting up prices during school holidays and called on head teachers across the country to stagger their term dates to help families with young children.

The Prime Minister said that he shares the “frustration” of parents who face higher bills for breaks taken during school holidays.

Well, yes, they do "deliberately" put up prices. They know the demand is going to be higher then and so they make as much money as possible. Like any other business with a brain. I doubt he "shares my frustration", though as his wife has an estimated £30m fortune, which means that a few grand on a holiday isn't going to make much of a dent.

Mr Cameron said that he himself has had to cope with higher ticket prices from low-cost airlines such as Easyjet and Ryanair because of increased demand during school holidays.

Who sell every ticket. Right.

Mr Cameron said that more “competition” in the holiday sector is “absolutely key” to driving down prices.

So why do the Conservatives oppose the building of a 3rd runway at Heathrow? I'm sure that Ryanair, Easyjet or someone else would happily buy up the planes that would allow more people to fly off to Benidorm or Faro and increase the supply that would create more competition.