Boeing: Late to the reputation recovery party? Or not showing up at all?

Debris field from the Ethiopian Airlines plane crash (March 10, 2019).

It’s been exactly two months since the crash of the Ethiopian Airlines 737 Max 8 Boeing plane that killed all 157 passengers and crew on board. But as far as Boeing’s PR response is concerned, it might as well never ever happened.

Of course, sticking one’s corporate head in the sand doesn’t make problems go away — and in the case of Boeing, clearly the markets have been listening.

Since the crash, Boeing stock has lost more than $27 billion in market value — or nearly 15% — from its top value of $446 per share.

The problem is, the Ethiopian incident has laid bare stories of whistle blowers and ongoing maintenance issues regarding Boeing planes. But the company seems content to let these stories just hang out there, suspended in the air.

With no focused corporate response of any real coherence, it’s casting even greater doubt in the minds of the air traveling public about the quality and viability of the 737 planes — and Boeing aircraft in general.

Even if just 20% or 25% of the air traveling public ends up having bigger doubts, that would have (and is having) a big impact on the share price of Boeing stock.

And so the cycle of mistrust and reputational damage continues.  What has Boeing actually done in the past few months to reverse the significant market value decline of the company? Whatever the company may or may not be undertaking isn’t having much of an impact on the “narrative” that’s taken shape about Boeing being a company that doesn’t “sweat the small stuff” with proper focus.

For an enterprise of the size and visibility of Boeing, being reactive isn’t a winning PR strategy. Waiting for the next shoe to drop before you develop and launch your response narrative doesn’t cut it, either.

Far from flying below radar, Boeing’s “non-response response” is actually saying something loud and clear. But in its case, “loud and clear” doesn’t seem to be ending up anyplace particularly good for the Boeing brand and the company’s

What are your thoughts about the way Boeing has handled the recent news about its mode 737 aircraft? What do you think could have done better?  Please share your thoughts with other readers here.

How to Lie with Statistics: Commercial Airlines Edition

airlineIt’s become rather predictable. Government pronouncements claim that because the national unemployment rate is down to around 5%, it means that the U.S. economy is humming along.

But in fact, that conclusion doesn’t square neatly with the reality that the unemployment percentage is calculated based on the lowest level of workplace participation in decades.

So, which is it?  A strong economic upturn … or a middling recovery?  When the average citizen is the judge rather than breathless PR flacks, it’s the latter.

The same could be said about the airlines.

The amount of “happy-talk” about passenger airline travel is quite high these days.  Some of the news is undoubtedly welcome:  The lowest jet fuel prices in recent memory are making it cheaper to fly cross-country today than in years.

But upon further scrutiny, another spate of good news seems to be little more than blue smoke and mirrors. For a number of years now, the passenger airlines have been crowing about their on-time flight arrival performance.

The statistics purport to show that on-time performance rates for commercial airlines have been steadily improving.

But look a little closer … and the skies aren’t quite as clear-blue as all that.

A study by OAG Aviation Worldwide, a UK-based analytical firm that analyzes travel data, finds that airlines have been padding their flight-time schedules going on 20 years now.

Here’s a representative example of what’s been happening:  OAG evaluated 1,400+ commercial flights scheduled between Los Angeles International Airport and San Francisco International Airport.  Back in 1996, not even one of the flights between these two airports was scheduled to take longer than 90 minutes.

And yet … by 2015 the airlines had allotted flight times of between 91 and 110 minutes for nearly half of the flights scheduled between those two airports.

Of course, it’s axiomatic that if the scheduled flight times are lengthened upwards of 10%, that will take a so-so on-time flight arrival statistic and transform it overnight into a pretty impressive one.

… And the transformation’s been accomplished without changing a thing where it actually counts: on the ground (or in the air, I could say).

logoFor the record, no one at the airlines is acknowledging this statistical sleight-of-hand. Asked to comment on the OAG study’s findings, a spokesperson for the trade group Airlines for America (A4A) responded with this rather mealy-mouthed statement:

“We have the same goals as our customers, which is to get them, their luggage and packages to their destination safety and on time.”

Well, at least they’re not fudging on the safety part …

Sprawl & Crawl: Are work commutes actually worse than you think?

DC traffic
It turns out politics isn’t the only kind of gridlock in Washington, DC. It also has more traffic gridlock than anywhere else in the country.

This past weekend, The Wall Street Journal published a feature story in its “Personal Journal” section that profiled how businesspeople cope with their daily work commutes

It turns out that the average daily work commute in the United States takes about 25 minutes

Another interesting statistic from the article is the amount of time car commuters in larger cities spend stuck in traffic:  52 hours annually, or about an extra hour per week.

The WSJ story profiled several people who access mass transportation for their work commutes, as well as one businessman who relocated from the Washington, DC Metropolitan area to Metro Cincinnati, substantially reducing his daily commute time and hassle in the process.

As someone who lives not far from the DC Metro area and who contemplates any drive through the region with a mixture of disdain and dread, this got me to wondering:  Just what is the worst geographic market for commuting?

Helpfully, there’s a recently completed study that answers this very question.  The Transportation Institute at Texas A&M University has applied a calculation tool called the Planning Time Index (PTI) to compare drive times in heavy traffic (i.e., rush hour) against travel times when the same highways are clear.

The way the PTI calculation works is this:  A PTI of 2.00 means that a “normal” drive will take twice as long in heavy traffic. 

Using that PTI=2.00 example, a drive that may ordinarily take ~20 minutes will take ~40 minutes instead.

My suspicions about the DC Metro area turned out to be right on the money.  Here are the most “challenging” metro markets for work commutes based on their PTI indices:

  • Washington DC:  5.72 PTI index
  • Los Angeles:  4.95
  • New York-Newark:  4.44
  • Boston:  4.25
  • Dallas-Ft. Worth-Arlington:  4.00
  • Seattle:  3.99
  • Chicago:  3.95
  • San Francisco-Oakland:  3.74
  • Atlanta:  3.71
  • Houston:  3.67

How do these PTI indices translate into actual drive times?  Shockingly, a DC-area commute that ordinarily takes 20 minutes translates into almost two hours in heavy traffic. 

And among all of the other “top ten” worst markets, that normally 20-minute commute  will take 1.2 hours or longer in rush-hour traffic.

Interestingly, when one scans the “Top Ten” list, the only Midwest urban area that shows up on it is Chicagoland.  So if you wish to avoid the hassle of long commutes, consider relocating to urban markets in the Midwest like St. Louis, Minneapolis-St. Paul, Cleveland, Milwaukee or Kansas City.

But what’s the absolutely easiest metro market for commuting?  According to the Texas A&M study, it would be Pensacola in Florida.  It has a PTI of just 1.31. 

… Which means only about six extra minutes in rush traffic compared to the ordinary 20-minute commute.

Come to think of it … Pensacola has great beaches and nice sea breezes as well.  Perhaps dealing with the occasional hurricane is worth it, all hassles considered!

In the drive towards self-driving cars … How do we get there from here?

car crash in semi-rural marylandA few weeks ago, I was driving to work on the main two-lane state highway here in our semi-rural corner of Maryland.  It was the Friday before Labor Day weekend, so traffic was lighter than usual.  It was also a clear day, with no wet roads or fog.

In other words, a perfect day for driving.

All of a sudden, an oncoming car drifted into our lane.  In fact, it appeared as if it was purposefully targeting the vehicle about four or five car lengths in front of me.

In the inevitable collision that occurred (thankfully not completely head-on but sickening enough at 55 mph), there were injuries and ambulances … a closed road for 90 minutes … statements to the police required of myself and others … and two wrecks to be towed.

The cause of this accident had to be a case of distracted driving – perhaps reaching for a smartphone, checking a text message or some other action that took eyes off the road just long enough to cause a serious accident.

self-driving carsIt got me to thinking about recent news reports touting “self-driving” cars of the future.

Certainly in a case like this accident, self-driving features like nudging the vehicle back into the correct lane could have easily prevented this accident from ever occurring.

Self-driving vehicles seem like a very nice idea in theory, and in practice they’re not very far off — at least if the news reports are to be believed.

Nissan, Volvo, Daimler-Benz and other leading car companies are predicting that commercial models will be a common sight on the road by about 2020 … and by about 2035, a majority of cars operating will have this technology.

But in order to get there from where we are now, we’re going to have to deal with numerous challenges.  Here are a few that seem particularly nettlesome:

  • Will operators of self-driving cars require a different kind of vehicle training?
  • How will highways accommodate vehicles with and without drivers?
  • Will self-driving cars perform equally well in different road environments – ordinary roads in addition to super-highways?
  • Insurers will need to figure out who is at fault if a self-driving car crashes – the car or the driver?
  • How will automotive manufacturers ensure that cars’ onboard computers can’t be hacked?

And here’s another technology challenge:  What sort of back-end servers will be required to process the huge amounts of vehicular data … as well as secure ways for cars to communicate in real-time with the cloud and other vehicles?  (Daimler has reported that its self-driving test vehicle produces 300 gigabytes of data every hour from its stereo camera alone.)

And lest you become really anxious, don’t think very hard about the kind of data that’s being captured, chronicled and saved on each and every self-driving car’s trip – including  “where it’s been when” and “how fast it got there.”

I also wonder about the transition period when there will be a mix of self-driving cars and traditional vehicles sharing the road.

If self-driving cars “react” to other vehicles so easily, won’t it be really tempting for driver-operated vehicles to make end-runs around self-driving cars or otherwise cut them off, knowing that those cars are programmed to move out of the way to prevent a collision?

Roy Goudy, a senior engineer at Nissan, has commented that since “autonomous” cars can react more quickly to potential hazards than can cars driven by people, it will be difficult to have both on the road at the same time.

“What are the rules in that environment, and what do we do to enforce those rules?” Goudy asks.

I think the future of driving is a very intriguing subject.  Self-driving vehicles could mean far fewer traffic-related injuries and deaths … and it could bring more mobility and independence to disabled people and the elderly.

We just need to figure out a way to get there.

Teens’ Rites of Passage: Technology Trumps Transportation

Technology, not cars with teens.
Technology, not cars, are where it’s at with teens today.

Thirty years ago, the rite of passage going from being a kid to adulthood had to include having your own automobile.

Not so today.

In fact, the percentage of young adults who even have their driver’s license has declined considerably:  In the early 1980s, nearly half of 16-year-olds in America had a driver’s license. By 2010, that percentage had dropped to just ~28%.

What happened between then and now? A number of things, but the biggest may be the rise of consumer electronics and social media.

Recall what an automobile could provide a young adult in the 1980s: access to all of the kid-popular activities of the day: shopping, music, movies, getting together with friends, and so forth.

Today, teens can access pretty much all of that right at their fingertips via the Internet or a smartphone.

You want clothes? Order them online.

Music? Download it to your smartphone.

Communicate with friends? Just Skype or text away.

Meanwhile, between more sophisticated, costly auto maintenance and the high price of gasoline, owning a car has only become more expensive.

Auto insurance premiums for teens? Outta sight.

Plus, it’s just more of a hassle to get a license today. Driver education classes are disappearing from many a public school classroom, the casualty of budget cuts. Stricter state laws make it much more difficult and time-consuming to rack up the necessary behind-the-wheel training hours prior to taking driving tests.

The result is fewer kids getting licensed during their teen years.

In 1983, nearly 70% of 17-year-old Americans had drivers licenses … a figure that dropped to just ~46% by 2010.

Even for 18-year-olds, the percentage holding drivers licenses declined from ~80% in 1983 to only about 60% in 2010.

A recent survey conducted by Zipcar found that millennials (people age 18 to 34) would rather shop online than in stores. No car needed for that.

And when presented the choice between giving up their phone or their tablet computer or their car … two thirds of the Zipcar survey respondents would forego the car.

This is a veritable sea change in attitudes about wheels.

In fact, one could conclude that the very things that cars once represented – the “vehicle” that enabled you to “do what you want, see who you want and be what you want” – is what actually describes the digital and social media world today.

Meanwhile … the car is now just a way to get to your part-time job. Ugh.

Amtrak and the $16 Hamburger

Amtrak logo
Amtrak changed its logo in 2000 from the “pointless arrow” to the “fancifal splotch.”

What are we going to do with Amtrak? Over the past three decades since the rail line was formed as the “for-profit,” government-owned National Railroad Passennger Corporation, it has lost money year after year – all the while taking in more than $25 billion in government subsidies.

I’d be the first to admit that along Amtrak’s passenger routes are some of the most beautiful scenery one could ever hope to see. I’ll never forget a train trip my wife and I once took from Minneapolis-St. Paul to Seattle and back. The Empire Builder route travels across the plains of North Dakota where the cloud-to-ground lightning at night was a sight to see. And the trek through Glacier National Park and the Cascade Mountains of Washington State was equally memorable.

Of course, the price of our train tickets didn’t begin to cover what it actually cost to have us travel on the Amtrak train.

At the other end of the country, I enjoy taking jaunts to New York City from Wilmington, DE. It’s reasonably quick, it means I don’t have to face traffic jams on the New Jersey Turnpike, and it gets me into the middle of Manhattan without having to worry about parking (or the Holland Tunnel for that matter).

[I will say that seeing the “wonders” of post-industrial North Philadelphia and Chester along the train route to NYC is distinctly different than taking in the vistas of the Rocky Mountains!]

But the same question arises here as well: How much is the government kicking in for each ticket that I buy? We may not know that answer, but we do know how much Amtrak is losing on every hamburger they serve on the train.

It costs AMTRAK ~$16 to make a hamburger which is sold on the train for $9.50 … and the taxpayers cover the difference.

It’s one thing to lose money on the transportation service. But to lose money on the foodservice as well is … hard to swallow. Hungry customers trapped on a train with nowhere else to purchase food – how difficult can this be?

In the tortured reasoning of Amtrak, if the train doesn’t serve food, fewer people will ride, thus causing a further reduction in operating revenue.

But here’s the rub: Amtrak ridership in 2011 increased ~5% over the previous year. But operating losses went up four times as fast (~20% over the same period) to more than $900 million.

So isn’t this rich: Amtrak has a business plan that doesn’t work whether ridership goes up or down. 

And another thing:  I wonder if contracting out foodservice to a private entity has even been considered?

In the great tradition of the government jumping into commercial ventures — and then messing it up big-time when it comes to efficiency, the intent was to structure Amtrak so it would deliver a service that would be profitable while also serving the public interest.

And the U.S. Congress has gone back to the well numerous times to “tweak” and “adjust” the program so that it does just that.  For example, the Amtrak Improvement Act of 1981 prohibits the government-owned company from selling food products at a loss.  (Not that this has had any noticeable impact.)

Additional legislation passed in 1997 “mandated” a path to profitability for Amtrak – but with no specific changes to train routes, ticket pricing, employee head-count or wages outlined.

The way I see it, the abysmal performance of government-owned Amtrak is a direct consequence of several factors:

  • High overhead costs
  • Federal bureaucracy
  • Lack of agility and nimbleness
  • Lack of market incentives

It becomes all too tempting to overlay the Amtrak experience onto what will likely happen in other areas where the government has stepped in to regulate activities – like in health insurance exchanges, health care costs and quality of care.

But, you know, if there are problems that arise with healthcare, we can always pass supplemental legislation to “fix it” – just like we did with Amtrak in 1980 and 1997.

And that will solve everything.

The Ripple Effects of High Gasoline Prices

Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.