This is vacation season
and I'd rather be in Paris....
or looking over Lake Como...
I'd even rather be in El Paso, Texas...
Riding Amtrak or eating bugs...
but instead I'll be off the air waves for a week to attend to some surgery on out-of-warranty parts. Unfortunately non-elective which would be much more exciting.
Below is a picture of the Whole Foods' check-out counters at 6:00 P.M., Saturday on a holiday weekend in Atlanta. Traffic has been dwindling for several months. Last year on any given Saturday the check-out lines were backed up to the bakery. Are people giving up high-end green shopping to subsidize gas prices?
That's interesting...it looks like the men are still paying the Whole Food price.
Just an observation.
I'm grateful to be safe and sound in the U.S. on this July 4th.
It's called Dynamic Architecture and dynamic it is. Eighty rotating floors that completely change the exterior facade with each degree of rotation.The creator of this architectural wonder is Italian architect, David Fisher. The first of three buildings to be built around the world, Dynamic Tower, pictured here, will be located in Dubai where iconic architecture is a sport. But this residential skyscraper may top them all.
First get a feel of how the building will move and change in this dramatic time-compressed animated video:
Remember the old Slinky toys? My apologies to the architect, but that's what came to mind when I first saw the building in motion. The mind is obviously a scary place.
This rendering represents the various shapes the tower might slip into during a single day. The possible variations are virtually limitless.
If you don't have time to watch the one hour press conference held in New York on June 24th (registration required), read on and I'll give you the jaw-dropping details. But you'll have to stay with me till the end to get the punch line.
Other than the awe inspiring ambitious design allowing breakfast facing the sunrise and dinner set against the sunset, there are two other salient features that set this tower apart.
There are wind turbines and solar panels between each of the floors which will not only completely power the building, but will generate excess power that can be used or sold off property. Eighty floors, seventy-nine turbines and 100% self sufficient according to Fisher. Other features add to create a totally green building and environment.
A pretty impressive power plant...
The apartments will be anywhere from 1,334 square feet to almost 13,000 square feet and will all be pre-constructed in a factory in southern Italy and shipped to the job site complete and ready to uploaded to the concrete core (which is the only on-site construction).
The completion of the building is estimated to require only 90 workers whereas a conventional high-rise would require about 2,000 workers. Further efficiencies include a time savings to complete of more than 16 months. The cost savings will be a minimum of 10 percent and for future towers the savings could reach as much as 30 percent depending on certain logistics.
Fisher explained the prefabrication process as being similar to Boeing's methods to construct the Airbus.
Another jaw-dropping fact about Dynamic Tower is the price tag. You might think with all the efficiencies we've just discussed there might be a reflection in the sales prices. Well think again. These digs will start at $3,000 per square foot making the smallest unit over $4 million. And the largest unit before anyone starts combining floors a mere $39 million. With oil quickly heading to $150 a barrel.... no let's not go there.
So what are some of the perks? See the balcony pool...not the girl.
But the most exciting amenity comes with the units on the upper floors. There is a vehicle elevator so that you drive into the elevator and in moments you are sitting in the 75th floor garage inside your unit. Pretty cool. Your Lamborghini gets a view.
Construction is set to start in a couple of months and they are taking reservations for the units. During the press conference Fisher was asked three times about the financing for the building and was finally nailed by the Wall Street Journal reporter. I didn't hear a very clear answer except that a member of the royal family was involved.
A second rotating tower is planned for Moscow and a third for New York City.
You have to agree that the prospects are fascinating and if Fisher pulls it off he will definitely find himself at the top of the architectural heap. There's just one thing...Fisher has never designed a skyscraper before. He was nailed on that one at the press conference as well. But he sure has one hell of an imagination.
There's a few unanswered questions. With most floors having multiple units, who gets the remote to control the rotation? This will be one to watch. Absolutely fascinating.
Associated Press video of interview with David Fisher
Harvard has just laid the proverbial wet blanket upon the real estate industry with last week’s release of the 2008 “State of the Nation’s Housing Report”. The author of this scholarly tome could have been a collective Grim Reaper spreading the apocalyptic prognosis for the near-term housing market.
The always much anticipated Harvard Housing Report was anticlimactic this year. We already knew the outcome. No new news here?
The housing market is dismal and is a challenge to everybody connected to it. There is no light at the end of the tunnel – yet. No one can predict where the bottom might be but we’re not there yet. And the current economic climate is an added challenge, at least in the minds of the consumer, as rising fuel and food costs cut at the purse strings of mainstream America.
If anyone needs yet another analysis, albeit a reliable, scholarly source, of how we got to the current miserable state of real estate you can refer to Harvard’s report and lose yourself in the data, charts, graphs that back up the report’s findings. Stellar research.
Do we really need Harvard to tell us there is no good news on the housing front for the foreseeable future? They have been producing this report for 20 years and although it seems much to do about nothing new, we need to read closely for those pearls of wisdom hidden away in the telling of dire news.
If you want a really fascinating read check out Harvard’s 2004, 2005, and 2006 Housing Reports. In hindsight you will find the red flags portending the approaching housing bubble explosion. In almost every case those smart guys at Harvard were right-on. If we had only listened and seen past the mounting bank deposits.
Harvard…you have my attention.
Harvard serves up a glimmer of optimism…
“Nevertheless, demographic fundamentals still point to increased housing demand over the next decade. But the excess inventory must be worked off before the demand for new homes rebounds. This in turn requires a return to stable-to-rising home prices, sustained job growth, and accessible credit. When that happens, and assuming immigration remains strong, the inventory overhang will start to thin, prices will firm even more, and average annual production, including manufactured housing, will likely head back toward 1.9 million units.”
This week's Worthy Nods in the news and on the blogs:
The Ground Floor: OK That's It, We're All Done. In an effort to live up to their own initiatives, an ULI exec travels on Amtrak for a family vacation- but never again..
Rollins Financial Blog: Where are the Tech Innovators? A new generation of innovators surfacing as Bill Gates bids farewell.
Wired Magazine: The Many (Geeky) Faces of Bill Gates - A Capsule Biography.
Realty Check Blog/MSNBC: Gas Prices Hitting Home: I Don't Think So (Do the math) - Diane Olick does the math and says that the burbs are still a value for families.
WSJ: Renovators in Limbo - Banks freeze homeowners' credit lines; fancy finishes are out, cheaper appliances in.
Real Central VA Blog: Green Financing Reaches Possible Mainstreaming -Check out this finance company that has developed a program for rating and funding green-certified real estate.
Inman News: Site Posts Foreclosure Addresses For Free - ForeclosurePoint provides data on filings in 35 states.
WSJ: New Home Sales Continue Decline - New home sales retreated 2.5% during May, the fifth decline in six months, while the median price for a home dropped 5.7% to $231,000.
On the Beijing Olympic Front:
MSNBC/AP: Beijing Hotels Hurting Ahead of Olympic Games - Tourist officials say travelers put off by visa rules, pollution, other factors...See Slide Show.
IHT/ Globespotters Blog: Waiting For the Olympics: What's Ready, What's Not
This week's Worthy Nods in the news and on the blogs:
New York Times: At Oil Conference, Saudis Offer Slight Rise in Oil Production - Sunday's Emergency energy meeting in Saudi Arabia underscored how few options the world has to push oil prices down from their record levels.
WSJ: Suburbs a Mile Too Far For Some - Demographic Changes, High Gasoline Prices May Hasten Demand for Urban Living.
MSNBC/AP: Cost of Gas Is Influencing Housing Purchases - Urban, homes near commute options holding value better than suburbs.
Forbes: America's Shrinking Beach Communities - What's hurting them today is a slow sales market fueled by economic uncertainty.
WSJ: Guarantee Gamble: Developers Dread the Return of Recourse - After a decade of easy lending, the dreaded personal guarantee is making a comeback in the real-estate industry.
The Ground Floor: A Wake-Up Call for Land Use - Rising gas prices and demographic shifts have created a "wake-up call" for the land use industry...
MSNBC: Real Estate Mess Hurts Those In Field Twice - Real Estate Agents find themselves foreclosure victims as business dries up.
The Ground Floor: The Greening of Land Planning - "How does this community work?"
WSJ: Russian Billionaire Part of Record Deal for Trump Mansion - If the deal closes in the next few weeks, as planned, it is likely to be the most expensive sale of a U.S. single-family home.
Business Week: Are Downtowns in Danger of Going Downhill Again? - Many ambitious programs to revitalize downtowns of cities across the U.S. could stall as the economy slows.
The Economist: Boom to Bust - China's property bubble is about to burst.
Matrix Blog: Inflation, Be Paranoid or Deal With It - The Fed’s opted to deal with the housing market first, and then inflation.
New York Times: How Green Is Your Brand? - Sustainable brands. A term soon to join the lexicon of perfect oxymorons.
Seth's Blog: Is It Worthy? - Very good question.
Seth's Blog: No Such Thing As Price Pressure
The University of Pennsylvania's Wharton Business School has embarked on a series of interviews with seven Wharton professors on the credit crisis.
The first in the series is "Credit Crisis Interview: Todd Sinai on Home Values" and it's definitely a must read or view the video below. Give a nod to the smart guys at Wharton. What I appreciated about it was the objective and academic view of the issues which we are often too close to to view with crystal clarity.
I have included below a few short excerpts from the transcript for a flavor for the interview although the questions and answers are very interrelated and much more meaningful experienced in its entirety.
"The difference between housing and the stock market is that when you sell the share of stock and it's doubled in value or tripled in value, you can buy more stuff. If your house doubles or triples in value, you can buy the same amount of housing -- unless you're going to move somewhere else where houses' prices didn't rise quite as much. So it's a very different thing to think about in terms of an investment. And I think when people say that people are using it as an investment, what they mean is they're using it as a line of credit. "
Now, we saw prices just soaring in the early and mid part of this decade. What was behind that?
"The rest of it is due to a couple of factors. About two-thirds of the run-up, on average, for the country appears to be due to, essentially, it's cheaper to finance your house. And the way to think of that is that if you were to invest in stocks, by the time you went from 2000 to 2005, the kind of return or yield you would have gotten on the stocks would have gone down a lot. It's the same with bonds. Houses actually end up being priced a lot like bonds. When required yields are lower, bond prices go up. With houses, if the cost of your money, in terms of where else you could have invested it or the cost of borrowing for housing, goes way down, then the prices go up to compensate. Now, that's about two-thirds of it. A third of it just seems to be what we call momentum -- looking backwards and saying, 'Hey, prices have gone up.' It's going to go up in the future. And that's sort of a behavioral or psychological, kind of bubble story."
And on subprime...
"I think, in large part, the subprime problem came from the lending sector, banks and finance companies that were in a hunt for yield. They had capital they needed to put to work, and they needed to get yield. And you could take an abnormally low yield in traditional bonds, or you could put it into housing, and you could do it knowing that you were taking on risk. You might not have known exactly what the parameters of that risk were, but you knew that you were taking on risk, and it was still worth it, because then you could actually make a bit more money, or the same amount of money. I think whatever regulation the government had done, Wall Street would have found a way to circumvent it."
The second in the series, "Credit Crisis Interview: Susan Wachter on Securitizations and Deregulation" discusses the drive to securitize mortgages combined with deregulation that were key triggers of the credit crisis.
Infrastructure 2008 - Part III
ission prepared a study on traffic and part of the findings suggested it would take a total of 26 lanes to accommodate the current traffic load (metro area population is now about 5 million), never mind the one million additional people who are expected to move to Atlanta within the next 20 years.
Infrastructure 2008 - Part IIInfrastructure is not on the short list of cool topics for politicians or for cocktail parties. It’s taken for granted. No that’s not really correct. It’s that nobody wants to deal with it because the issues are is sooooo BIG and it is such a gargantuan job to fix what’s wrong today - to effectively plan for the huge changes that an extra 100 million people added to our population in the next 30 years will dictate and then to pay for it with empty coffers. That’s a pretty tall order.
There is no presidential candidate, past-present-or future, which has the guts to present Americans with a trillion-dollar budget for repair and regeneration of our infrastructure system. It is almost too big an issue for us to get our minds around when soaring gas prices, health care, social security, global warming, and the Iraq War demand the lion’s share of our attention.
We have a choice…we can suffer some heartburn today or we can do a “life-saving resuscitation” later. We can deal with these big issues as they are or the growing monster can be left for our children to tame. Maybe they'll be smarter than we are.
The subject of infrastructure is firmly on the ULI radar screen. Those who stand to win or lose greatly by how this is dealt with – the real estate industry – can no longer turn a blind eye.
Infrastructure 2008 - Part I
When the Urban Land Institute and Ernst & Young team up on one of their brilliant collaborations, people listen. Most notable is the annual Emerging Trends in Real Estate report which is eagerly awaited every year by industry leaders. Their newest joint venture, now in its second year, deals with infrastructure and examines the surrounding issues and trends.
Infrastructure is the pyramid base for the real estate industry. It is the backbone for communities, cities, and nations. Our roads, ports, bridges, utilities, airports, schools, and communication systems power our economy, advance commerce, and make our lives easier. It’s really important stuff that we take for granted - until we are shaken by inconvenience or disaster.
Infrastructure 2008: A Competitive Advantage takes a global view of infrastructure with an in-depth look at China, Japan, India, Europe, and of course, the United States. When it comes to the infrastructure race, the U.S. stacks up miserably. ULI/EY issues a dire warning that the U.S. infrastructure system is broken and that if the outdated regional planning process is not overhauled and a “viable federal framework” created we will lose our ability to compete in a global marketplace.
It was a sobering morning session when Tom Murphy, a ULI senior resident fellow and former mayor of Pittsburg, presented the report’s findings to industry professionals in Atlanta. I knew the U.S. was sorely lacking in its attention to the matter but only now understand the gravity of the deficiencies and the lack of any vehicle in place to correct a country-wide antiquated and ailing infrastructure system.
The message as presented by Mr. Murphy was so powerful as to cause Tad Leithead, SVP of Development for Cousins Properties, to proclaim that if this same case was made to each and every member of Congress, focus and action might realign to these issues.
Before I launch into the ugly truths of where the U.S. stands globally when it comes to the infrastructure fountain, I want to share an underlying and obvious problem – other than sheer dollars.
The Federal Government has decreased its commitment to infrastructure annually since Eisenhower. The Feds checked out of the conversation on infrastructure and the range wars started as local and Federal governments fought over who was going to pay for this stuff. The Feds stuck it to the locals by saying “it’s your problem.” But it is a national and regional issue, at least to a great extent, and cannot be effectively patched together purely on a local level.
ULI/EY suggests that “2008 marks a critical juncture and the changing economic environment demands new approaches to land use, infrastructure, and energy efficiency which will likely reorder the next generation of winners and losers.”
No doubt that infrastructure is expensive. Roads need constant investment. The average life span for road beds, bridges, and tunnels is about 50 years before they need extensive capital overhauls or even replacement. The report estimates that the United States has at least a $170 billion annual funding gap.“America heads for a crisis in the next ten years if nothing is done.The status quo increasingly looks like a precarious option.”
Click here to get your own copy of Infrastructure 2008. It's well worth the $50 investment ($40 for ULI members). It's a really interesting read in its entirety.
Lawrence Yun, NAR
It was only this morning I published my latest diatribe concerning Mr. Yun, Chief Economist for the National Association of Realtors and his overly enthusiastic optimism and complete disregard for reality. I thought it a refreshing contrast to quote a section from today's Housing Overview by the National Home Builders Association's Chief Economist, David Seiders.
By the way, I'm not saying the news is refreshing (it isn't, it's bleak) but that Mr. Seiders at least is not blowing smoke and does not seem to have his head in the sand.
Quoted from the Seiders Report: 
And a glimmer of hope and guarded optimisms:
You decide who's the better economic soothsayer.
It is just too painful to pen yet another post proclaiming the idiocy of the Chief Economist for the National Association of Realtors, Dr. Lawrence Yun. Luckily I don't need to because even the International Herald Tribune has taken up the mantra, "What are you thinking, Dr. Yun?"
Speaking to a Miami Realtor Association, Yun reports “The downturn is a short term phenomenon,” assuring his audience that key economic indicators remain strong. “The good news is that [the market] appears to have stabilized.” Not for the first time Yun predicted that "valuations in mid-level cities like Miami, Las Vegas and Phoenix will grow 10 to 50 percent over the next five years."
Obviously not an opinion shared by 99 percent of the nation's economists.
But go ahead, read on. It's apparent Dr. Yun doesn't.
Inconvenient Truths According to Wired
"In the age of climate change, what matters most is cutting carbon dioxide and other greenhouse gases. That means rethinking everything you ever learned about being green."
SCREW ORGANIC
GO NUCLEAR
LIVE URBAN
CRANK THE A/C
"The war on greenhouse gases is too important to be left to the environmentalists.
"There, we said it."
The "we" is Wired Magazine, always irreverent, always entertaining, often right. While most of the population is dealing with light bulbs, recycled products, and organic foods while being bombarded with the green message, we're missing the larger and more important picture. The green message is infused with confusion and contradiction and although we may be buying into saving the planet, we mostly are doing the opposite. . . . according to Wired. . .
"The environmental movement
has never been short on noble goals."
NO
T ALL TREES ARE MOTHER NATURE'S FRIEND - The most surprising misconception for me was that all trees are not good for the environment. Blasphemy! Get ready, here comes the cold hard facts...trees act like a vacuum cleaner sucking up atmospheric carbon only up to a certain point. After a certain age, trees become emitters of carbon (say it's not true!). An oak tree's growth slows after 55 years and it absorbs less carbon. Eventually, it will decay releasing all its carbon.
The optimal use of trees to benefit the environment is to clear the oldest trees, remove dead trunks and replant. Plant seedlings and harvest when the tree's carbon absorption abilities mature. Maybe somebody should tell the Sierra Club that logging is a good thing.
WHEN ARE ORGANICS NOT GREEN? Scared cow #2. Cows raised on organic feed produce 8% less milk than conventionally raised cows (pumped with hormones). Cows are big carbon emitters and organically raised cows emit 16 percent more greenhouse gases than the other guy. Organic cows are global warming machines. And don't get me started on beef from grass-fed cows... A meat intensive diet of an average American generates 1.5 more tons of greenhouse gases than a vegetarian. And if your organic pest-free fruits and vegetables are grown by Big Ag and being shipped across time zones in carbon-belching trucks, well that's just not helping the planet.
LIVING A BUCOLIC EXISTENCE IN THE WILDERNESS IS NOT GREEN. Commuters contribute roughly 1.9 billion tons of carbon dioxide a year to the global carbon cloud. Give up the lawn mowers that spews 11 cars' worth of pollutants per hour and move to the city. Would you believe that Manhattan is maybe the greenest place in the U.S.? A Manhattan resident's carbon footprint is 30 percent smaller than the average American. Fewer cars, high-speed transport, and energy efficient vertical buildings all contribute to a smaller carbon footprint - per person. I'm hearing a few rumblings out there. Give up Green Acres for a flat in Manhattan?
GO AHEAD - CRANK UP THE A/C. Everybody come on down to the South or head to the western deserts if you really want to make a green difference. Empty Finland and Norway and while you're at it might as well take Greenland (no pun intended) and Sweden too. Save the planet. Heating the country releases nearly eight times more carbon over the same period than cooling by air conditioning. It takes less energy to cool a given space by one degree than to heat it by the same amount. If you live in a cold climate take heart in that with global warming you can turn the heat down every year.
EMBRACE NUCLEAR POWER. Or at least don't scream like a banshee. Th
ink about it. Coal-fired power plants release 520 times more atmospheric carbon per hour than its nuclear counterpart. "There's no question that nuclear power is the most climate-friendly industrial-scale energy source." Coal vs. nuclear in the warming contest. The experts say "Nuke it."
The environmental scared cows are led to slaughter, one by one, in the name of truth and the fight to save the planet. We can be sure that myths will be debunked daily as we gain more and better truths. We will discover that our best efforts to fight global warming are in fact the worst offenders of the environment and readjust yet again.
But like the journey toward better health, we follow the wisest advice du jour and change course when proven facts are rewritten for today's truths.
I could do way better in cutting my personal carbon footprint, but it's darn hard work. I would have to sell our house, move the dogs into a high-rise building downtown, get a bicycle because Atlanta's mass transit sucks, and probably die in a car/bicycle collision.
Or I could cut down 20 some carbon-mature OLD oak trees in our yard and be fined thousands of dollars for destroying Atlanta's coveted trees. That's some pretty hard choices. I think I'll just sit still and try not to stir up the carbon.
Real Concept's Green Series:
Inconvenient Green Truths - Rethinking Everything
"Vehicle Miles Traveled" Becoming a Zoning Issue as Governments Fight to Reduce Emissions
Builder's Facing Green Conundrum
Over The Top Eco-Iconic Architecture
This week's Worthy Nods in the news and on the blogs:
San Francisco Gate: Is Suburbia Turning Into Slumburbia?
The Economist: Green in the East - China and India are increasingly keen to show how they are tackling climate change.
New York Times: About 1 in 11 Mortgage Holders Face Loan Problems - Both the rate of new foreclosures and late payments surged to the highest levels since 1979, a new report says.
New York Times: International Agency Urges the Start of an ‘Energy Revolution’ - The International Energy Agency said investments of at least $45 trillion are needed over the next half-century to prevent energy shortages and greenhouse gas emissions from slowing growth.
Business Week: Don't Fear the Bubble - Could speculative booms and busts be good for the long-term health of the economy?
CoStar Group: REIT Week ’08 Redux: Uncertainty Marks More Somber Industry Conference - Predictions are that commercial real estate will dodge the big bullet. Barring a deep and prolonged recession the commercial real estate market ought to be able to side step a serious downturn.
Wired Magazine/AP: House of Lords reaching out to young with YouTube - See YouTube video.
Wall Street Journal: Foreclosures Rise 48% in May As U.S. Housing Woes Deepen
Wall Street Journal: LandSource Chapter 11 May Hit Calpers
MSNBC: Rising oil prices squeeze homebuilding sector - 'Unfortunately, I think we'll be caught in a squeeze,' says one top builder.
Forbes: Top Tips for Vacation Home Buyers
BigBuilder OnLine: Feds Fine Home Builders for Water Pollution - Four of the nation's largest builders are fined $4.3 Million by EPA & JD for failure to control runoff at construction sites in 34 states.
Forbes/MSNBC: The Most Expensive Homes in the U.S. - What a difference a year makes.
IHT, Raising the Roof Blog: Study finds 204 towers under development in Panama City - CBRE’s report found 204 residential buildings under construction or in pre-sales, representing 21,710 units
And la pièce de résistance ... The Wall Street Journal: The Donald Dinna Ken the Scotts - “As The Donald is beginning to realize, it’s not his plans for a world-class golf course near Aberdeen that have incensed so many Scots — it’s him.” Also see IHT Blog: Donald Trump’s performance in Scotland panned by critics.
The U.S. could be looking at a very different aerial landscape if the finances of our domestic airlines continue to bleed red. The deficit rate is so staggering as to bring to mind the image of a small plane running out of gas, tossing luggage, seats, passengers - anything with weight - in order to attempt a landing. The airlines are cutting costs in the same desperate fashion in a self preservation effort. I file this topic under "other important stuff."
But this is not a eulogy, at least not yet. For now it is a visual, an analogy, of the disparity, the insanity of the price of passenger airline tickets. I want to pay as little as possible for a seat, but I also want the skies populated with financially viable airlines.
Consider this...
If you were a piece of luggage and your combined travel weight with bags was 240 pounds, it would cost $1,214 to fly Fed Ex round trip from Atlanta to Chicago...
Or you could fly Delta as a live passenger for $221...
The speed with which the airlines are jumping on the slippery slope of checked baggage fees may come to an inglorious end with American Airlines’ infamous $15 fee. Apparently passenger acceptance has its limits and charging for the first checked piece of luggage may be it, although we're now seeing the "pile-on" syndrome with other airlines following suit.
When United Airlines boldly went where no major domestic airline had ventured before, charging for the second checked bag, talk on the street centered on better planning – not revolution.
AA and followers may discover they have crossed the line of demarcation. Isn’t it an inalienable right for passengers to check a bag within the cost of their airline ticket? I couldn’t find anything in the Constitution, but I think it may be carved in stone somewhere in the Sierra Nevada’s and can be clearly seen when flying into Sacramento.
MSNBC did a very clever comparison of AA's check bag fee with what it would cost to ship a 50-pound suitcase to your destination for next day freight delivery:
“The estimated cost of shipping a 50-pound suitcase from Boston to Chicago via FedEx is $231 for delivery the next morning by 10:30 a.m. and $222.63 for delivery the next afternoon. Even second-day delivery is priced at $124. These quotes are for one way. Now look at the airfares. According to AA.com, the least expensive airfare from Boston to Chicago for flights a month in the future costs $226 round trip. That’s almost exactly the same price as shipping a suitcase one-way on FedEx either next morning or afternoon delivery. (Note: with AA your luggage is “same-day delivery” and travels conveniently with you.) With a promotion like “pay to ship one piece of luggage to Chicago and the passenger flies for free” the airlines would actually make more money based on the FedEx guidelines.”
Let's take it a step further. According to industry analysts, the average number of bags attributed per passenger is 2.5 including checked and carry-on pieces. Let’s say the average passenger weight is 180-pounds (CDC). Include a 50-pound checked bag and a ten-pound carry-on. We’re now at 240-pounds for transport from say Atlanta to Chicago. To send a 240-pound parcel via Fed Ex from Atlanta to Chicago for arrival by 10:30 a.m. next day is $607 (and that is a previous evening check-in by 8:00 p.m. – 14.5 hour point to point) and that my friends, is a no frill flight. No movies, no peanuts, no Cokes, no water. And that is just a one-way ticket. If you shipped yourself by Fed Ex and you wanted to come home the total nut would be $1214.
Checking Expedia, you can book a round trip ticket at least two weeks out for as low as $221 on Delta! I’m buying stock TODAY in Fed Ex. My brother, who is a captain for Fed Ex, swears the packages they transport never, NEVER complain. My other brother who is a captain for U.S. Air says that ticket should be about $700 just to break even - still a bargain compared to shipping yourself as a piece of luggage.
Although this is a simplistic comparison without the economic subtleties of two very different business models, it does demonstrate a huge gap in the price to move matter from point A to point B. All things being equal (which they aren’t) I would think it should cost way more to transport comfort-loving real passengers versus an innate box of matter. Is it any wonder airlines are losing so much money? The manpower it takes to coddle the flying public must be enormous - feed them, entertain them, make them safe and comfortable - and deliver it all at a rock bottom, unprofitable price.
I for one am not opening my mouth about checked baggage charges and I'm going to gratefully eat my pretzels, and if necessary even pay for them (or bring my own).
Real Concept's Green Series
Let me explain further, although I'm sure I don't need to … this is what the greening of America means to shareholders…
