Objectives

2. Objectives • After reading and studying this chapter, you should be able to: • Describe the development of the cruise industry and the key players in it • Describe the importance of the rail history • Discuss the present and future of high-speed and high-tech trains • Explain the importance of the automobile in the American society

3. Objectives (cont’d.) • List some major historic and scenic drives throughout the United States • List different bus services and major players in the business • Explain airways and the jet stream • Discuss the hub and spoke concept • Identify components of airline profit and loss • Identify trends in the transportation industry

4. Changes in the technology of travel Widespread implications Rail travel Influenced building of towns and cities Auto travel Produced the motel and a network of highways Commercial jets Created destination resorts in remote locations Made the rental cars a necessity Changed the way we look at geography Introduction

5. Long-distance travel Always been fairly comfortable for the wealthy 1830s: development of the railroad made travel comfortable and cheaper 1920: automobile and the bus began to replace railroads Introduction (cont’d.)

6. Choice of travel mode rests on: Preference Budget Time available Reason for travel Introduction (cont’d.)

7. Becoming increasingly varied and affordable Over 200 cruise lines Accommodations, attractions, and entertainment ranges Cruising

8. Development Until the 1830s, principal reasons for water travel were immigration, trade, and war First cruise ships 1844: Peninsula and Oriental Steam Navigation Company 1867: 1st American cruise ship Quaker City 1990s: more passengers took to sea Cruising (cont’d.)

9. Titanic Made its first trip in 1912 Carried 2,225 passengers Collided with an iceberg 705 survivors World War I Dramatically changed ship travel industry Immigration policies New attraction to European travel Cruising (cont’d.)

10. Slight decline during World War II Popularity continued All-time high in 1957 Today, cruising is on the rise Reported to be a $35.7 billion industry Steady growth over the last 10 years Cruising (cont’d.)

11. Key players Carnival Most successful Royal Caribbean Cruises Second largest Star Cruises/Norwegian Cruise Line Third largest Cruising (cont’d.)

12. Cruise market is broad Average cruise passenger: 50 years old Married (78 percent) Has no children in the household (65 percent) Household income of $79,000 Cruising (cont’d.)

13. Most trips are for seven days or fewer Middle-aged passengers prefer cruises two to three weeks in length Around-the-world cruise is usually for older adults About 10 million passengers take a cruise each year Cruising (cont’d.)

14. Types of cruises Regional cruises Coastal cruises River cruises World cruises Crossings Specialty and theme cruises Cruising (cont’d.)

15. In the past moving goods or people was extremely difficult Railroad was a breakthrough Made travel possible for almost everyone Long-distance travel became cheaper and faster Entrepreneurs soon built hotels conveniently close to train stations Traveling by Train

16. 1920s: rail travel declined Reasons: bus, automobile, and airplane 1960s: airplanes had taken over 1970: Rail Passenger Service Act National Railroad Passenger Corporation began as a semipublic corporation Amtrak Traveling by Train (cont’d.)

17. Rail travel abroad Rail service in other parts of the industrialized world is far ahead Makes sense in densely populated areas Eurostar: connects UK with mainland Europe France’s TGV trains: serve over 150 cities Japan’s Shinkansen: Tokyo to Osaka in just over 2 hours Eurail pass: connects 17 nations Traveling by Train (cont’d.)

18. Does the train have a future? Generally used by those who don’t want to fly and enjoy the experience Maglevs (magnetic levitation) Travel speeds over 300 miles per hour Require fewer personnel to operate Run at a lower cost Are more energy efficient Traveling by Train (cont’d.)

19. Vital importance to U.S. economy Most common mode of transportation Largest of all segments in the ground transportation sector Bring people to places that are otherwise inaccessible Expansive network of roads and highways Traveling by Car

20. Route 66 and other great drives Route 66 2,448 miles long Crosses 8 states and 3 time zones Stretches from Illinois to California Other scenic trips: Wiregrass Trail Blue Ridge Parkway Pacific Coast Highway Traveling by Car (cont’d.)

21. Automobile associations American Automobile Association (AAA) and Canadian Automobile Association (CAA) Set important standards in the industry Lobby political parties to enforce stricter automobile safety laws Offer roadside service and other benefits Traveling by Car (cont’d.)

22. Rental cars 5,000 car rental companies in the U.S. About 75% sales take place at airports Larger companies do 50% or more of their business with large corporate accounts Big rent-a-car agencies in the U.S.: Enterprise, Hertz, Avis, National, and Budget Traveling by Car (cont’d.)

23. Huge industry Many employees, corporations, and passengers Offer charter and tour services Some offer destination management, incentive programs, planning of meetings, events, and conferences Traveling by Coach

24. Major reasons passengers select coach over other modes: Convenience Economy Allow leisure travelers to sit back and relax Traveling by Coach (cont’d.)

25. Types of coach services Routes between towns and cities Local route service Charter, tour, and special services Commuter service Airport service Urban and rapid transit service Traveling by Coach (cont’d.)

26. Largest is Gray Line Founded in 1910 Franchise operation based in Colorado Assembles package tours and customized tours Arranges rail and air transfers Plans meeting and convention services Major service is sightseeing trips Traveling by Coach (cont’d.)

27. Coach associations American Bus Association (ABA) Facilitates relationships between the motor coach industry and related industry segments Creates awareness of the motor coach industry National Motorcoach Network (NMN) Includes charter and tour affiliates Established nationwide reservations Promotes safety Traveling by Coach (cont’d.)

28. Development is closely linked to the growth of the travel and tourism industry Brought the world together in 70 years Made resorts on remote islands possible Fostered multinational enterprises Broadened the horizons of hundreds of millions of people Makes travel easier and more convenient Air Transportation

29. Hotels, car rental agencies, and even cruise lines depend heavily on airplanes Lower airfares result in more passengers and greater need By 2012, passenger traffic between U.S. and the world is projected to reach 1 billion 1990s expansion was tremendous Currently facing financial problems, but growth is expected to continue Air Transportation (cont’d.)

30. Boeing jets 747-400, 737, and787 Dreamliner Series Airbus jets A300 family A380 is a response to Boeing’s Jumbo Jet Full-sized double-decker Capacity to carry almost twice as Boeing 747 Uses less fuel Air Transportation (cont’d.)

31. Highways in the sky Jets fly along airways Airways follow radio beams emitted from navigation stations 200 to 300 miles apart Pilots follow them from station to station Planes must be at least 1,000 feet above or below one another, and 10 miles on either side Separated by time intervals at takeoff Air Transportation (cont’d.)

32. Commercial aircraft Fly at about 18,000 and 75,000 feet Supersonic jets Fly at about 45,000 and 75,000 feet Subsonic jets Fly at about 30,000 to 40,000 feet Air is thinner, resulting in less fuel consumption Air Transportation (cont’d.)

33. Effects of the jet stream Winds at altitudes of 30,000 to 40,000 feet Established when cold polar air meets hot air from the tropical regions Generally flow from west to east Pilots ride these streams when flying east Makes the trip shorter Must fly against the current when traveling west Air Transportation (cont’d.)

34. Routing For long flights, computers project the fastest and most fuel-efficient routes Fuel accounts for 25% of total operating costs Altitudes for most efficient flights are also projected Weather and traffic conditions also help determine the best route Air Transportation (cont’d.)

35. The hub and spoke concept Major airlines link their routes togetherselecting one or more hub cities Most of their flights radiate from these hubs Coordinates flight schedules 120 U.S. hubs (12 fortress hubs controls 75%) Airlines that dominate a hub raise fares for short distances More competitive for long distance flights Air Transportation (cont’d.)

36. Hub and spoke disadvantages Bad weather backs up passengers Results in missed flights, long delays in departures, and lost luggage Air transit points or gateway cities Variation of the hub-and-spoke concept Airports become transit points because of geographical location and importance Air Transportation (cont’d.)

37. Airports around the world Air Transportation (cont’d.) Figure 14–1 • The World’s Top 10 Busiest Airports Source: Airport Council International, “Statistics Highlight,” www.airports.org/cda/aci_common/display/main/aci_content07_c.jsp?zn=aci&cp=1-5_666_2 (accessed September 23, 2009).

38. International airline organizations International Civil Aviation Organization Association of national governments Concentrates on air navigation and air transport with regard to safety and service coordination International Air Transport Association Association of airlines Mission is to represent, lead, and serve the airline industry Several “freedoms” Air Transportation (cont’d.)

39. Figure 14–2 • The Eight Freedoms of the Air

40. Airline safety Federal Aviation Administration (FAA) Safety and technical oversight of commercial aviation Concentrates on passenger safety, aircraft certification to meet safety standards, pilot licensing, and air traffic control Primary concern is to direct air traffic in the federal airway system Air Transportation (cont’d.)

41. Deregulation and efficient operations have reduced airfares Airfares are set to serve two broad markets Business traveler Usually has few scheduling options Standard fares Leisure traveler May find discount fares, usually restrictive Air Transportation (cont’d.)

42. Overbooking and bumping Certain percentage of passengers who have booked seats do not appear (2-33%) Oftentimes, more passengers show up than there are seats available Some are bumped Airlines offer money to confirmed passengers or credit for future travel Air Transportation (cont’d.)

43. Deregulation and profits 1939-1970s: airline industry was highly controlled and protected by government Major airlines had a mutual-aid pact Colleagues grounded by strikes were compensated by other pact members Deregulation brought about major changes New airlines hired nonunion personnel Some worked for a third of union salaries Air Transportation (cont’d.)

44. Most of the new airlines failed to survive Late 1980s: huge consolidation of major airlines Undercapitalization: Main reason for airline failure Existing airlines have more capital backing Enables them to underprice new airlines Air Transportation (cont’d.)

45. After deregulation, airlines racked up large financial debts for expansion Competition became intense, leading to bankruptcy Workers faced pay cuts, increased hours, cut vacation days, increased out-of-pocket medical expenses, and a no-strike clause Increasing fuel, medical, and pension benefits make the airline industry a very tough Air Transportation (cont’d.)

46. Reregulation Some maintain the airline industry must be nationalized and run as a public utility Deregulation Led to more airlines, more flights, discounted fares, and an explosion in the number of domestic passengers Air Transportation (cont’d.)

47. On the one hand: Airline employees get paid less and risk losing jobs in a merger On the other hand: Passengers benefit through lower prices, sacrificing the in-flight service Air Transportation (cont’d.)