Sunday, June 25, 2017
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Malcolm’s Picks Of The Week On The #BusinessBreakfast

1. Donald Trump and the new reality

Donald Trump in the run-up to being inaugurated as President of the USA was aggressive and patronising to the head of the US Federal Reserve Janet Yellen.

Trump had regularly accused Janet Yellen of acting in bad faith, implying that she was keeping interest rates low for political reasons. By keeping interest rates low the Fed has created a “false stock market, he argued, suggesting the reason for that was to bolster Pres. Obama’s legacy.

Yellen should be “ashamed” of what she’s doing to the country, Trump said, adding the Fed is not even close to being independent.

So acrimonious was the language becoming that Paul Ashworth, chief U.S. economist at Capital Economics, said in a note. “It is hard to see how she could continue in her position until her current term expires in early 2018.

But….

This week, along with backtracks on his China, Syria, Russian & NATO policies, Donald Trump has also done a flip on Ms. Yellen.

Instead of pushing for her removal as he has in the past, this week in the Wall St. Journal he said that she was “not toast” after her current term expires, and that she could serve another term as he “respects her”.

He may just be picking his battles one at a time, because his cause celebre – The Mexican Wall – looks likely to struggle to get funding.

However, having also been beaten up by the judiciary over his initial US-bound travel bans, it could be that the President is growing up fast and learning to pick his battles wisely!

2. United Airlines turns heavy

“Fly United” was the United Airlines slogan of yore. This week it was subtly changed to “Fly Untied” on Twitter accounts and cartoons from across the world.

United had probably the most uncomfortable 48 hours in its 91-year existence this week, after a 69-year old man was treated like a criminal, knocked unconscious and forcibly dragged off a United flight from Chicago to Louisville Kentucky.

Dr. David Dao was left bloodied after the confrontation, after the airline called police on to the plane to remove him.

So, had he been acting suspiciously or threateningly? No, United wanted the seat for its own crew to reposition to another city, and Dr.Dao had the temerity to refuse to disembark.

The backlash around the world was enormous and calls for the CEO Oscar Munoz’s resignation were loud and long. The United share price dropped 1% each of the next two days, bookings on United were cancelled, and the airline was portrayed as a corporate bully by just about anyone who could create a meme.

Mr. Munoz initially tried to brazen it out saying Dr. Dao was belligerent, until videos emerged of the clearly unconscious doctor being dragged down the aisle and off the plane.

Having finally grasped the enormity of what had happened, he vowed to “fix what’s broken so it never happens again”.

It was initially reported that Dr. Dao was of Indian origin, then Chinese, then Vietnamese, with the online communities in those countries getting vexed in turn.

PR and crisis management experts have been confused by the police’s strongarm brutality. Did United not communicate to them the reason Dr. Dao was being offloaded? Had they thought it was more serious? Why would United put their reputation in the hands of a third party?

John Bailey is a specialist in crisis communications, and has handled many of aviation’s biggest names, including Malaysian Airlines and the disappearance of flight MH370.

“Any airline who takes heavy-handed action against a paying customer is asking for trouble” he says. “Every passenger on that plane was a potential citizen journalist”.

“Businesses are generally struggling to adapt to the new communications landscape. Research suggests that it takes companies an average of 21 hours to issue meaningful external communications in a crisis situation, leaving them open to trial by Twitter”.

In this case the first response from Mr. Munoz was aggressive and dismissive. This from the man named PR Communicator of the Year by PR Week Magazine last week!

He belatedly apologized after a firestorm of tweeted approbation and demands to quit. Almost two days too late.

3. Trains

The train at platform 1…

Germany’s state-owned railway has competition!

Deutsche Bahn, the state operator runs 40,000 trains a day, and the new competition has…one.

‘Locomore’ was started with a one million Euro crowdfunding campaign and is simply happy to be up and running. It runs once a day between Berlin and Stuttgart with the intent to add extra services.

In true Berlin style, the new service offers Vegan and organic food.

The train at platform 2…

Another new service also started this week, but slightly longer than Berlin to Stuttgart.

An 18-day, 12,000 km journey from London Gateway on the River Thames to Yiwu on the East coast of China left the UK, carrying soft drinks, baby products and general goods.

It may not become a primary trade route because of some of the obstacles along the way: The containers have to be offloaded at the Belarus border and put onto different wagons because former Soviet Union countries use wider guage rails. They’re offloaded again at the Chinese border and put back onto standard guage railtrucks.

Still, that’s nothing compared to rigours of earlier caravanserai plying the silk road for trade.

The train at platform 3…

Bombardier and Siemens are reportedly in talks to merge their train-making businesses.

Bombardier’s shares rose nearly 7% on Tuesday, while Siemen’s hit a record high before falling back.

Bombardier is a major supplier of trains to the London Underground.

Analysts say the deal could help combat growing competition from China.

4. Long-haul low-cost air travel

Full cost air carriers see potential threat from low-cost airlines, and rightly so.

Not only have low-cost outfits duplicated full cost airlines’ short-haul routes, but have also started replicating their on-board configuration and services.

This means low-cost carriers have been able to introduce business class sections at around the same cost to passenger as an economy seat on “full-service” carriers. This head-to-head competition has been mostly on short-haul routes to date.

But that’s changing. Norwegian Air Shuttle will launch two more nonstop transatlantic flights, from Denver and Seattle, to London Gatwick.

Legacy carriers are having to reduce ticket prices to compete.

And smaller airports are gearing up to take advantage of the expected boom in low-cost long-haul.

London Stansted is spending 130 million pounds building a new terminal. It will be the UK’s first airport to separate out arrivals and departures into different buildings.