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About Kingfisher Airlines

It is one of the privately owned and famed airlines in India, based in Bangalore India this airline has created a mark for itself over last few years since its commencement of operations in 2005. Kingfisher Airlines comes from the parent company “United Breweries Group” or popularly known as the “UB group”.
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Having the main bases at Bengaluru International Airport, Chatrapati Shivaji International Airport, Rajiv Gandhi International Airport, Indira Gandhi International Airport, it operates a network of around 40 destinations with more than 200 flights per day.
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Though being an domestic airlines till yet, it has shown intensions to fly to USA following the lease of new Airbuses A320 and A200 in coming times with Bangalore being its major hub. Currently this airline flies with two service classes Economy and Business and has been granted a 5 star rating from Skytrax.
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Kingfisher as per its expansion plans have also acquired stake in Air Deccan airlines, which is an LCC in the market and have also shown intensions to acquire further stake in the same. Due to its inflight services and operations, Kingfisher airlines have also been awarded with lot of accolades and awards like the Business leadership award by NDTV, Economic Times Avaya award, India’s favorite airlines in a survey by IMB, Service excellence for a New airline by Skytrax and more.
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Kingfisher airlines have also started The Kingfisher airlines Tennis Open championship which has come up as a prestigious and high profile event by tennis fans across the world. This whole thing was started in order to reinforce the winning attributes and values ​​of the Kingfisher brand.
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The currently held event of IPL cricket also had Kingfisher airlines as a sponsor for the Bangalore team. Mr Vijay Mallya, being the proud owner of this airline is all set to achieve higher targets and objectives in the coming time and he is all minds for it.

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Discover the Little Known Secrets of Finding the Best Cheap Flights to Canada

There are many good reasons to make use of cheap flights to Canada. The giant of the North American continent is the USA. We have all heard how everything there seems to be bigger. Canada may be a smaller country than the US as far as territory is concerned but its charms are just as exciting.
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This country is renowned for its breathtaking scenery. Canada provides a spectrum of climates from snowy to hot. This means you can take advantage of world class skiing resorts in the Rockies. A popular resort is Marble Mountain.
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Finding out about cheap flights to Canada is a pleasant surprise because this is a location that is very popular. It is also a location that is well known around the world for its exceptionally high standard of living and open space.
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You can also witness the Northern Lights from Canadian soil. The best vantage point for this amazing natural wonder is Newfoundland and Labrador. This part of the country boasts an interesting and rugged shoreline and the character is unmistakably nautical.
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Cheap flights to Canada come with many benefits. Whether you are a vacationer or a regular visitor to Canada you will be able to save money. Try booking your tickets as early as possible in order to gain even more of a discount. All cheap flights are handled by established and experienced travel agents and airlines. This gives the traveling consumer a choice.
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You can get the most cost effective tickets to Canada by opting for a package deal. This could include air tickets, rental car, and accommodation and specified meals. A very good example of an all inclusive trip to Canada is a stay at a skiing resort. This may even include the use of skiing equipment and care for the kids. Booking cheap tickets has never been easier. Simply go online and make your choice.

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How to Get Cheap Travel Packages

The Direct Route Isn’t Always the Cheapest
In many cases there seems to be no rhyme or reason to how including work. There are seasonal changes, time changes, variations depending on demand, and then what seems like changes for not any reason at all. When searching for discount etc., look at alternate routes to get where you need to go. In many cases, a combination of 2 flights can be cheaper in comparison with one flight.
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This typically works by taking advantage of very low cost domestic plane tickets within the USA. For example, a return flight coming from New York to Montreal hotel like Best Western Europa in center ville in Canada, which is a trip approximately an hour, generally expenses around $ 300. For the roughly the same price you can find returning flight from NY to Los Angeles. The point is that for causes have to do with traffic, polices, and taxes, household flights are significantly cheaper then international ones, mile pertaining to mile.
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So depending where you want to go, you may come across your plane tickets is much cheaper if you’re willing to make a home flight very first, in advance of switching to an overseas one. If you live in the northern United States, as an example, and want to go to Latin or South America, it will eventually frequently be much cheaper to 1st go on a domestic flight to the southern hub including Miami or Dallas, tx and then fly additional south from there, in contrast to taking a lengthy trip directly from a northern city.
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When exploring multiple flights, furthermore keep in mind how close you might be to a main airline hub – it will be a lot additional highly-priced to fly around the globe directly from a more compact city then in order to fly to a significant hub very first.
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In many cases if you’re willing to put up with the slight inconvenience of two arrivals, discount travel could be yours. Just remember that as it stands many discount flight websites don’t search for arrivals in this way, so you will need to do some creative thinking by yourself.
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Eat Locally
An often overlooked key to lower price travel is food costs, which can be greatly reduced by buying in local grocery stores rather than dining out. Most places you stay will take advantage of tourists if you can and you frequently don’t understand until you do some currency conversion that you are forking out $ 10 for a poor dinner at your hotel.
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Instead, purchase some healthy snakes and fresh food from a market to eat within your outings. This doesn’t mean, of course, that you’ve to cook – it just means you must grab something fresh that you are able to eat on the go rather than quitting for lunch in the touristy restaurant.

Overview of Zimbabwean Banking Sector (Part One)

Entrepreneurs build their business within the context of an environment which they sometimes may not be able to control. The robustness of an entrepreneurial venture is tried and tested by the vicissitudes of the environment. Within the environment are forces that may serve as great opportunities or menacing threats to the survival of the entrepreneurial venture. Entrepreneurs need to understand the environment within which they operate so as to exploit emerging opportunities and mitigate against potential threats.

This article serves to create an understanding of the forces at play and their effect on banking entrepreneurs in Zimbabwe. A brief historical overview of banking in Zimbabwe is carried out. The impact of the regulatory and economic environment on the sector is assessed. An analysis of the structure of the banking sector facilitates an appreciation of the underlying forces in the industry.
Historical Background

At independence (1980) Zimbabwe had a sophisticated banking and financial market, with commercial banks mostly foreign owned. The country had a central bank inherited from the Central Bank of Rhodesia and Nyasaland at the winding up of the Federation.

For the first few years of independence, the government of Zimbabwe did not interfere with the banking industry. There was neither nationalization of foreign banks nor restrictive legislative interference on which sectors to fund or the interest rates to charge, despite the socialistic national ideology. However, the government purchased some shareholding in two banks. It acquired Nedbank's 62% of Rhobank at a fair price when the bank withdrew from the country. The decision may have been motivated by the desire to stabilize the banking system. The bank was re-branded as Zimbank. The state did not interfere much in the operations of the bank. The State in 1981 also partnered with Bank of Credit and Commerce International (BCCI) as a 49% shareholder in a new commercial bank, Bank of Credit and Commerce Zimbabwe (BCCZ). This was taken over and converted to Commercial Bank of Zimbabwe (CBZ) when BCCI collapsed in 1991 over allegations of unethical business practices.

This should not be viewed as nationalization but in line with state policy to prevent company closures. The shareholdings in both Zimbank and CBZ were later diluted to below 25% each.
In the first decade, no indigenous bank was licensed and there is no evidence that the government had any financial reform plan. Harvey (nd, page 6) cites the following as evidence of lack of a coherent financial reform plan in those years:

– In 1981 the government stated that it would encourage rural banking services, but the plan was not implemented.
– In 1982 and 1983 a Money and Finance Commission was proposed but never constituted.
– By 1986 there was no mention of any financial reform agenda in the Five Year National Development Plan.

Harvey argues that the reticence of government to intervene in the financial sector could be explained by the fact that it did not want to jeopardise the interests of the white population, of which banking was an integral part. The country was vulnerable to this sector of the population as it controlled agriculture and manufacturing, which were the mainstay of the economy. The State adopted a conservative approach to indigenisation as it had learnt a lesson from other African countries, whose economies nearly collapsed due to forceful eviction of the white community without first developing a mechanism of skills transfer and capacity building into the black community. The economic cost of inappropriate intervention was deemed to be too high. Another plausible reason for the non- intervention policy was that the State, at independence, inherited a highly controlled economic policy, with tight exchange control mechanisms, from its predecessor. Since control of foreign currency affected control of credit, the government by default, had a strong control of the sector for both economic and political purposes; hence it did not need to interfere.

Financial Reforms

However, after 1987 the government, at the behest of multilateral lenders, embarked on an Economic and Structural Adjustment Program (ESAP). As part of this program the Reserve Bank of Zimbabwe (RBZ) started advocating financial reforms through liberalization and deregulation. It contended that the oligopoly in banking and lack of competition, deprived the sector of choice and quality in service, innovation and efficiency. Consequently, as early as 1994 the RBZ Annual Report indicates the desire for greater competition and efficiency in the banking sector, leading to banking reforms and new legislation that would:

– allow for the conduct of prudential supervision of banks along international best practice
– allow for both off-and on-site bank inspections to increase RBZ's Banking Supervision function and
– enhance competition, innovation and improve service to the public from banks.

Subsequently the Registrar of Banks in the Ministry of Finance, in liaison with the RBZ, started issuing licenses to new players as the financial sector opened up. From the mid-1990s up to December 2003, there was a flurry of entrepreneurial activity in the financial sector as indigenous owned banks were set up. The graph below depicts the trend in the numbers of financial institutions by category, operating since 1994. The trend shows an initial increase in merchant banks and discount houses, followed by decline. The increase in commercial banks was initially slow, gathering momentum around 1999. The decline in merchant banks and discount houses was due to their conversion, mostly into commercial banks.

Source: RBZ Reports

Different entrepreneurs used varied methods to penetrate the financial services sector. Some started advisory services and then upgraded into merchant banks, while others started stockbroking firms, which were elevated into discount houses.

From the beginning of the liberalization of the financial services up to about 1997 there was a notable absence of locally owned commercial banks. Some of the reasons for this were:

– Conservative licensing policy by the Registrar of Financial Institutions since it was risky to license indigenous owned commercial banks without an enabling legislature and banking supervision experience.
– Banking entrepreneurs opted for non-banking financial institutions as these were less costly in terms of both initial capital requirements and working capital. For example a merchant bank would require less staff, would not need banking halls, and would have no need to deal in costly small retail deposits, which would reduce overheads and reduce the time to register profits. There was thus a rapid increase in non-banking financial institutions at this time, eg by 1995 five of the ten merchant banks had commenced within the previous two years. This became an entry route of choice into commercial banking for some, eg Kingdom Bank, NMB Bank and Trust Bank.

It was expected that some foreign banks would also enter the market after the financial reforms but this did not occur, probably due to the restriction of having a minimum 30% local shareholding. The stringent foreign currency controls could also have played a part, as well as the cautious approach adopted by the licensing authorities. Existing foreign banks were not required to shed part of their shareholding although Barclay's Bank did, through listing on the local stock exchange.

Harvey argues that financial liberalization assumes that removing direction on lending presupposes that banks would automatically be able to lend on commercial grounds. But he contends that banks may not have this capacity as they are affected by the borrowers' inability to service loans due to foreign exchange or price control restrictions. Similarly, having positive real interest rates would normally increase bank deposits and increase financial intermediation but this logic falsely assumes that banks will always lend more efficiently. He further argues that licensing new banks does not imply increased competition as it assumes that the new banks will be able to attract competent management and that legislation and bank supervision will be adequate to prevent fraud and thus prevent bank collapse and the resultant financial crisis. Sadly his concerns do not seem to have been addressed within the Zimbabwean financial sector reform, to the detriment of the national economy.

The Operating Environment

Any entrepreneurial activity is constrained or aided by its operating environment. This section analyzes the prevailing environment in Zimbabwe that could have an effect on the banking sector.

Politico-legislative

The political environment in the 1990s was stable but turned volatile after 1998, mainly due to the following factors:

– an unbudgeted pay out to war veterans after they mounted an assault on the State in November 1997. This exerted a heavy strain on the economy, resulting in a run on the dollar. Resultantly the Zimbabwean dollar depreciated by 75% as the market foresaw the consequences of the government decision. That day has been recognized as the beginning of severe decline of the country economy and has been dubbed "Black Friday". This depreciation became a catalyst for further inflation. It was followed a month later by violent food riots.
– a poorly planned Agrarian Land Reform launched in 1998, where white commercial farmers were ostensibly evicted and replaced by blacks without due regard to land rights or compensation systems. This resulted in a significant reduction in the productivity of the country, which is mostly dependent on agriculture. The way the land redistribution was handled angered the international community, that alleges it is racially and politically motivated. International donors withdrew support for the program.
– an ill- advised military incursion, named Operation Sovereign Legitimacy, to defend the Democratic Republic of Congo in 1998, saw the country incur massive costs with no apparent benefit to itself and
– elections which the international community alleged were rigged in 2000,2003 and 2008.

These factors led to international isolation, significantly reducing foreign currency and foreign direct investment flow into the country. Investor confidence was severely eroded. Agriculture and tourism, which traditionally, are huge foreign currency earners crumbled.

For the first post independence decade the Banking Act (1965) was the main legislative framework. Since this was enacted when most commercial banks where foreign owned, there were no directions on prudential lending, insider loans, proportion of shareholder funds that could be lent to one borrower, definition of risk assets, and no provision for bank inspection.

The Banking Act (24:01), which came into effect in September 1999, was the culmination of the RBZ's desire to liberalize and deregulate the financial services. This Act regulates commercial banks, merchant banks, and discount houses. Entry barriers were removed leading to increased competition. The deregulation also allowed banks some latitude to operate in non-core services. It appears that this latitude was not well delimited and hence presented opportunities for risk taking entrepreneurs. The RBZ advocated this deregulation as a way to de-segment the financial sector as well as improve efficiencies. (RBZ, 2000: 4.) These two factors presented opportunities to enterprising indigenous bankers to establish their own businesses in the industry. The Act was further revised and reissued as Chapter 24:20 in August 2000. The increased competition resulted in the introduction of new products and services eg e-banking and in-store banking. This entrepreneurial activity resulted in the "deepening and sophistication of the financial sector" (RBZ, 2000: 5).

As part of the financial reforms drive, the Reserve Bank Act (22:15) was enacted in September 1999.

Its main purpose was to strengthen the supervisory role of the Bank through:
– setting prudential standards within which banks operate
– conducting both on and off-site surveillance of banks
– enforcing sanctions and where necessary placement under curatorship and
– investigating banking institutions wherever necessary.

This Act still had deficiencies as Dr Tsumba, the then RBZ governor, argued that there was need for the RBZ to be responsible for both licensing and supervision as "the ultimate sanction available to a banking supervisor is the knowledge by the banking sector that the license issued will be cancelled for flagrant violation of operating rules ". However the government seemed to have resisted this until January 2004. It can be argued that this deficiency could have given some bankers the impression that nothing would happen to their licenses. Dr Tsumba, in observing the role of the RBZ in holding bank management, directors and shareholders responsible for banks viability, stated that it was not the role nor intention of the RBZ to "micromanage banks and direct their day to day operations."

It appears though as if the view of his successor differed significantly from this orthodox view, hence the evidence of micromanaging that has been observed in the sector since December 2003.
In November 2001 the Troubled and Insolvent Banks Policy, which had been drafted over the previous few years, became operational. One of its intended goals was that, "the policy enhances regulatory transparency, accountability and ensures that regulatory responses will be applied in a fair and consistent manner" The prevailing view on the market is that this policy when it was implemented post 2003 is definitely deficient as measured against these ideals. It is contestable how transparent the inclusion and exclusion of vulnerable banks into ZABG was.

A new governor of the RBZ was appointed in December 2003 when the economy was on a free-fall. He made significant changes to the monetary policy, which caused tremors in the banking sector. The RBZ was finally authorized to act as both the licensing and regulatory authority for financial institutions in January 2004. The regulatory environment was reviewed and significant amendments were made to the laws governing the financial sector.

The Troubled Financial Institutions Resolution Act, (2004) was enacted. As a result of the new regulatory environment, a number of financial institutions were distressed. The RBZ placed seven institutions under curatorship while one was closed and another was placed under liquidation.

In January 2005 three of the distressed banks were amalgamated on the authority of the Troubled Financial Institutions Act to form a new institution, Zimbabwe Allied Banking Group (ZABG). These banks allegedly failed to repay funds advanced to them by the RBZ. The affected institutions were Trust Bank, Royal Bank and Barbican Bank. The shareholders appealed and won the appeal against the seizure of their assets with the Supreme Court ruling that ZABG was trading in illegally acquired assets. These bankers appealed to the Minister of Finance and lost their appeal. Subsequently in late 2006 they appealed to the Courts as provided by the law. Finally as at April 2010 the RBZ finally agreed to return the "stolen assets".

Another measure taken by the new governor was to force management changes in the financial sector, which resulted in most entrepreneurial bank founders being forced out of their own companies under varying pretexts. Some eventually fled the country under threat of arrest. Boards of Directors of banks were restructured.

Economic Environment

Economically, the country was stable up to the mid 1990s, but a downturn started around 1997-1998, mostly due to political decisions taken at that time, as already discussed. Economic policy was driven by political considerations. Consequently, there was a withdrawal of multi- national donors and the country was isolated. At the same time, a drought hit the country in the season 2001-2002, exacerbating the injurious effect of farm evictions on crop production. This reduced production had an adverse impact on banks that funded agriculture. The interruptions in commercial farming and the concomitant reduction in food production resulted in a precarious food security position. In the last twelve years the country has been forced to import maize, further straining the tenuous foreign currency resources of the country.

Another impact of the agrarian reform program was that most farmers who had borrowed money from banks could not service the loans yet the government, which took over their businesses, refused to assume responsibility for the loans. By concurrently failing to recompense the farmers promptly and fairly, it became impractical for the farmers to service the loans. Banks were thus exposed to these bad loans.

The net result was spiralling inflation, company closures resulting in high unemployment, foreign currency shortages as international sources of funds dried up, and food shortages. The foreign currency shortages led to fuel shortages, which in turn reduced industrial production. Consequently, the Gross Domestic Product (GDP) has been on the decline since 1997. This negative economic environment meant reduced banking activity as industrial activity declined and banking services were driven onto the parallel rather than the formal market.

As depicted in the graph below, inflation spiralled and reached a peak of 630% in January 2003. After a brief reprieve the upward trend continued rising to 1729% by February 2007. Thereafter the country entered a period of hyperinflation unheard of in a peace time period. Inflation stresses banks. Some argue that the rate of inflation rose because the devaluation of the currency had not been accompanied by a reduction in the budget deficit. Hyperinflation causes interest rates to soar while the value of collateral security falls, resulting in asset-liability mismatches. It also increases non-performing loans as more people fail to service their loans.

Effectively, by 2001 most banks had adopted a conservative lending strategy eg with total advances for the banking sector being only 21.7% of total industry assets compared to 31.1% in the previous year. Banks resorted to volatile non- interest income. Some began to trade in the parallel foreign currency market, at times colluding with the RBZ.

In the last half of 2003 there was a severe cash shortage. People stopped using banks as intermediaries as they were not sure they would be able to access their cash whenever they needed it. This reduced the deposit base for banks. Due to the short term maturity profile of the deposit base, banks are normally not able to invest significant portions of their funds in longer term assets and thus were highly liquid up to mid-2003. However in 2003, because of the demand by clients to have returns matching inflation, most indigenous banks resorted to speculative investments, which yielded higher returns.

These speculative activities, mostly on non-core banking activities, drove an exponential growth within the financial sector. For example one bank had its asset base grow from Z $ 200 billion (USD50 million) to Z $ 800 billion (USD200 million) within one year.

However bankers have argued that what the governor calls speculative non-core business is considered best practice in most advanced banking systems worldwide. They argue that it is not unusual for banks to take equity positions in non-banking institutions they have loaned money to safeguard their investments. Examples were given of banks like Nedbank (RSA) and JP Morgan (USA) which control vast real estate investments in their portfolios. Bankers argue convincingly that these investments are sometimes used to hedge against inflation.

The instruction by the new governor of the RBZ for banks to unwind their positions overnight, and the immediate withdrawal of an overnight accommodation support for banks by the RBZ, stimulated a crisis which led to significant asset-liability mismatches and a liquidity crunch for most banks . The prices of properties and the Zimbabwe Stock Exchange collapsed simultaneously, due to the massive selling by banks that were trying to cover their positions. The loss of value on the equities market meant loss of value of the collateral, which most banks held in lieu of the loans they had advanced.

During this period Zimbabwe remained in a debt crunch as most of its foreign debts were either un-serviced or under-serviced. The consequent worsening of the balance of payments (BOP) put pressure on the foreign exchange reserves and the overvalued currency. Total government domestic debt rose from Z $ 7.2 billion (1990) to Z $ 2.8 trillion (2004). This growth in domestic debt emanates from high budgetary deficits and decline in international funding.

Socio-cultural

Due to the volatile economy after the 1990s, the population became fairly mobile with a significant number of professionals emigrating for economic reasons. The Internet and Satellite television made the world truly a global village. Customers demanded the same level of service excellence they were exposed to globally. This made service quality a differential advantage. There was also a demand for banks to invest heavily in technological systems.

The increasing cost of doing business in a hyperinflationary environment led to high unemployment and a concomitant collapse of real income. As the Zimbabwe Independent (2005: B14) so ​​keenly observed, a direct outcome of hyperinflationary environment is, "that currency substitution is rife, implying that the Zimbabwe dollar is relinquishing its function as a store of value, unit of account and medium of exchange "to more stable foreign currencies.

During this period an affluent indigenous segment of society emerged, which was cash rich but avoided patronising banks. The emerging parallel market for foreign currency and for cash during the cash crisis reinforced this. Effectively, this reduced the customer base for banks while more banks were coming onto the market. There was thus aggressive competition within a dwindling market.

Socio-economic costs associated with hyperinflation include: erosion of purchasing power parity, increased uncertainty in business planning and budgeting, reduced disposable income, speculative activities that divert resources from productive activities, pressure on the domestic exchange rate due to increased import demand and poor returns on savings. During this period, to augment income there was increased cross border trading as well as commodity broking by people who imported from China, Malaysia and Dubai. This effectively meant that imported substitutes for local products intensified competition, adversely affecting local industries.

As more banks entered the market, which had suffered a major brain drain for economic reasons, it stood to reason that many inexperienced bankers were thrown into the deep end. For example the founding directors of ENG Asset Management had less than five years experience in financial services and yet ENG was the fastest growing financial institution by 2003. It has been suggested that its failure in December 2003 was due to youthful zeal, greed and lack of experience. The collapse of ENG affected some financial institutions that were financially exposed to it, as well as eliciting depositor flight leading to the collapse of some indigenous banks.

Drones and Their Use by Governmental and Private Instances

A drone is an unmanned remotely controlled flying vehicle that also can be used for specific work in addition to just being able to fly around. Drones are used for photographic and video recording from above. Some are used to perform scientific or technical measurements. Some carry weapons and are used as combat tools. Still other are used to carry cargo and post between places. The latest development are drones that carry tools for installation and repair.

The basic technology in a drone consist of some kind of power plant, some propulsion mechanism, some kind of steering mechanism, some kind of sensors to recognize place and path and a sender-receiver unit to transmit and receive signals for steering and recording. Drones are found in all shapes you can find in greater airplanes, and also in all kind of exotic shapes, like oblong airships, disks, triangles, donuts, stars or can resemble big insects or birds.

Small or light drones are typically driven by propellers connected to electric motors powered by batteries. Steadily more one produces very light drones, powered by solar panels, that can fly in the air for several weeks in principle. Some drones are held aloft by gas lighter that air, like a blimp, which also makes the drone able to hold itself in the air for a long time. Greater or heavier drones are mostly powered by some kind of combustion engine, like piston motors, turboprop motors or turbojet motors.

It is also possible to construct drones powered by nuclear energy that can stay aloft for days or weeks, and especially if those drones are partially made as gas-filled blimps. Such nuclear power sources need not be what is considered atomic reactors. The energy source can be special isotopes that radiate intensely and thus produce enough heat to power the drone. Some of these isotopes radiate mostly alpha-rays or beta-rays that can be shielded off without heavy armors.

Since most uses of drones are held secret or simply not announced publicly, it is difficult to give a full account of the extent of their use and who are using them, but a fairly clear picture emerges based on official sources, journalistic and scientific articles, commercials from drone producers, and stories of people coming in touch with drones in use.

Most drones are probably used by civil authorities and property owners for domestic surveillance of various kind, like border control, road traffic surveillance, wildfire detection, air photography, geographic mapping, pipeline control, electric grid control and surveillance of crowd behavior. Drones are steadily more used to transmit views of sport championships. Police forces use drones for detection and investigation of crimes, a practice that also seems to involve direct spying by drones on private citizens at their homes.

Military forces have since long used drones for surveillance of foreign territories and combat zones. The use of small tactical drones for delivery of bombs, launch of missiles and gunning is old but is getting steadily more important. By 2014 such drones are extensively used to surveil terrorist bases, to bomb such bases and to kill individuals suspected of terrorism. A classical surveillance drone used both for military and sivil authorities is the RQ-4 global Hauk. The small helicopter drones Northrop-Grumman MQ-8 (A, B and C) fire scout are examples of the smaller surveillance-combat drones used in local operations and launched from small vessels or from land-based troupes.

Greater long range drones, comparable to bomber planes, is in use both for surveillance and to destroy targets at ground level and at sea. Well-known examples of these are the Atomics MQ-1 predator, the Atomics MQ-9 Reaper able to carry a heavier load of arms and the still more advanced stealthy jet-driven combat drone Atomics Avenger. The Isreeli Eitan drone is a big long-range surveillance and ground level combat drone able to keep itself aloft for 70 hours.

Effective laser guns have by now been invented, and drones armed by laser guns are probably a reality by 2014, at least in experimental versions, but these drones must be of some size because the laser needs a large power generator driven by a turbine engine.

The technical control mechanisms are however by 2014 probably not so far advanced that one has been able to construct fully reliable supersonic drones with fighter jet capabilities. Unmanned supersonic stealthy fighter jets have however been under construction for some time and they are by 2014 since long been flown for test. Of these Northrop-Grumman stealth bomber drone x47B is by 2014 near to be deployed for realistic tests of combat operations form aircraft carriers.

The British company BAE is developing a stealthy supersonic fighter-bomber drone in a project called Taranis. The French producer Dessault together with other European participants are working on a similar project, called nEUROn. Both projects have produced experimental versions that are flown for test by 2014. There are speculations that the 6th generations of fighter jets will be unmanned or can be flown manned or as drones depending on choice. Lockheed-Martin Skunk Works and Boeing Corporation Phantom Works are leading American developers of combat vehicles, including unmanned planes.

Information available seems to indicate that Lockheed Martin is developing unmanned combat planes which use much of the same technology as the F35B stealthy, vertical take-off and landing, supersonic fighter, and that they also are developing a high-flying hypersonic unmanned spy-plane . It is logical to think that this hypersonic plane also will get bombing capabilities.

Drones that mimic birds or other small animals have been developed and can be used for spying, gunning or injection of poison in targets. There are rumors that such drones already are in use by certain authority units. Rumors can tell that even spy and attack drones resembling insects in shape and size is being developed. Probably the microtechnology has still not come so far that such drones can be made, but the physical posibility of making such drones is there.

USA have plans to let construct drones made as blimps and powered by solar panels to be permanently stationed in the upper zones of the atmosphere for surveillance. Such drones can be made to lower altitude to avoid clouds and to patrol an area, something one cannot do with satellites. But possibly high flying drones that operate aloft for days or weeks, powered by nuclear energy are already in use since long. Certain UFO observations seem to point in that direction.

One can ask how often people see drones in flight or in use by 2014. There is of course not any statistics about this. Sometimes people see flying objects that clearly are recognized as drones. Most often it will be difficult to decide what is seen. Most UFO reports by 2014 are probably caused by drones.

Since at least bigger drones are comparable to other air traficants, they are obliged to keep lanterns and other means to warn against the possibility for collision, but since government instances operating drones typically want to keep the flight secret, such lanterns will possibly be lit only when other traffic is in the neighborhood, or when the operators want visual contact. This kind of intermittent light emission is typical of many classical UFO sightings.

Also the flight pattern of a drone that are used for surveillance and investigation will mimic the pattern seen by objects in UFO reports: Sometimes they fly foreword with various velocity, sometimes they stop and just hover, they will often change direction, they will come from above, do some maneuvers near the ground and then fly up and away.

Also lights from drones can be used to illuminate targets, often at the ground, for image recording, which is also seen in classical UFO stories. Also many drones have a shape like a classical UFO. Furthermore, drones will make only little noise, which also is characteristic of so-called UFOs.

How Do I Expand My eBay US Business Internationally?

It is a very large world out there with well over 193 recognized countries. If you add all the dozens of colonies and territories controlled by other countries that number rapidly grows to well over 200 countries in the world. For eBay sellers looking to expand Internationally, many of them fear the customs rules and regulations which are different in every country. How could one eBay seller, become well versed in the customs regulations of every country? The answer simply is you can not. So what does an eBay seller do to avoid issues with this by selecting to offer your product to the worldwide market? Slow methodical International expansion is the way to go and making the customs rules the responsibility of your buyer.

Stage 1 for a US Seller International Expansion

The first step in the process is to change your shipping policy page for your listings. One of the nice features which eBay offers is that you can select specific countries which you would like to start servicing Internationally. But which countries should you select? Currently the USPS offers a service Internationally called 1st Class Package International. The USPS raised the postage rates for this service level category and in some cases doubled the rates. However, it allows a new eBay International customer to ship a 4 oz package Internationally and receive a delivery confirmation scan in selected countries. These are the first countries which you will start with for your new eBay International Business.

Activate the following countries:

Canada Australia United Kingdom

Netherlands Germany Switzerland

Belgium New Zealand Sweden

Spain Ireland Finland

France Portugal Brazil

Insurance

If you are using an order management system like Shipstation or Shipworks, they will allow you to purchase insurance for these packages. This will alleviate your concerns regarding potential fraud and lost packages.

Shipping Policy

Make sure that you adjust your shipping policy pages to reflect the fact that you are now servicing the above referenced countries. Make sure that you select the correct shipping service and mention that you do not offer combined shipping on International orders. In addition, please make sure you notate that items that are prohibited from entry to your country is the buyers responsibility. The seller is not responsibility for prohibited, restricted or items prevented from entry by your customs agency. If you have questions regarding entry restrictions please contact your local customs agency. Duties and taxes assessed against shipments are the sole responsibility of the buyer.

Addressing Label System

When expanding into the International market, you want to use an address management system that will grow with your business. I always recommend using Endicia.com. Endicia allows you to take advantage of commercial base pricing for your domestic parcels and will allow you to generate the 1st Class Package International compliant labels. This will become an important feature as your business grows.

Measure Your Success

Keep track of how many packages you are shipping internationally daily. The main statistics you will want to measure are the following:

1) Number of International Orders?

2) Percentage of lost packages in relationship to your International orders?

3) Percentage of Fraudulent orders?

4) How does this compare to your US Business?

5) Which country are you receiving the most orders from?

Stage 2 For an eBay US Seller International Expansion (Shipping more than 20 packages per day Overseas)

So you have been in stage one of your International expansion and you are seeing some real success with the expansion of your business. As a seller, you know that if you can lower your postage rates internationally you will be able to expand your business further. How do you accomplish this? You contact a USPS Postal Qualified Wholesaler. To locate and contact a Postal Qualified Wholesaler you will want to contact your Global Account Manager with The USPS.

OK so you have found a USPS Postal Qualified Wholesaler and want to know which USPS Bulk International Mailing program should you choose? This question is answered differently by each eBay seller. For the most part, you have two options which are listed below:

USPS International Priority Airmail

This is a USPS 1st Class International mailing service offered by Postal Qualified Wholesalers (PQW) to over 200 countries throughout the world. In essence, the USPS has outsourced the USA side sorting, transportation and preparation required for International distribution. The PQW will deliver your mail to the USPS International Sorting Center (ISC) sacked and ready to go out on the next flight. Since the USPS is receiving sacked mail your packages are not scanned at the acceptance facility nor will they receive a delivery confirmation scan in the destination country. The benefits of this service is that your postage rates, in many cases, will be cut in half. You will be able to upload the same tracking numbers to eBay but they will not scan for delivery. Now this is where your statistics come in handy. If you are experiencing a high loss percentage from your stage 1 testing, then this service is not for you. However, if you are experiencing a palletable loss percentage then you may want to test this service to optimize your postal savings and increase your quantity of International Orders received. In the event that you feel you must have tracking on these orders, the you must use the next service. For additional information regarding International Priority Airmail please see my article on EzineArticles.com titled USPS International Priority Airmail for eCommerce Companies.

USPS Commercial ePacket

This is a USPS 1st Class International mailing service offered by Postal Qualified Wholesalers (PQW) to only 15 countries throughout the world. The main difference between Commercial ePacket and International Priority Airmail is that ePacket will have a delivery confirmation number and are scanned delivered by the receiving post office. The trade off here is that this service is more expensive than International Priority Airmail.

Important Considerations

Some important considerations you will want to make when determining which direction you're going to take in your International Shipping Method

1) Will your increase in business outweigh any risk of lost packages?

2) How many fraudulent claims are you currently experiencing Internationally?

3) Is your product sale price low in value and easily replaced if your package is lost?

4) Would you be willing to self insure yourself by withholding a small portion of the postage savings to eliminate any risk of loss?

Tips For Choosing a Hajj Package

Hajj, which purifies man of all sins, is a very sacred journey whose spiritual aspect can be overshadowed when faced with logistical troubles. Therefore choosing the "perfect" hajj package is crucial to allow you to focus on the spiritual aspect of the journey wholeheartedly.

Following are some aspects to consider when choosing a hajj package:

1. Choosing an agency registered with the Ministry of Hajj over a sub-agent increase your chances of a smooth journey. Registered agencies are more aware of the latest rules and regulations of processing visas, can contact Ministry of Hajj to resolve a problem, are accountable to Ministry if pilgrims file a complaint and are more resourceful in making airline, hotel and transportation arrangement. They are also cheaper because travel arrangement in Saudi Arabia can only be done by authorized agencies. Sub agents have to buy services from these agencies and therefore sell the package at a mark up price.

2. Despite all the advantages of licensed agents mentioned above, you can choose a sub agent if you have heard good things about them. All Authorized agents may not give a good service while some sub agents are very professional. Therefore one should choose a hajj package provider based on referrals.

3. Company of a knowledgeable and experienced guide in your group is necessary. No matter how much information you have accumulated from books and lectures, you may face questions, you had not anticipated before. It is also important to know if the travel agency seeks advice from their guide. For logistical ease, some agents may plan departure to Arafat and Muzdalifah before the time recommended by Islamic law. Choosing an agency that plans the trip under a reputable imam can mitigate risks of taking shortcuts or going against Sunnah.

4. Be sure to check that the Imam will do the hajj with the pilgrims of the package you have selected. It is difficult to contact the Imam if he is staying in a different hotel, traveling in a different bus or living in a different tent in Mina from yours. This problem is especially common with agencies that offer large variety of packages under the guidance of one or two Imams only.

5. Having a female guide would be of added benefit for sisters performing pilgrimage.

6. It is useful to check if the travel agency has a full-time employee in US and Saudi Arabia. The more an agency relies on outside resources, the more likely it is to suffer from mismanagement. Also the longer an agency has provided Hajj services, the better equipped it is to give a organized service.

7. Most Hajj packages advertise price with fare from New York to Jedda. If you live elsewhere, be sure to include the cost of domestic air fare to New York when choosing a package. Also add the cost of Hajj fees and Zabiha to get an estimate of the exact amount you will be spending per person.

8. Accommodation in a convenient site is very useful. Hotel close to the Haram and Masjid – e- Nabwi is more important than the number of stars of a hotel as it would cut travel time, conserve energy for worshiping and save time by not having to stand in long lines to do wudu or use restrooms . It may be better in cases to share your room with 4 people in a hotel close to Haram and not sharing room with one other person but at a greater distance from the Haram. Moreover hotel ratings are per Saudi Government standards which are different from the American standards of rating hotels.

9. Do not worry too much if a hajj package does not offer meals in Makkah and Medina. There are plenty of options around Haram to eat and drink in between prayer times, but may take up a lot of your time waiting in a line. Hotel buffets could be a time saver or a big distraction, as often people may spend a lot of time socializing too much. It is however good to receive food in Mina and Arafat as options will be limited. If you are performing Hajj with family it may be better to choose a package that offers meals throughout the trip.

10. Choosing hajj packages that land in Medina first, can save time spent in immigration lines. Pilgrims landing in Jedda can experience 14 – 18 hours in immigration before leaving for Makkah. However choosing package where pilgrims land in Jedda opens up many more flight options and may be cheaper. Same is true for leaving Saudi Arab. Medina as a port of entry or exit could save a lot of time.

11. Ask the agent about the location of the tent in Mina. VIP Tents are mostly (if not all) at a short walking distance from Jamarat. However regular tents in the North American Camp are as far as a 50 minute walk to Jamarat one way. In fact some tents are not even pitched in Mina. They are located beyond huge sign boards that say "Mina ends here"!

12. Hajj packages promising access to private apartments during stay in Mina is a plus. Tents in Mina are small with just enough space for people to sleep. Pilgrims can thus leave their luggage in their rooms during their stay in Mina. It also opens up the option to use the bathrooms and showers of the room and not the ones set up in Mina camp.

13. Hajj packages that offer free shuttle service from Mina to Haram can help you save money. Taxi fares increase exponentially during Mina days. Lured by the profits, a number of people come from other cities to work as taxi drivers and may even get lost while trying to drive pilgrims to Haram. Buses though cheaper take a long time to arrive. Therefore a shuttle service provided by your agent would be quicker and free.

14. Most hajj packages give out SIM cards. This could be a time saver too. Otherwise you may have to wait in lines to get a SIM card.

Considering these logistical issues while choosing the perfect hajj package will hopefully cut your worldly worries of performing hajj and allow you to concentrate on your worship to your heart's content.

Picking the Right Pool Table for Yourself

There is something to be said about buying the right pool table. Buying a pool table is really similar to buying a car. In many ways you can relate the entire billiard industry to the car industry. It is astonishing, how many lessons our pool table manufacturers and retailers can learn from the o-so-trusted car industry. There are dozens of different manufacturers in different countries. Then, you have to choose where you are going to purchase your pool table. Will you decide to purchase from an authorized dealer or a small timer in his garage? Inside that, you'll notice that there are several different designs and sizes. There are a wide range of options in raw materials it's built out of. Even more you have to decide what options you want including: stains, cloth, sights, and accessories. Are you going to buy new or used? And the list goes on and on.

The recommendation to purchase new is always the best one. Why? Forget for a moment, the different qualities and brands available. Now really consider the disadvantages of buying a new pool table. There simply is only one real disadvantage, price. If you are considering buying a pool table and you are motivated on price and price alone; then it may be best suited for you to just settle for something used. However, if you can wait, if you can take some time to slow down the impulse of purchasing now; then you will notice that you would be giving away all the advantages that come along with buying new. Remember there are numerous brands and qualities. You would be abandoning the customization, quality, generational passing, warranties and guarantees. Need anything more be said? It's obvious.

Buying a pool table is a huge expense. You shouldn't have to simply settle, whether that is for a used one or a retailer's stock, because it is cheaper. You wouldn't settle for the car you don't want just because it's cheap, right? Perhaps, but you know what you want. You know what you like. Build it and be a part of the process. This is going to be something that you can pass on to your children's children. However, there are certain occasions that buying in stock inventory or used items might just make more sense. Just know what is right for you.

Alright, then what is the best pool table available? That's up for debate. I have worked on, and seen, pretty much everything out there over the years. Some are great others are firewood. Generally, speaking I would recommend that you purchase something made in the United States, uses a hardwood in the construction, and contains either a Brazilian or Italian slate in the three-piece form.

As a side note: Tables from China just aren't good. Slate from China just isn't good. If you think slate is just slate; then tell that to the numerous customers that made the mistake of buying these and needed frame rebuilds, slate replacement, and new parts that ended up costing them more money than what they paid for the whole table brand new. Chinese slate is rigid and hard not allowing it to flex so it cracks and breaks with ease. Their pool tables are mass-produced on "the line" with sprayed on stains and finishes. Sure they look great. They might even play OK for a little while, but those finishes crack and the cheap woods used, warp. It doesn't take long for that to happen either.

There is also a difference in MADE IN THE USA and BUILT IN THE USA. There are many stateside companies that claim made in the USA but are actually only assembled here. I'm not buying from someone like that. Do the research, talk to the right people and educate yourself. I can list many American manufacturers for you but that would be settling and taking away from the value in product research. Let's try to remember that this is a process more than it is an impulse purchase.

One piece slate tables are out dated for the home. In bars they are nice, but that isn't what you want in your home. First off, who wants to move it? Nobody does. Secondly, they just can't get the same kind of precision level that a three-piece slate table can get. General leveling is all you get with one piece slate and three pieces of slate not only gives you that, but also adds a fine tuning element that will hold that level for longer and resist warping as well.

Finding the right manufacturer and retailer will take some time. Find the best ones that fit your budget and, more importantly, fit your needs. The internet can give you the ideas, but you have to get out there and actually see the product. Take your time. Find what works best. Remember it's your money.

Size and style are completely up to you. There isn't anything here that anyone can do to influence these. How much room do you have? This will help you gauge what size will fit into your current home. Think about this one carefully though. Remember, as American's, we move often. What may fit in your current home may not fit in your next one. What decor do you have and present in your home? Does a traditional look, contemporary design, or tournament style fit you and your home? There can be options on a pool table from the legs, the frame (arched, no arch, double arch), and rail edges (routed, plain, scalloped). All of these things should be considered. Get out there and look at them!

There are the more common types of woods used to make pool tables. Generally, you will see particle board with veneer and laminate over it, poplar wood (or tulip-wood), oak (white or red), hard white maple, hickory, walnut, mahogany, or some other exotic woods. There are tables out there made out of marble, car parts, metal, and other strange materials. Your standard hardwoods, however, will be oak or maple for most traditional models and a laminate will typically be used on your tournament style modern corner tables. General rule of thumb: stick with the standard woods and work your way up.

Which of these are important to you? Which aren't? Generally, your domestic hardwoods are going to last a really long time. Just another important note on "hardwoods", poplar is technically considered a hardwood, but most don't recognize it that way. It's soft and warps easy even if you press it together in layers. Don't be fooled by the salesperson. Tournament style tables are pretty much all made from a particle board wood with either a high, or low, quality laminate. Don't let that keep you from buying one because particle isn't that great. It isn't, but some good name brand stuff makes a good table out of it.

There are a multitude of different stains and finishes available these days. The stain is basically the color that they make the wood while the finish is what goes over that for protection and shine. The stain colors range from natural and light colors, all the way to dark and blacks. Finishes will generally be available in only a few different options with matte, semi gloss and high gloss being the most popular. These two items are related to your personal desires and decor. Check them all out, especially against your cloth color options.

No longer are the days of the traditional green cloth. There are dozens of colors available now and you aren't limited to the greens and blues of the past. There are different types of cloth though. They will fall into two types: woolen and worsted.

Woolen cloth, or nap cloth, is your standard in home and recreational cloth. Most retailers include this type as the standard cloth on a table purchase. Very rarely will you see it in a pool hall unless the owner is cheap. This cloth is usually a nylon and wool blend. It's sometimes referred to as nap cloth because it has micro-fibers that stand up similar to carpet. Professionals stay away from this cloth because, it doesn't pull on the slate as tight for less speed and accuracy, it tends to pill, balls will indent grooves, and gives it the "wiggle".

Worsted cloth is also a similar blend with, a much, higher wool content. This stuff is the best of the best. It's elastic enough to stretch to unbelievable tightness which gives the game extreme accuracy and speed that is consistent enough to allow professionals to maintain position throughout their game. It doesn't pill and rip, like its brother woolen, and it's heavy and durable which extends its life in most scenarios. If you have the extra cash, get it! Don't skimp on cloth, but know that there really is only one true manufacturer and the other brands of worsted wool are just cheap knockoffs.

Sights come in many different materials and styles. You'll see round and diamond-shaped sights made from plastics, mother of pearl, abalone, and metals like brass and chrome. You can have them be different colors or have a double diamond look to them. The most common double diamond style will consist of a mother of pearl sight surrounded by abalone. This gives a pool table a completely different look and feel.

Then we come to the accessories. They are what they are and most often than not you are going to get a kit with your table that comes straight out of China and generally suck. That's OK though because these are starter items. Naturally, you want the best you can get with the purchase, but don't let one guy tell you his table is better because he has better accessories. Once you learn the game and get more involved you will appreciate, and understand, the value of upgrading the equipment over time. Personally, if the balls aren't Aramith and the cues aren't of American decent; then I don't want them. However, they get pricey and aren't as necessary until after you get the feel for the game and desire better equipment.

So the last thing to mention while you search for the perfect pool table is the warranties and guarantees. Why is this important? Simple, if the manufacturer doesn't back their product up for a lifetime, and a retailer doesn't support his work with a lifetime guarantee; then what good is the product and service being provided. Remember that generational passing? How can you be expected to do that if the maker and seller don't even believe in their product? It's hard to find the right manufacturer to dealer combination, but they are there. If you can't offer these two simple things then you shouldn't be in the business at all. Forget them.

If the brand is right then call the manufacturer and tell them you want their product without the retailers' involvement and tell them why. It the retailer is right and the brand is wrong then you might need to explore other options with them or find another brand.

This is all about you and this is the insight for your analysis. Ultimately, you are the one who needs to decide what is right for you in brand, cost, quality and style.

Expat Banking – Personal Finance For the Intrepid Investor

Here at Q Wealth we often receive emails and calls from people who are confused about how to manage their finances once they become expats or non-residents. I'm not talking so much about tax preparation or returns, but rather about the practical aspects of banking across borders.

For example: Do you need an offshore bank account? What is the difference between a multi-currency account and multiple currency accounts? Should I keep my money in the country where I am living? Can I still access my online brokerage account from overseas? These are all typical questions we are asked, and I will answer these and more in this article.

Let's make up two typical composite characters, Bill and Mary Expat, who are retiring early abroad and planning to travel frequently. To make things easy, let's say they are American. They have decided they like the laid-back lifestyle of Latin America, but they are still wavering between retiring in one of the more popular expat havens like San Miguel de Allende in Mexico, or Bocas del Toro in Panama … or maybe they would like to go to a more exotic, adventerous place like Columbia or Brazil. They don't know yet. Either way, getting there is half the fun, and Bill and Mary are determined to enjoy the journey. For the moment, they are going to up stumps and travel!

Bank Accounts and ATM Cash Withdrawals

Bill and Mary are starting out on their journey with a few accounts at banks in their home country, the USA. Like most couples, they have a couple of joint checking accounts, a savings account, a credit union account and a few credit cards.

It's certainly worth keeping these home country accounts. US checks are still useful in many Latin American countries, where they can be cashed at the friendly neighborhood casa de cambio. This is a good way to access cash for things like daily living expenses or home improvements. Typically the casas de cambio give a better rate of exchange than ATM machines without charging any fees, and without being subject to daily limits. But of course, before they will cash checks for you on the spot, they must know you. It is best to referred by an existing client, so ask around the "expat experts" in your chosen area.

US bank accounts will also be useful for paying bills at home. Regular bills like insurance payments may be debited automatically, while one-off bills might be best paid by mailing a check. Regular income like social security checks can be direct deposited into the US checking account.

Many people don't even know they have daily cash withdrawal or spending limits on their ATM or credit cards until the day they urgently need a reasonably large amount of money. Scared of building up a large amount of cash at home, they wait until the last minute to withdraw funds, assuming that because they have the money in their account, they can withdraw it using their debit cards.

Big mistake! They have to pay their builders in cash and the cash dispenser refuses to spit out the money. In addition to that, many countries have just one or two ATM networks and these networks automatically impose their own daily limits.

It's important to understand in this respect that there are actually three different types of daily limits you must contend with:

o Daily cash withdrawal limit imposed by the bank that issues the card

o Daily purchase limit imposed by the bank that issues the card – this applies to non-cash purchases, where you sign a card purchase voucher in a retailer.

o Daily cash withdrawal limit imposed by the ATM network owner – this limit is not set by your bank, but by the owner of the actual cash machine where you are conducting the transaction.

That is to say, you can ask the bank that issues your card for a permanent or temporary increase in your cash withdrawal limit. They might set it at $ 50,000 a day. But most ATMs don't pay out more than about $ 500 in one transaction. In this case as far as your card issuer is concerned, you could do 100 transactions of $ 500 each per day, before you hit their limit.

ATM network owners set their own limits, for a variety of reasons. In Brazil, for example, things are particularly difficult. Withdrawals at night are limited to 50 reals, whereas a taxi across Sao Paulo can easily cost 150 reals. So if you are arriving in Sao Paulo on the red-eye flight, be sure to bring cash and don't rely on local ATM networks! Argentina and other countries place similar restrictions on ATM withdrawals.

In some countries each bank has a different network. In other countries (Spain for example) you may find one monopoly network that controls virtually all the cash machines. They are the worst! If the network owner says nobody may withdraw more than say $ 500, their word is law. It doesm't matter that the card issuer allows you to withdraw $ 50,000. You will get $ 500 a day, no more!

Internet Purchases and Credit Cards

When you are starting out in a new country without any established credit record, and as a new, recent arrival resident, it may be hard to obtain a credit card. So it is well worth keeping credit cards from your home country too. But there are a few tips and tricks for playing the cards correctly.

First, inform your card issuer that you will be traveling. Call them in advance. That's important because these days, all transactions from abroad are viewed with suspicion by automatic tracking software used by all the banks. If your bank doesn't know you are abroad, the software will most likely prevent you from suddenly spending $ 500 in Panama. This would, of course, be rather embarrassing if you are just leaving a restaurant with prospective business partners at midnight Panama time, early morning Eastern when your bank is closed, and you were relying on the card to pay the bill.

It's also worth keeping a US billing address. This may be a PO Box or a private mailbox street address provided by an outfit like The UPS Store or Pakmail. You can get a phone number to go with it from a VOIP provider like Skype. This is important. Although your bank might be happy to mail statements to a foreign address, about 99% of online retailers are not set up to handle US cards with non-US billing addresses. Their systems will automatically detect from the card number that the card is issued in the US, then the same system will require an AVS (Address Verification System) match. AVS only works with US addresses. So if you have a US-issued card with a non-US billing address it is basically useless for internet purchases, and also for any other purchases where your ZIP code is requested (some gas stations in the US for example)

Equally, you should be aware that the unique IP address of each computer on the internet, allows the merchant to see what country the order is being placed from. If you order something that is popular with card fraudsters (like a new laptop, a digital camera or gold jewelery) using a US card, US billing address but a Panama IP address, the transaction will most likely be flagged as potential fraudulent. Usually in cases like this, you need to pick up the phone and talk to the merchant directly to explain the circumstances, so they can manually override their fraud procedures. Most merchants will be happy to do this, but some simply won't budge.

Opening a Local Bank Account

At some point you will most likely find you need to deal with the local banking system in the country you are moving to. For example, in most Latin American countries now you can pay your utility bills online rather than standing in line for 45 minutes to pay in cash. But you will need a local bank account to do this.

Bank account opening procedures vary enormously from country to country. Unless you are moving to a known 'tax haven' the banking system will probably be geared towards locals, and you might find that you have to demonstrate official residence by means of a permit or local ID card before you are even allowed to open a local bank account. There are often exceptions to these rules – but local bank staff in small-town branches will probably not be familiar with them. It's best to ask local expats for their recommendations, and to choose a bank and branch that is accustomed to dealing with expats and foreigners.

Either way, before you leave home try to get several copies of a bank reference from your home bank addressed "To Whom it May Concern" and stating that you have been a client for a number of years and that have always operated your account in good standing. These documents will prove very useful when dealing with foreign banks, both local and offshore. If your home bank says they want to address a reference to a specific bank, explain that you are traveling and are planning to buy property overseas, but you don't yet know in which country you will end up.

It's not just the account opening procedures that vary a lot depending on the country you go to. So do the services offered, which may be significantly different from what you are used to at home. Make sure you take the time to understand the terms and conditions of operation related to your new account, otherwise your bank might assume one thing while you assume something totally different. For example, how long do you have to wait after making a deposit before you can write a check against it? Some countries have complicated systems of value dates where money might show up in your account even though it is not available for you to spend. If there's anything you don't understand, ask your bank.

Do you need a Private Offshore Bank Account?

Banking services vary widely, but are rarely of very high quality. You should probably therefore consider opening an account at an offshore bank that specializes in dealing with non-residents. You can open this in a neutral third country – places like Switzerland, the British Channel Islands, Singapore and Panama are typically good. Big names like Barclays Wealth and HSBC offer these services, as do a multitude of smaller banks. Even in this day and age it should be possible to open non-resident bank accounts by mail, without the need to travel there. You can then operate the account using internet banking and debit or credit cards.

There are two main reasons why you might want to open an offshore account. The first is for convenience – you will be dealing with a sophisticated private banker who speaks your language and can offer the range of international services that you will demand. The second is for privacy and asset protection – offshore banks offer confidentiality and discretion. As you become non-resident of your home country for tax purposes, you will gain substantial tax advantages by moving your money offshore.

One of the convenient services most offshore banks offer expats is the multi-currency bank account. This allows you to keep various currencies in the same account. For ease of use you have just one account mnumber, but you can keep all major currencies there and switch them at will with the click of a mouse. Another useful service is the so-called InvestLoan which allows you to borrow money in one currency at a low rate of interest, then re-invest it in a higher interest currency to make a profit.

Of course this doesn't necessarily apply if you are moving to a banking center like Panama or the Cayman Islands, but if you are moving to a high tax bureaucratic country like Mexico, Brazil or almost anywhere else in Latin America, you don't want to put all your assets into the domestic banking system where the government can see them on the radar. Neither do you want to leave them in your home country like the USA which will also try to tax you on those assets!

Another consideration when opening your offshore account is whether to open a personal or corporate account. If privacy is a concern for you, it is generally worthwhile forming an offshore corporation and holding the account in the name of the corporation instead of your personal name. This helps keep your account under the radar, as transfers in and out will not show your name.

If you would like to open a private or company offshore bank account, there are consultants who can help you. They will explain a number of do's and don'ts, and also direct you to specific banks that you can contact directly in order to open accounts. They can also tell you which banks will open accounts for offshore corporations.

A separate brokerage account is usually a good idea too, since most online offshore banks do not offer great brokerage facilities. But there are some. I know, for example, a European-owned offshore discount brokerage house based in Panama that allows you instant online access to major world markets such as New York, London and Frankfurt.

The History of Austrian Airlines at JFK

1. Return to JFK:

Two decades after Austrian Airlines launched its original, but unsuccessful transatlantic service to New York – a joint operation with Sabena Belgian World Airways inaugurated on April 1, 1969 with a Boeing 707-320 registered OE-LBA that made an intermediate stop in Brussels- it returned to the US on March 26, 1989, this time with an Airbus A-310-300 sporting registration OE-LAA. The occasion not only introduced intercontinental service to its route system, but a widebody aircraft with its first three-class cabin configuration to its fleet. Unlike the previous attempt, this one proved successful, but signaled the beginning of another two decades of elasticity, paved with numerous aircraft types, airline alliances and strategies, terminals, handling companies, and computer systems. This is its story.

2. JFK Station Evolution:

Initial training, held at Austrian Airlines' North American headquarters in Whitestone, New York, and taught by Peter "Luigi" Huebner, commenced on February 6, 1989, or six weeks before the inaugural flight, and its curriculum included "Passenger Handling I" and "Adios Check-In" courses.

Austrian Airlines' first JFK location, the East Wing of the no-longer-existent International Arrivals Building, was a shared facility with Icelandair and encompassed five Austrian-specific check-in counters equipped with computers, automated boarding pass printers, and laser-scannable baggage tag printers, and the jointly-used, upper level Icelandair Saga Lounge.

Entirely employed and trained by Austrian and outfitted in its uniform, its staff performed all ground operations functions: Passenger Service, Ticket Sales-Reservations, Lost-and-Found, Load Control, Administration, Supervision, and Management, while Icelandair personnel served on the ramp, overseeing aircraft servicing and baggage, cargo, and mail loading.

However, the success of the operation relied upon the equipment that serviced it and it was only Airbus Industrie's decision to offer a shorter-fuselage, lower-capacity version of its signature A-300 that made the reinstated transatlantic operation possible with the A-310 .

This long-range, twin-engine, widebody design, of concurrent technology, offered the same range and dual-aisle comfort as the comparable quad-engine 747 or the tri-engine DC-10 and L-1011, yet at the same time offered reduced capacity to facilitate profitable, year-round operations. Because of Austrian's market size, the larger 747, DC-10, or L-1011 would otherwise have operated at a loss outside of the peak summer travel season. Any of the other then long-range aircraft, inclusive of the Boeing 707 and the McDonnell-Douglas DC-8, featured older-generation, fuel-thirsty, four-engine Stage 1 technology of the early-1960s and would have been banned from US service unless they had been hush-kited or altogether engine-retrofitted. The very A-310 made Austrian Airlines' long, thin Vienna-New York route sector possible.

The initial 1989 timetable offered six weekly frequencies during the summer and five in the winter, at which time two A-310-300s served New York and Tokyo, the latter with an intermediate stop in Moscow. Alternatively, they also augmented the longer-range routes, such as those to Tel Aviv, Istanbul, and Teheran.

During the first six months of JFK operations, an aircraft never experienced an excessive delay because of scheduling, resulting in exemplary on-time performance.

In-flight service naturally represented a large portion of an airline's expenditure. As a result, many carriers began to reduce this in order to decrease costs. Austrian Airlines, however, remained unique in a world aloft characterized by snacks and paper cups by providing printed menus, amenity kits, china service, complimentary alcoholic beverages, and earphones in the coach cabins of its transatlantic flights to and from Vienna.

Because of the A-310's short fuselage, however, lower-deck cargo space was limited, with the forward hold usually accommodating baggage unit load devices (ULDs) and the aft the cargo itself, which was often restricted to two pallets and a single AKE unit.

Although load factors on the New York-Vienna sector were initially low, they steadily increased until most of the flights were full. Large tour groups constituted an increasing portion of the passenger mix, along with the anticipated connecting passengers, who were able to take advantage of the expanding Vienna hub. It was the ultimate testament to a carrier when a passenger chose to fly with it and make a connection at its home airport as opposed to traveling nonstop with a national carrier.

As a "second attempt" across the Atlantic, Austrian Airline's intercontinental A-310 service to New York was ultimately successful.

With the acquisition of its third A-310-300, registered OE-LAC, Austrian Airlines contemplated service to a second US gateway by the spring of 1991, such as to Los Angeles, but the A-310-300's 11-hour flight duration precluded this reality. Although Chicago was alternatively considered, American's own nonstop Boeing 767-200ER service to Vienna would have resulted in prohibitive competition, since O'Hare was its second-largest hub, leaving Washington-Dulles as the only viable alternative.

For the European continental network, a higher gross weight McDonnell-Douglas MD-83 was ordered for delivery in 1991 and several existing MD-81s were converted to this standard, increasing their range and payload capabilities. Two additional Fokker F.50s were also ordered for domestic and long, thin international routes.

During the five-year period from 1989 to 1994, Austrian Airlines independently operated at JFK, offering as few as four weekly departures during the winter and as many as seven during the summer.

3. Delta Air Lines Code Share:

Changing market conditions prompted a modified strategy at JFK for Austrian. Seeking to align itself with a US domestic carrier in order to obtain feed for its transatlantic flights, for example, it concluded a marketing agreement with Delta Air Lines in 1994, in which it placed its two-letter "OS" code on Delta-operated flights, while Delta itself reciprocally placed its own "DL" designator on Austrian's services. Two Delta flight attendants, wearing their company's uniforms, initially also served in the cabins of its A-310s to and from Vienna.

Although the concept's financial benefit was slow to materialize, the aircraft ultimately achieved high load factors, carrying both Austrian and Delta passengers from some two dozen US cities through New York to Vienna, often with beyond-travel.

In order to reduce ground-handling costs and attain synergistic, inter-carrier benefits, Austrian Airlines relocated its operation to Delta Terminal 1A (later redesignated Terminal 2) on July 1, 1994, retaining only nine of its original 21 staff members. Delta Air Lines, the newly-designated ground-handling carrier, assumed arrivals, lost-and-found, passenger check-in, departure gate, ramp, and baggage room responsibilities, while Austrian itself continued to perform its own ticketing, load control, administration, supervision, and management functions.

1994 also marked the acquisition of two long-range, quad-engine A-340-200s configured for 36 business and 227 economy class passengers and registered OE-LAG and OE-LAH. They periodically served New York throughout the next decade.

Yet another change occurred three years later, between February of 1997 and 1998, when it relocated its check-in counters and operational office to Delta Terminal 3, but otherwise remained in the same marketing alliance.

The year also marked the first time that the transatlantic route to New York had sufficiently matured to support a second departure on selected days during the summer timetable, with this additional flight arriving at 2045 and redeparting at 2205. Usually operated by aircraft OE-LAC, an A-310 with a reduced business, but higher-capacity economy section, it facilitated connections with the midday bank of departures from Vienna.

4. Atlantic Excellence:

Once again yielding to airline deregulation-necessitated realignment and attempting to achieve additional cost-reducing synergies, Austrian Airlines integrated its JFK operations with Sabena Belgian World Airways and Swissair on March 1, 1998, forming the tri-carrier Atlantic Excellence Alliance. Although the employees of all three airlines continued to wear their respective uniforms, they operated from single passenger service and load control offices, utilizing a joint Austrian, Sabena, and Swissair check-in facility, and handled each other's flights.

During the peak summer season, seven daily departures operated by four airlines were offered, inclusive of two to Vienna with Austrian Airlines, two to Brussels with Delta and Sabena, one to Geneva with Swissair, and two to Zurich, also with Swissair.

Eight functions were performed at the Atlantic Excellence station, including Control, Arrivals, Departures, VIP / Special Services, Ticket Sales-Reservations, Load Control, Ramp Supervision, and Trouble Shooting. Because Swissair was contracted to prepare load sheets for Malev-Hungarian Airlines' flights to Budapest, the Load Control function itself entailed handling six aircraft types-747-300s, A-340-200 / -300s, MD-11s, A-330- 200s, 767-200ERs, and A-310-300s-often requiring inter-carrier training courses.

As had singularly occurred with Austrian Airlines, Delta equally concluded reciprocal two-letter code-share agreements with Sabena and Swissair, but now took the former marketing arrangement to full alliance status at Delta's significantly-maturing JFK flight hub. Delta nevertheless continued to provide ramp and baggage room functions for all three Atlantic Excellence airlines.

In August of that year, Austrian Airlines took delivery of the first of four longer-range, higher-capacity A-330-200s, registered OE-LAM and configured for 30 business and 235 economy class passengers, and the type ultimately replaced the A -310-300 as its intercontinental workhorse. The four aircraft, later operating with a reduced, 24-seat business cabin when the Grand Class concept was introduced, sported registrations OE-LAM, OE-LAN, OE-LAO, and OE-LAP.

During the summer timetable of 1998, Austrian fielded its first dual-aircraft type operation from JFK, with the first departure standardly operated by the A-330 and the second by the A-310.

5. Star Alliance:

Although an ultimate "Swissport Solution," under which all Atlantic Excellence ground operations staff would have been transferred to the service provider, was envisioned, the eventuality never occurred.

Rumors, rumbling through the station like the gentle forewarnings of a pending storm, pervaded the atmosphere by mid-1999. A new strategy seemed to loom on the horizon and its seeds, planted long before it bloomed, were multi-faceted and omni-encompassing.

In June of 1999, Delta Air Lines and Air France had formed the fundamental basis of a new global alliance, which was later named SkyTeam, thus dissolving the 25-month Austrian / Delta / Sabena / Swissair Atlantic Excellence Alliance whose agreement, without renegotiation, would have expired in August of 2000.

Despite a ten-percent investment limitation, Swissair had nevertheless attempted to purchase additional Austrian Airlines stock, precluding Austrian's goal of retaining its own identity and independence, and forcing it to withdraw from the Swissair-led Qualiflyer Alliance of European carriers.

Swissair and Sabena formed a combined commercial management structure, which again proved counter to Austrian Airlines' independent direction.

Finally, in early 2000, both Sabena and Swissair concluded code-share agreements with American Airlines, a US airline-alignment that was counter to Austrian Airlines' strategy of US feed.

As a small, but profitable international carrier of considerable quality, Austrian Airlines nevertheless needed the reach of a global alliance to remain profitable and thus concluded a membership agreement with the Lufthansa- and United-led Star Alliance, which became effective on March 26, 2000 .

The largest and longest-running alliance, it was then comprised of Air Canada, Air New Zealand, All Nippon, Ansett Australia, Austrian Airlines, British Midland, Lauda Air, Lufthansa, Mexicana, SAS, Thai Airways International, Tyrolean, United, and Varig, and collectively carried 23-percent of the world's passenger traffic. But, more importantly, the decision facilitated continued independent identity and operation, yet had the potential for expansion. Expressed as a sentiment, the decision was stated as, "Here we grow again!"

The transition from the Atlantic Excellence to the Star Alliance, commencing as early as January of 2000, entailed four integral changes.

1). An entirely new IT (information technology) system and frequent flier program.

2). The operational relocation to a new terminal, passenger service office, passenger check-in counter, load control-aircraft dispatch center, and gate at JFK.

3) New alliance airline code-share flights and traffic feed resulted in the closing of the Atlanta station and the subsequent opening of the Chicago one and the reopening of the Washington one in the US.

4). The company-wide migration training in Oberlaa, Austria, location of Austrian Airlines' head office.

Star Alliance membership, once again entailing a relocation to Terminal One at JFK, prompted another handling carrier change, this time from Delta to Lufthansa, which now performed the Baggage Services and Passenger Check-In functions, while Austrian itself continued to act in the capacities of Arrivals, Ticketing, Load Control, Ramp Supervision, and Management. Under a reciprocal agreement, it also provided these passenger services to Lufthansa for its own Frankfurt departures during non-operational hours. Aircraft loading and baggage room functions were initially performed by Hudson General, which was later renamed GlobeGround North America.

In a further cost-reduction strategy, Austrian Airlines relocated to a smaller, reduced-cost Passenger Service office on the ground floor of Terminal One in September of 2002, at which time the Load Control / Ramp Supervision function was awarded to Lufthansa. No longer serving Lufthansa's flights, Austrian staff members further dwindled, now to six full-time and two part-time positions, and the daily shift hours decreased from nine to eight.

Austrian's largest-capacity aircraft, the A-340-300 – which accommodated 30 business and 261 economy class passengers – intermittently also provided service to JFK, particularly during the summer 2002 timetable when a late Saturday departure was scheduled. Two such aircraft, registered OE-LAK and OE-LAL, now made up part of the fleet.

6. Swissport USA:

The continual need to reduce costs resulted in yet another handling-company change at JFK on January 1, 2003, when most of the ground services were transferred from Lufthansa to Swissport USA.

In preparation for the change, the Swissport passenger service staff attended the Guide Check-In course in Vienna the previous month, while one Swissport agent, who structured the Baggage Services department, attended the World Tracer Basic course later in the year, in October.

Outfitted in Austrian Airlines uniforms, Swissport staff performed the Arrivals, Lost-and-Found, Passenger Check-In, Departure Gate, Load Control, and Ramp Supervision functions, while Austrian itself continued to assume Ticket Sales, Administration, Supervision, and Management responsibilities .

Load control, which was initially performed in Terminal 4 using the Swissair DCS system, was ultimately transferred to Terminal One and the Lufthansa-WAB system after the Swissport operations personnel completed a computerized load control course in Vienna that March.

7. North American Station Training Program:

Because most of the Swissport agents had little previous airline experience and were consequently unfamiliar with Austrian Airlines' products and procedures, the author created a local training program by drafting the course descriptions, writing the textbooks, devising the quizzes and exams, teaching the courses themselves , and subsequently issuing the training certificates in order to more adequately prepare them to perform their jobs.

The program, tracing its routes to the Austrian Airlines Passenger Handling Course created in 1989 and the introductory Load Control training material written in 1998, evolved into the full-fledged North American Station Training Program, whose content, updated in accordance with aircraft, system, procedure, and alliance change, included the four integral curriculums of "Initial Passenger Service," "Ramp Supervision Certification," "Load Control Licensing," and "Airline Management."

Ultimately encompassing 27 Passenger Service, Ramp Supervision, Load Control, Air Cargo, and Airline Station Management procedural and training manuals, two station histories, and 28 curriculums, it resulted in 63 courses having been taught to Austrian Airlines and Austrian Airlines-handling carriers Delta , Lufthansa, Passenger Handling Services / Maca, SAS, Servair, and Swissport at the eight North American stations of Atlanta, Cancun, Chicago, Montreal, New York, Punta Cana, Toronto, and Washington.

The program, which quickly evolved into the equivalent of an "airline university" and was often cited as the reason why Swissport staff were eager to transfer to the Austrian Airlines account, proved instrumental in their career paths, facilitating their promotions or acceptances by other airlines .

8. Boeing and Lauda Air to JFK:

JFK, hitherto exclusively served by Austrian Airlines and its fleet of A-310, A-330, and A-340 Airbus widebody aircraft, received its first regularly scheduled Lauda Air 767 operation during the summer of 2004, a carrier founded by Formula I race car driver Niki Lauda and considered Austrian Airlines' competitor during the early part of its history. But by the following year its frequency quadrupled and during 2007 it altogether replaced the 17-year Airbus service.

The summer 2004 Lauda 767 flight, which operated as an addition to the daily Austrian frequency during the 11-week period from June 26 to September 5, was scheduled to arrive at 2055 on Saturday evenings and departed some 25 hours later at 2200 on Sunday.

In order to prepare the station for the additional service, local Boeing 767 Passenger Service and Boeing 767 Load Control courses were created and taught to Swissport staff.

Because the Lufthansa technical employees did not hold 767 licenses, its maintenance was contracted to Delta Air Lines, which operated all three -200, -300, and -400 series 767s, and an extensive night stop and security procedure was performed before aircraft push- back to the Terminal One hardstand, at which time security seals were applied to all access doors. Off-loaded galley equipment was washed and prepared for the following evening.

Because of the aircraft's then 36-passenger Amadeus Class capacity, the late departure was difficult to sell in the business cabin without significant marketing promotion and fare reduction, while cargo-pallet loading was door-dimensionally restricted to four positions in the forward compartment. The aircraft themselves operated in a combination of Lauda Air and Star Alliance liveries.

During the summer 2005 timetable, from June 14 to September 2, the 767-300 provided up to four additional weekly frequencies, resulting in a total of 11, with the A-330 standardly operating the early departure and the 767-300 the late one .

By 2007, the type altogether replaced the A-330 and A-340 fleets, but appeared with several configurations. Aircraft OE-LAE, -LAY, and -LAZ, for example, accommodated 36 in business and 189 in economy, while those registered OE-LAX and -LAW respectively featured 30 and 200 seats. Aircraft OE-LAT, which offered the highest capacity of the six, included ten more seats than these latter two, for a 240-passenger coach complement.

9. Centralized Load Control:

In late-2006, a concept known as the "Centralized Load Control" (CLC) System was introduced at JFK, and the station, like the nucleus of an atom, became the core of it all.

Brainchild of Michael Steinbuegl, then-JFK Station Manager, the procedure, following trends set by Swiss International in New York, Lufthansa in Cape Town, and SAS in Bangkok, had its origins in an earlier investigative project in which he explored cost reductions by means of a large, single Centralized Load Control department in Vienna or several regional ones. The latter, however, entailed language and time zone obstacles.

Having himself amassed considerable experience creating operational procedures and methods as former Aircraft Handling Manager, he was well versed with weight and balance issues.

Seeking to apply this knowledge and simultaneously attempting to rectify the system incompatibility and communication difficulties encountered with the SAS-Bangkok arrangement in Washington, he tackled this station first, which, like JFK, already used the Lufthansa-WAB system. In the process, he set the course for the many transitions to come by making several duty trips to establish local station-compatible procedures and then drafting a detailed booklet concerning them. The first centralized load sheet for the Washington flight, OS 094, was generated on November 1, 2006.

Charlie Schreiner, then head of Austrian Airlines Load Control, subsequently marked the occasion by sending the following telex.

"With Austrian Airlines Flight OS 094 on November 1," he wrote, "our first line station had been connected to a regular Centralized Load Control process with ULD aircraft. All activities toward the operational flight preparation, load planning, ULD coordination, and WAB System documentation, inclusive of the load sheet transmitted to the cockpit via ACARs, had been successfully controlled by our JFK station yesterday. "

The remainder of the CLC program, however, involved phased implementation. In May of the following year, service was reinaugurated from Chicago. Because this could now be considered a "new" station, it logically followed that its load sheet would be integrated into the CLC system from the start and, despite computer system differences, was successfully adapted with the first flight on May 29 after procedural modifications.

With these cities being handled by JFK, it was decided to integrate the last North American station, Toronto, whose first centralized load sheet was issued on July 1.

Three Austrian Airlines-dedicated Load Controllers from Swissport, two of whom worked on a given day during the peak summer season, formed the Centralized Load Control System team.

Since the fourth station was integrated, JFK produced some 120 load sheets per month, and the highly successful system yielded numerous benefits.

First and foremost, it produced considerable savings. All flights departed on time relative to their load plan and load sheet preparations and all four North American flights were operationally handled by only one more daily Load Controller than JFK had employed for a single departure. All loading instruction reports and load sheets were additionally generated by the Lufthansa-WAB system, giving Vienna immediate access to all load control-related data and documentation.

10. Boeing 777:

When Austrian Airlines turned the page of its winter 2008-2009 timetable on March 29, JFK fielded its first Boeing 777-200ER operation, the carrier's largest capacity aircraft and the fifth basic type to have served New York after the A-310, the A -330, the A-340, and the 767.

The airplane, having originally been acquired by Lauda Air, was configured for 49 business class and 258 coach passengers, although two later examples, which featured higher gross weights and modified passenger arrangements, accommodated 260 economy class passengers in ten-abreast, three-four -three, configurations.

During the six-month period between April and September of 2009, the single flight carried 34 percent more arriving and departing passengers, along with significantly increased complements of cargo and mail, than the comparable year-earlier period, when the 767 was used. The four 777s in the fleet were registered OE-LPA, OE-LPB, OE-LPC, and OE-LPD.

11. Lufthansa Acquisition:

2009 was a pivotal year for Austrian Airlines, both locally and systemwide. Because of the global economic downturn, escalating fuel prices, eroding yields, and strong competition within Western Europe from low cost carriers, its financial viability and continued existence as a company were threatened, despite previous strategies that included selling its A-330 and A- 340 fleet, reducing its long-range route system, and implementing several restructuring plans. Its savior, in the form of an agreement with Lufthansa-German Airlines, enabled it to continue operating, as it assumed its debt and acquired the majority of its shares.

On August 28, the European Commission officially approved Lufthansa-German Airlines' acquisition of the Austrian Airlines Group. Comprised of the 500 million euros from the stated holding company needed for restructuring and the merger between the two carriers, the strategy paved the way for Austrian's integration into the Lufthansa fold by September. In order to achieve the required antitrust immunity, however, Lufthansa itself had to agree to relinquish key flight slots and reduce the number of services between Vienna and Brussels, Cologne, Frankfurt, Munich, and Stuttgart.

For Austrian Airlines, which would become one of Lufthansa's several independent, European hub carriers, it signaled financial survival, an improved economic foundation, cost synergies, such as joint fuel and aircraft purchasing, and access to Lufthansa's extensive international sales and route network. The establishment of Vienna as a high-performance hub for traffic feed to its new owner's dense Central and Eastern European route system was considered Austrian's strength within the system.

As a result of this ownership, numerous, fundamental North American changes also occurred.

In Toronto and Washington, for example, Lufthansa assumed all ground-handling aspects.

In New York, more than half of the staff employed at its North American headquarters in Whitestone were laid off, while its facility, located on the fifth floor of Octagon Plaza and considered its "fortress" for almost a quarter of a century, was closed , with its remaining employees relocating to Lufthansa's East Meadow, Long Island, office.

At JFK itself, Austrian Airlines Cargo equally relocated to the Lufthansa facility on November 1, and 16 days later Swissport passed the ground-handling torch to Lufthansa-German Airlines.

Michael Steinbuegl, Manager of that station for four years, was promoted to Key Account Manager, North America, but four Ticket Sales-Reservation positions were rendered redundant when Lufthansa assumed those functions, reducing the Austrian Airlines' staff to just two members, (the author included), who received limited, six-month contracts that expired on May 15, 2010. Intermittently integrated into the Lufthansa operation and schedule, they handled their flights, while familiarizing Lufthansa employees with their own procedures, but after this transition period, were equally released from employment.

The last Austrian Airlines "red uniform presence," whether having been represented by purely Austrian Airlines or Swissport staff, occurred on November 15, and the first floor office in Terminal One, hitherto "home" for the carrier's Management, Passenger Service, Centralized Load Control, Ticket Sales-Reservations, and Baggage Services / Lost and Found Departments, was relinquished for three desks in the Lufthansa facility, two of which were Duty Manager stations located on the main level and one of which was reserved for the Key Account Manager position on the lower level in the Station Operations office.

All things seem to come fully cycle. The event, effectively ending 21 years of autonomous Austrian Airlines presence, marked the carrier's return to its 1938 integration with Lufthansa and its 2000 ground-handling arrangement at JFK.

12. JFK Station Strengths:

In 2009, Austrian Airlines operated 666 arriving and departing flights at JFK and carried 158,267 in- and outbound passengers, an 18.42-percent increase over the year-earlier figure, while it operated 5,005 arriving and departing flights and carried 1,074,642 passengers during the seven- year period, between 2003 and 2009, that Swissport USA assumed its ground-handling there.

JFK, having weathered several airline alliances, terminal locations, computer systems, handling companies, aircraft types, and an ever-decreasing number of Austrian Airlines personnel over its 21-year presence, effectively closed its doors, the last of its North American stations to have done so.

Throughout its more than two-decade presence, it had handled five aircraft types – the Airbus A-310, the Airbus A-330, the Airbus A-340, the Boeing 767, and the Boeing 777; had assumed four strategies – its initial, independent operation; the Delta Air Lines code share agreement; the tri-carrier Atlantic Excellence station; and the Star Alliance integration; had operated from four JFK terminals – Terminal One, Terminal Two, Terminal Three, and the International Arrivals Building; had been handled by three companies – Delta Air Lines, Lufthansa-German Airlines, and Swissport USA; and had used two computer systems.

Because the talents and abilities of many of its staff were channeled to produce creative and innovative results during the last chapter of its existence, JFK had notched up several achievements, some of which enabled it to play an increasingly nucleic role within North America. They can be subdivided as follows.

The North American Station Training Program, comprised of the Passenger Service, Ramp Supervision Certification, Load Control Licensing, and Management disciplines, was instrumental in the educational preparation of all entry-level employees, enabling them to perform their designated functions with sufficient procedural knowledge or climb the ladder all the way to management, if so needed. The textbooks and courses were subsequently used to duplicate this success at Austrian Airlines' other North American stations.

The Centralized Load Control (CLC) Department, entailing the preparation of loading instruction/reports and load sheets for the four North American stations of Chicago, New York, Toronto, and Washington, was highly successful and once involved four aircraft types: the Boeing 767, the Airbus A-330, the Airbus A-340, and the Boeing 777.

The Baggage Services/Lost and Found Department, under the direction of Omar Alli, served as a model for other stations and earned a lost baggage rating that became the envy of them. Omar himself often traveled to other stations in order to provide restructuring guidance for their own Baggage Services Departments.

The Ticket Sales-Reservations counter, under the direction of Sidonie Shields, consistently collected significant amounts of annual revenue in ticket sales, excess baggage, and other fees.

The visible presence of Austrian Airlines, in red uniforms, to the passenger, whether worn by Austrian Airlines or Swissport staff, cemented its identity.

The several annual special flights, which sometimes posed significant challenges, but were always successfully executed, included those carrying the Rabbi Twersky group, the American Music Abroad group, the IMTX group, the Vienna Boys' Choir, the Vienna Philharmonic Orchestra, and Life Ball, the latter with its high-profile celebrities, colorful characters, and pre-departure parties.

The special events, often fostering a "family" atmosphere among its own and Swissport staff, included the annual "Year in Review" series, the Pocono Mountain ski trips, the summer pool parties, the birthdays, the Thanksgiving dinners, and the Secret Santas at Christmas.

And, finally, the daily briefings, jokes, laughs, raps, camaraderie, friendships, and human connections continually emphasized and acknowledged the true souls behind everyone as they cohesively worked toward the airline's and the station's common goals.

Michael Steinbuegl, who assumed command as JFK Station Manager in September of 2005, had cultivated the environment and orchestrated the steps that had allowed every one of these accomplishments to be made.

13. Two Decades of Elasticity:

Austrian Airlines, hitherto among the smallest European airlines, had to assume a considerable degree of necessary "elasticity" during its 21 years at JFK, ebbing and flowing with the ever-changing turbulence created by prevailing market conditions, seeking financial benefit, synergistic strength, market niche, alliance realignment, and ultimate change of ownership. Defying Darwinian philosophy, whose "survival of the fittest" prediction is often translated as "survival of the largest," Austrian Airlines had, despite numerous, necessary redirections, proven the contrary, perhaps prompting a rewording of the philosophy to read, "survival of the smallest," if four short words were added-namely, "as a global player."

Toward this end, the latest strategy enabled the carrier to survive. For station JFK and its staff, however, it did not.

Epilogue:

Because I had been hired by Austrian Airlines two months before its inaugural transatlantic flight from JFK occurred on March 26, 1989 and subsequently held several positions there throughout its 21-year history, I felt singularly qualified, as a lifetime aviation researcher, historian, and writer, to preserve its story in words. It is, in essence, my story. It is what I lived. And what I leave…

Small Talk: Starting a Conversation While Traveling

With a record number of travelers this holiday season, many people find themselves sitting next to others on airplanes, at airports and at other functions. They want to talk with them but struggle to know what to say.

Start by making a statement about something you have in common, such as the long wait or the great view outside. Then ask a question. For example, "That's a beautiful sunset out there! Do you often fly at this time of day?" Follow it up with an open-ended question, such as "What's your favorite time to fly?"

In an airport, you can comment on the lines or the new security procedures, both of which are likely to get a response form someone else. Start by saying, "This line seems to be (finally) moving! Have you been in any other lines this long elsewhere in the airport today?" Then follow it up with "What do you think is the best domestic airline to fly?"

Be sensitive to others who do not want to talk. Some people want to work or sleep, for example, or prefer not to talk to strangers. Others may not speak much English, have a hearing loss, or difficulty speaking clearly. But many do want to talk, and just aren't sure how to start.

To end a conversation, give a reason why you need to stop. For example, "It's been nice talking to you. I need to do some work now." or "I hear my flight being called. Bye!"

Airport or airplane conversations can let you meet people you might otherwise never know. For safety reasons, be very cautious about giving out personal information. Most conversations, though, are casual and you are not likely to see the person again. But while you are together, make the most of it!

How to Capitalize on Benefits From Part 141 and Part 61 Helicopter Flight Training

There has long been a debate on the advantages of Part 141 versus Part 61 training. Student pilots are confused by the differences and are therefore unable to determine how to make the most of the benefits offered by each.

The following remains the same, regardless of whether your train under Part 141 or Part 61: 1) Written tests. 2) Oral exam in check ride. 3) Flight portion of the check ride. 4) License issued.

Measurement of success is the same at both types of schools: 1) Instructors make or break the school. Knowledgeable, experienced instructors are key. 2) Some flight schools have a high dropout ratio. Successful schools should have at least 90% of the students they train attain the certificates and ratings they signed up for. 3) Aircraft maintenance is important. Students should very seldom have flight lessons canceled due to aircraft being grounded. 4) The school accident record should be zero or close to zero, indicating that the school places a high value on your safety.

On the surface, it looks like all helicopter flight schools are very similar. This is why it is so useful to understand the differences between Part 141 and Part 61. The two biggest differences are: 1) Part 141 training requires following an FAA approved Training Course Outline (TCO). Part 61 does not require a TCO be used at all. 2) The flight school itself and the Chief Flight Instructor have to meet stringent FAA requirements. Part 61 is not subject to these FAA requirements.

Let's start with Part 61 helicopter training and flight schools. The majority of helicopter flight schools in the USA today are Part 61 flight schools. Many Part 61 helicopter flight schools start off with one certified flight instructor and one helicopter. The flight instructor offers one-on-one training to prospective students and teaches the student as he or she sees fit. If the instructor is good, more students join the school and the owner purchases additional helicopters and hires more instructors to meet the demand.

There are no FAA inspections required for a Part 61 helicopter flight school. The flight school is free to train their students using their own chosen methods. They are expected to follow the rules and regulations in the FAR / AIM for Part 61 flight schools and training, but are not subject to FAA inspections to confirm that they are doing this.

Part 141 training and flight schools have to meet very specific requirements and standards. The helicopter flight school itself is issued an Air Agency Certificate when it passes the FAA inspections. Facilities and aircraft that will be used for Part 141 training are inspected. The Chief Flight Instructor is required to take an annual check ride with the FAA.

On the training side, the flight school submits a separate and distinct Training Course Outline (TCO) to the FAA for each certificate and / or rating that they want to teach under Part 141. For example, a Private Pilot TCO would be submitted. This contains lesson plans for both Flight and Ground training. The flight school would have to submit another TCO for Instruments if they wanted to teach Instrument ratings under Part 141.

Don't assume that a Part 141 helicopter flight school offers all their certificates and ratings under Part 141. Many only obtain FAA certification for Private, Instrument and Commercial certificates. It takes a lot of work for the flight school to create TCO's and to teach under Part 141. The FAA requires that the flight school keep extensive student documentation for Part 141, including very detailed information on student progress. This is great for the student. It is time consuming for the flight school.

There are a few very large flight schools that only offer Part 141 training. They have set schedules for their classes and teach many students at the same time. They also have regimented flight schedules. These few very large flight schools often have a very high ratio of foreign versus domestic students. This is because SEVIS (Student Exchange Visitor Information System) requires that flight schools be FAA certified as a Part 141 flight school in order to apply for permission to train international students. The Veterans Association (VA) has the same Part 141 requirement for veterans to use their VA benefits.

Most Part 141 schools also offer Part 61 training for the same programs. For example, you may choose to do your Private Pilot under Part 141 or Part 61. Schools that offer both training methods provide the most flexibility to the student.

The student attending a Part 141 helicopter flight school gets all the benefits of attending a Part 141 school even if they choose to do some or all of their training under Part 61. This is due to the school being subject to random FAA inspections. They have to maintain their high standards at all times to retain their certification.

The disadvantage of Part 141 training is that the TCO has to be followed in the sequence written. Every student learns differently and some people prefer the flexibility of Part 61 training, which enables the student to cover materials in the sequence appropriate for him or herself.

This brings to light another advantage to a flight school that offers both Part 141 and Part 61 training. They will often use the TCO for your Part 61 training. This is great for the student pilot as you get the benefit of a structured Training Course Outline that is FAA certified, while at the same time being able to cover materials in the order that suits you best.

Another advantage to training at a school that offers both is that you can mix and match your training. For example, I did my Private Pilot under Part 61 as I wanted the flexibility to jump around in the curriculum. Flying instruments is very structured and is about learning procedures, so I choose to do my instrument training under Part 141. I found the structured approach and learning sequence worked really well for my Instrument training. I went back to Part 61 for my Commercial training.

Learning to fly a helicopter is fun, exciting and expensive. Learn all you can about your helicopter flight school and the programs they offer before making your final decision. Fly safe!

Japan's Insurance Industry

During the heydays of the 80's and the first half of 90's, like rest of its economy, Japan's insurance industry was growing as a juggernaut. The sheer volume of premium income and asset formation, sometimes comparable with even the mightiest USA and the limitation of domestic investment opportunity, led Japanese insurance firms to look outwards for investment. The industry's position as a major international investor beginning in the 1980's brought it under the scanner of analysts around the world.

The global insurance giants tried to set a foothold in the market, eyeing the gargantuan size of the market. But the restrictive nature of Japanese insurance laws led to intense, sometimes acrimonious, negotiations between Washington and Tokyo in the mid-1990s. The bilateral and bilateral agreements that resulted coincided with Japan's Big Bang financial reforms and deregulation.

Building on the outcome of the 1994 US-Japan insurance talks, a series of liberalization and deregulation measures has since been implemented. But the deregulation process was very slow, and more often than not, very selective in protecting the domestic companies interest and market share. Although the Japanese economy was comparable with its counterpart in USA in size, the very basis of efficient financial markets – the sound rules and regulations for a competitive economic environment – were conspicuously absent. And its institutional structure was different, too, from the rest of the developed countries.

The kieretsu structure – the corporate group with cross holdings in large number of companies in different industries – was a unique phenomenon in Japan. As a result, the necessary shareholder activism to force the companies to adopt optimal business strategy for the company was absent. Although initially touted as a model one in the days of Japan's prosperity, the vulnerability of this system became too evident when the bubble of the economic boom went burst in the nineties. Also working against Japan was its inability to keep pace with the software development elsewhere in the world. Software was the engine of growth in the world economy in the last decade, and countries lagging in this field faced the sagging economies of the nineties.

Japan, the world leader in the "brick and mortar" industries, surprisingly lagged far behind in the "New World" economy after the Internet revolution. Now Japan is calling the nineties a "lost decade" for its economy, which lost its sheen following 3 recessions in the last decade. Interest rates nose-dived to historic lows, to thwart the falling economy – in vain. For insurers, whose lifeline is the interest spread in their investment, this wreaked havoc. Quite a few large insurance companies went bankrupt in the face of "negative spread" and rising volume of non-performing assets. While Japanese insurers largely have escaped the scandals afflicting their brethren in the banking and securities industries, they are currently enduring unprecedented financial difficulties, including catastrophic bankruptcies.

Institutional Weaknesses

The Japanese market is a gigantic one, yet it is comprised of only a few companies. Unlike its USA counterpart, in which around two thousand companies are fiercely competing in the life segment, Japan's market is comprised of only twenty-nine companies classified as domestic and a handful of foreign entities. The same situation prevailed in the non-life sector with twenty-six domestic companies and thirty-one foreign firms offering their products. So, consumers have far fewer choices than their American counterparts in choosing their carrier. There is less variety also on the product side. Both the life and non-life insurers in Japan are characterized by "plain vanilla" offerings. This is more apparent in automobile insurance, where, until recently premiums were not permitted to reflect differential risk, such as, by gender, driving record etc. Drivers were classified in three age groups only for purposes of premium determination, whereas US rates long have reflected all these factors and others as well.

The demand varies for different types of products, too. Japanese insurance products are more savings-oriented. Similarly, although many Japanese life insurance companies offer a few limited kinds of variable life policies (in which benefits reflect the value of the underlying financial assets held by the insurance company, thereby exposing the insured to market risk), there are few takers for such policies. At ¥ 100 = $ 1.00, Japanese variable life policies in force as of March 31, 1996 had a value of only $ 7.5 billion, representing a scant 0.08 percent of all life insurance. By contrast, American variable life policies in force as of 1995 were worth $ 2.7 trillion, roughly 5 percent of the total, with many options, such as variable universal life, available.

Japanese insurance companies in both parts of the industry have competed less than their American counterparts. In an environment where a few firms offer a limited number of products to a market in which new entry is closely regulated, implicit price coordination to restrain competition would be expected. However, factors peculiar to Japan further reduce rivalry.

A lack of both price competition and product differentiation implies that an insurance company can grab a firm's business and then keep it almost indefinitely. American analysts sometimes have noted that keiretsu (corporate group) ties are just such an excuse. A member of the Mitsubishi Group of companies, for example, ordinarily might shop around for the best deal on the hundreds or thousands of goods and services it buys. But in the case of non-life insurance, such comparative pricing would be futile, since all companies would offer much the same product at the same price. As a result, a Mitsubishi Group company, more often than not, gives business to Tokio Marine & Fire Insurance Co., Ltd., a member of the Mitsubishi keiretsu for decades.

On paper, life insurance premiums have been more flexible. However, the government role looms large in this part of the industry as well – and in a way that affects the pricing of insurance products. The nation's postal system operates, in addition to its enormous savings system, the postal life insurance system popularly known as Kampo. Transactions for Kampo are conducted at the windows of thousands of post offices. As of March 1995, Kampo had 84.1 million policies outstanding, or roughly one per household, and nearly 10 percent of the life insurance market, as measured by policies in force.

Funds invested in Kampo mostly go into a huge fund called the Trust Fund, which, in turn, invests in several government financial institutions as well as numerous semipublic units that engage in a variety of activities associated with government, such as ports and highways. Although the Ministry of Posts and Telecommunications (MPT) has direct responsibility for Kampo, the Ministry of Finance runs the Trust Fund. Hence, theoretically MOF can exert influence over the returns Kampo is able to earn and, by extension, the premiums it is likely to charge.

Kampo has a number of characteristics that influence its interaction with the private sector. As a government-run institution, it inarguably is less efficient, raising its costs, rendering it noncompetitive, and implying a declining market share over time. However, since Kampo cannot fail, it has a high risk-tolerance that ultimately could be borne by taxpayers. This implies an expanding market share to the extent that this postal life insurance system is able to underprice its products. While the growth scenario presumably is what MPT prefers, MOF seemingly is just as interested in protecting the insurance companies under its wing from "excessive" competition.

The net effect of these conflicting incentives is that Kampo appears to restrain the premiums charged by insurers. If their prices go up excessively, then Kampo will capture additional share. In response, insurers may roll back premiums. Conversely, if returns on investments or greater efficiency reduce private-sector premiums relative to the underlying insurance, Kampo will lose market share unless it adjusts.

Japan's life insurance sector also lags behind its American counterpart in formulating inter-company cooperative approaches against the threats of anti-selection and fraudulent activities by individuals. Although the number of companies is far lower in Japan, distrust and disunity among them resulted in isolated approaches in dealing with these threats. In USA, the existence of sector sponsored entities like Medical Information Bureau (MIB) acts as a first line of defense against frauds and in turn saves the industry around $ 1 Billion a year in terms protective value and sentinel effect. Off late, major Japanese carriers are initiating approaches similar to formation of common data warehousing and data sharing.

Analysts often complain against insurance companies for their reluctance to adhere to prudent international norms regarding disclosure of their financial data to the investment community and their policyholders. This is particularly true because of the mutual characteristic of the companies as compared with their "public" counterpart in US. For example, Nissan Mutual Life Insurance Co., failed in 1997, generally reported net assets and profits in recent years, even though the company's president conceded after its failure that the firm had been insolvent for years.

Foreign Participation in Life Insurance

Since February 1973, when the American Life Insurance Company (ALICO) first went to Japan to participate in the market, fifteen foreign life insurance companies (with more than 50% foreign capital) are currently in business. However, companies like American Family Life (AFLAC) were initially permitted to operate only in the third sector, namely the Medical Supplement Area, like critical illness plans and cancer plans, which were not attractive to Japanese insurance companies. The mainstream life insurance business was kept out of reach of foreign carriers. However, the big turmoil in the industry in the late nineties left many of the domestic companies in deep financial trouble. In their scurry for protection, Japan allowed foreign companies to acquire the ailing ones and keep them afloat.

Foreign operators continue to enter the Japanese market. As one of the world's top two life insurance markets, Japan is considered to be as strategically important as North America and the European Union. Consolidation in the Japanese life market, facilitated by the collapse of domestic insurers and by ongoing deregulation, is providing global insurers with prime opportunities to expand their business in Japan. The total market share of foreign players is gradually increasing, with global insurers accounting for over 5% in terms of premium incomes at the end of fiscal 1999 and over 6% of individual business in force. These figures are roughly two times higher than those five years earlier.

In 2000, the AXA Group strengthened its base of operations in Japan through the acquisition of Nippon Dantai Life Insurance Co. Ltd, a second-tier domestic insurer with a weak financial profile. To this end, AX formed the first holding company in the Japanese life sector. Aetna Life Insurance Co. followed suit, acquiring Heiwa Life Insurance Co., while Winterthur Group bought Nicos Life Insurance and Prudential UK bought Orico Life Insurance. Also newly active in the Japanese market are Hartford Life Insurance Co., a US-based insurer well known for its variable insurance business, and France's Cardiff Vie Assurance.

In addition, Manulife Century, subsidiary of Manufacturers Life Insurance Company inherited the operations and assets of Daihyaku Mutual Life Insurance Co., which had failed in May 1999. In April 2001, AIG Life Insurance Co. assumed the operations of Chiyoda Life, and Prudential Life Insurance Co. Ltd. took over Kyoei Life. Both the Japanese companies filed for court protection last October.

The foreign entrants bring with them reputations as part of international insurance groups, supported by favorable global track records and strong financial capacity. They are also free of the negative spreads that have plagued Japanese insurers for a decade. Foreign players are better positioned to optimize business opportunities despite turmoil in the market. Although several large Japanese insurers still dominate the market in terms of share, the dynamics are changing as existing business blocks shift from the domestic insurers, including failed companies, to the newcomers in line with policyholders' flight to quality. The list of companies, with foreign participation, is the following:

INA Himawari Life
Prudential Life
Manulife Century Life

Skandia Life
GE Edison Life
Aoba Life

Aetna Heiwa Life
Nichidan Life
Zurich Life

ALICO Japan
American Family Life
AXA Nichidan Life

Prudential Life
ING Life
CARDIFF Assurance Vie

NICOS Life

Foreign insurers are expected to be able to prevail over their domestic rivals to some extent in terms of innovative products and distribution, where they can draw on broader experience in global insurance markets. One immediate challenge for the foreign insurers will be how to establish a large enough franchise in Japan so that they can leverage these competitive advantages.

What ails the life insurance industry?

Apart from its own operational inefficiency, Japan's life insurance sector is also a victim of government policies intended in part to rescue banks from financial distress. By keeping short-term interest rates low, the Bank of Japan encouraged in the mid-1990s a relatively wide spread between short-term rates and long-term rates. That benefited banks, which tend to pay short-term rates on their deposits and charge long-term rates on their loans.

The same policy, however, was detrimental to life insurance companies. Their customers had locked in relatively high rates on typically long-term investment-type insurance policies. The drop in interest rates generally meant that returns on insurers' assets fell. By late 1997 insurance company officials were reporting that guaranteed rates of return averaged 4 percent, while returns on a favored asset, long-term Japanese government bonds, hovered below 2 percent.

Insurance companies cannot make up for a negative spread even with increased volume. In FY 1996 they tried to get out of their dilemma by cutting yields on pension-type investments, only to witness a massive outflow of money under their management to competitors.

To add insult to injury, life insurance companies are shouldering part of the cost of cleaning up banks' non-performing asset mess. Beginning in 1990, the Finance Ministry permitted the issuance of subordinated debt made to order for banks. They can count any funds raised through such instruments as part of their capital, thereby making it easier than otherwise to meet capital / asset ratio requirements in place. This treatment arguably makes sense, inasmuch as holders of such debt, like equity holders, stand almost last in line in the event of bankruptcy.

Subordinated debt carries high rates of interest precisely because the risk of default is higher. In the early 1990s insurers, figuring bank defaults were next to impossible and tempted by the high returns available, lent large amounts to banks and other financial institutions on a subordinated basis. Smaller companies, perhaps out of eagerness to catch up with their larger counterparts, were especially big participants. Tokyo Mutual Life Insurance Co., which ranks 16th in Japan's life insurance industry on the basis of assets, had roughly 8 percent of its assets as subordinated debt as of March 31, 1997, while industry leader Nippon Life had only 3 percent.

The rest, of course, is history. Banks and securities companies, to which insurers also had lent, began to fail in the mid-1990s. The collapse of Sanyo Securities Co., Ltd. last fall was precipitated in part by the refusal of life insurance companies to roll over the brokerage firm's subordinated loans. Life insurers complained that they sometimes were not paid off even when the conditions of a bank failure implied that they should have been. For example, Meiji Life Insurance Co. reportedly had ¥ 35 billion ($ 291.7 million) outstanding in subordinated debt to Hokkaido Takushoku Bank, Ltd. when the bank collapsed in November. Even though the Hokkaido bank did have some good loans that were transferred to North Pacific Bank, Ltd., Meiji Life was not compensated from these assets. It apparently will have to write off the entire loan balance.

Subordinated debt is only part of the bad-debt story. Insurance companies had a role in nearly every large-scale, half-baked lending scheme that collapsed along with the bubble economy in the early 1990s. For example, they were lenders to jusen (housing finance companies) and had to share in the costly cleanup of that mess. Moreover, like banks, insurers counted on unrealized profits from their equity holdings to bail them out if they got into trouble. Smaller insurers of the bubble period bought such stock at relatively high prices, with the result that, at 1997's year-end depressed stock prices, all but two middle-tier (size rank 9 to 16) life insurance companies had unrealized net losses.

What Lies Ahead

Analysts have identified the following short-term challenges to the sector:

New market entrants;
Pressure on earnings;
Poor asset quality; and,
Capitalization.

The recent high-profile failures of several life insurance companies have turned up the pressure on life companies to address these challenges urgently and in recognizable ways.

The investment market has been even worse than expected. Interest rates have not risen from historically low levels. The Nikkei index has sagged since January 2001, and plummeted to 9 year low following recent terrorist attack on American soil. Unrealized gains used to provide some cushion for most insurers, but, depending on the insurers' reliance on unrealized gains, the volatility of retained earnings is now affecting capitalization levels and thus financial flexibility.

Table 1
Major Risks Facing Japanese Life Insurance Companies

Business risks
Financial risks

Weak Japanese economy
Strong earnings pressures

Lack of policyholder confidence, flight to quality
Low interest rates, exposure to domestic, overseas investment market fluctuations

Deregulation, mounting competition
Poor asset quality

Inadequate policyholders' safety net
Weakened capitalization

Accelerating consolidation within life sector, with other financial sectors
Limited financial flexibility

Most analysts probably would agree that Japan's life insurers face problems of both solvency and liquidity. Heavy contractual obligations to policyholders, shrinking returns on assets, and little or no cushion from unrealized gains on stock portfolios combine to make the continued viability of some companies far from certain. Many others, while obviously solvent, face the risk that they will have to pay off uneasy policyholders earlier than they had planned. Either solvency or liquidity concerns raise the question as to how insurers will manage their assets. Another factor that has to be considered is Japan's aging population. As Mr. Yasuo Satoh, Program Manager of insurance industry, finance sector, IBM Japan, points out, "The industry needs to change the business model. They have to concentrate on life benefits rather than death benefits and they have to emphasize on Medical Supplement and long term care sectors as the overall population is aging. "

Japanese life insurers are actively pursuing greater segmentation, while seeking to establish unique strategies both in traditional life and non-life businesses. In late 2000, the sector witnessed the emergence of several business partnerships and cross-border alliances involving large domestic life insurers. Anticipating increased market consolidation, heated competition, and full liberalization of third-sector businesses, the companies are reviewing their involvement through subsidiaries in the non-life side of the business, which was first allowed in 1996.

Over the long term, Japanese insurers are likely to forge business alliances based on demutualization. Widespread consolidation in Japan's financial markets over the near term will bring about an overhaul of the life insurance sector as well. Although domestic life insurers announced various business strategies in the latter half of 2000 to respond to this sea change, the actual benefit of various planned alliances for each insurer remains uncertain. Further market consolidation should add value for policyholders, at least, making available a wider range of products and services. To succeed, life insurers will have to be more sensitive to diverse customers needs, while at the same time establishing new business models to secure their earning base. Long term prospects seem to be good considering the high saving rate of Japanese population. But in the short term, Japan is poised to see a few more insurers succumb before the sector tightens its bottom line with sweeping reforms and prudent investment and disclosure norms.