Delta Airlines Sucks And Teaches Scottevest Some Austrian Economics

Posted 05 Oct 2010

[pullquote]What is absolutely required during an interaction with Customs? ... Like muscles as you flex your rights they become stronger; so use them or lose them.[/pullquote] This article is mainly just some very helpful hints with some slight economic analysis.

Being an entrepreneur who enjoys creating wealth and building from scratch I have a special empathy for those engaged in similar work. One entrepreneur that has added value to my life is Scott Jordan, CEO and Founder of Scottevest.

As I traveled almost 100,000 miles in 2010 I found my Scottevest incredibly helpful and it has saved me plenty of money from the evil airline's ridiculous fees. Of course, when there are lucrative profit pools the entrenched interests will almost always by hook or by crook attempt to stifle innovation and advancement but in this case there some helpful travel tips we can apply to save time and money.

[pullquote]It's still true: Delta Airlines sucks.[/pullquote]SCOTTEVEST ADVERTISEMENT DENIED

Years ago I decided to never fly Delta again. Then somehow I ended up with a free Delta ticket so I used it. It's still true: Delta Airlines sucks. So when I received an email from Scott Jordan on 2 October 2010 I figured I should lend the fellow entrepreneur a friendly voice.

The New York Times reported that "the fee frenzy, which generated nearly $8 billion for American carriers last year." Scott's awesome travel clothing help owners 'Beat The System' so when he attempted to advertise in the airlines magazines the advertisement was canceled at the last moment.

 Seriously, what did Scott Jordan expect would happen when he advertises a value-adding product that attacks an extremely lucrative profit pool? Even worse Scott's media agent pleaded with him to not press the issue. I am not sure the media agent gets it.

But it seems Hap Klopp, founder of North Face and chief adviser to Scott, gets it because he hit the nail on the head with an excellent economic analysis. "Scott, this is classic David vs. Goliath. Their reaction shows how touchy of a subject baggage fees are for them. You've found a way for everyday people to get around their crazy policies, and you just put a fork in their cash cow." Forutantely, Scott took Klopp's advice and remarked, "Hap's comments solidified it for me: this was a big story, and the cat was out of the bag."

If you have a quality product that adds value to the customer then in the Information Age with social media, blogs, YouTube, etc. the story will get out. The economic concept of creative destruction was first introduced by the Austrian School economist Joseph Schumpeter in his 1942 book Capitalism, Socialism and Democracy. For those that have not noticed, the newspapers evaporated through creative destruction so the era of screwing your customers and getting away with it because the media gatekeepers will protect you is over. And when it is a David vs. Goliath story then almost everyone roots for David, especially when David is engaged in creative destruction in an attempt to save them money on baggage fees!

[pullquote]Time is the most valuable commodity.[/pullquote]THRIFTY RENT-A-CAR'S SLEAZINESS

Another thing the airlines are often doing is bundling products and making it difficult to discern what fees actually apply and which goods or services are actually mandatory. Airlines love to privatize the gains and socialize the losses to their customers which are often incurred by wasting your time through delays, cancellations, bumps, etc. The rental car companies seem to play a similar game.

For example, I was recently in Dallas, Texas meeting with a few friends who run various hedge funds. At the airport I went to rent a car and they wanted to charge $150 for what I had earlier researched on the Internet to cost about $50. Not being able to book at the counter at $50 I booked through my iPhone and then had to wait about 20 minutes, which was worth it to starve the vampire squid, for the reservation to get into their system. When I went to pick up the keys the desk agent asked me, "And which type of insurance do you want, minimal, medium or comprehensive?"

Because she did not mention none and because it is reasonable to assume that insurance may be required in Texas and because 'minimal' implies the least amount required therefore I replied, "Minimal." She then said the total would be $120. This was surprising because the Internet reservation was for about $50 and said all I needed to provide was a driver's license and the reservation.

So I responded, "Is the insurance required?" At first she dodged the issue by trying to explain probabilities, risk and reward. Seriously, as an investor who calculates probabilities of risk and reward for a living do I really need that advice from a desk agent who has probably never taken a statistics class and has a conflict of interest? So I responded with a little sterner tone of voice, "Is it required?" She said, "No." and I responded, "Then no insurance, please."

I get annoyed when people, institutions and organizations waste my time pitching me products I do not need and add no value to my life. After all, time is the most valuable commodity. Vacations are great when you take the airlines, car rental companies and hotels with their $8 bottled water and $15 potato chips out of the equation. Guess what the car company's lucrative profit pool must be? Yep, insurance! So keep that in mind next time you rent a car and Thrifty's was very clean and ran well.


Many people have asked how I pack so light and efficiently. Nothing is worse than going on a trip and having your airline suck your luggage into the engine. On one trip to Guatemala one of my travel companion's luggage was lost and seemed to always be a day behind us as we traveled around the country. Very annoying for them! I no longer check luggage and it has made an tremendous difference. Eliminate all but the essentials and you will have a lot less stress on your trips.

After doing a ton of research and getting plenty of products which were a waste I have winnowed down my travel infrastructure to: (1) Rick Steve's Convertible Carry-On, (2) Scottevest Essential Travel Jacket, (3) Eagle Creek Pack-It Garment Sleeve and (4) a few Eagle Creek cubes of varying sizes. With this infrastructure I have ample space for either a weekend or a six weeks to either Europe or Argentina.

[flowplayer src=, width=520, height=293, splash=]

There are a few other reasons I really like my Scottevest. In the morning I like to take a walk in the brisk air. The Scottevest has pockets for both my iPhone and iPad which keeps them out of my hands as I search for a place to read. It is a great tool for my morning routine. So from one entrepreneur to another; I hope Scott Jordan appreciates this free review.

[pullquote]Like muscles as you flex your rights they become stronger; so use them or lose them.[/pullquote]HELPFUL TRAVEL TIPS FOR CUSTOMS

Casey Research is having another investment conference at La Estancia de Cafayate on 20-24 October 2010 and I hope to see you there.

What that means is another international trip and another interaction with Customs which seems like just another case of government sending 'hither swarms of officers to harass our people, and eat out their substance.' Responsible law abiding citizens need to be wasting neither their nor customs official's time by even talking to them or answering their questions because this results in increased spending and drives up the federal debt.

Thus, when I came across Paul Karl's extremely popular article, even being discussed on The Economist, about being detained by Customs for refusing to answer their questions my interest was immediately sparked and I even began to formulate the question: What is absolutely required during an interaction with Customs?

So my co-author of How To Vanish, CA attorney Bill Rounds, and I began to research the issue. The result of our work is this handy tab which fits right in your passport with the applicable binding law outlining your rights and tips on how to politely apply them. I hope you find it helpful. To help save the customs officer's time feel free to print this PDF and distribute it widely, perhaps to everyone on your plane. Remember, like muscles as you flex your rights they become stronger; so use them or lose them.

For data I find Dropbox and Truecrypt a very effective combination.

[pullquote]It is always about the money.[/pullquote]CONCLUSION

The Internet is changing the way news, products and information is distributed. Gatekeepers can no longer protect the lucrative profit pools by refusing to discuss the issues or actively trying to prevent the market from learning about value adding products. As a result, entrepreneurs with good products that add value to the customer have a greater chance of penetrating the marketplace and this leads to David having more leverage against Goliath.

As the greater depression continues and intensifies coupled with the evolution of the Information Age it will be even more critical for companies to truly add value to their customers. Those that do not will encounter swift and powerful damage to their brands as sleazy business and governmental practices are quickly brought under scrutiny.

Individuals are getting extremely tired of this crap, the depression is making disposable income tighter and some are even intentionally fighting back with the misumer movement to silently and peacefully starve the vampire squid. After all, with the civil rights movement it was not the protests but the boycotts that caused massive social change. It is always about the money.

For example, Dollar Thrifty Automotive Group made $45M in 2009 compared to their $340M loss in 2010. Delta lost $8.9B in 2008 and $1.2B in 2009 for a reason. Perhaps these sleazy companies and governments should try adding more value to the customers? Better yet they can go bankrupt or cease to exist and be replaced by fresher companies that to add value to their customers and have a good culture. No one will miss them.

So please, tell me how you feel about the airlines, car rental companies, customs and please contribute any helpful travel tips!

DISCLOSURES: Long physical physical gold, silver, platinum and no position the problematic SLV or GLD ETFs or Delta(DAL) or Thrifty (DTG).