Economist 1/1/16

1. THE rise of big emerging economies like China and India, and the steady march of globalisation, have led to a surge in the numbers of people wanting to travel abroad for business or tourism.The most sensible response to this surge in demand for short-term visas would be for governments to streamline the application process and scrap the most onerous requirements. In 2016 America will start requiring visas for some travellers who currently do not need them—if, for example, they have visited Iran, Iraq, Syria or Sudan in the previous five years.In many cases, instead of simplifying the visa process, governments have offloaded it to private contractors.The biggest firm in this growing business is VFS Global, which is part of Kuoni, a Swiss tourism company. Starting from a single premises in Mumbai in 2001, handling applications for American visas, VFS now has more than 1,900 visa centres in 124 countries, processing paperwork for 48 governments.Its main rivals are CSC, with around 10% of the market, and TLScontact, with around 7%.VFS probably enjoys operating margins of 20%, reckons Kathleen Gailliot, an analyst at Natixis, a French bank.VFS accounts for just 5% of Kuoni’s revenues but more than 60% of its operating profits.
2. James “Jim Bob” Moffett, one of the great wildcatters of the past half-century, presaged his fate in 2012. On December 28th Freeport-McMoRan, the firm he founded and built into a global mining and oil giant, said he was stepping aside as executive chairman.He seems to be the latest casualty of the “Icahn effect”, the toppling of larger-than-life entrepreneurs of the commodities boom after Carl Icahn, a veteran activist investor, buys stakes in their firms and seeks to shift their focus to cost-cutting.Since it invested in Freeport in August, Mr Icahn’s firm has acquired two seats on the board, and the miner has halted the dividend and shrunk operations to stabilise its debt.Two years earlier one of the biggest mavericks of the shale boom, Aubrey McClendon, also came a cropper after Mr Icahn invested in his firm, Chesapeake Energy.
3. EVERY New Year, cruise lines brace themselves for “wave season”—the first three months of the year, in which nearly a third of all holidays at sea are booked.On December 18th Carnival, the world’s largest operator, with more than 40% of a global market worth nearly $40 billion a year, announced a record $2.1 billion in full-year earnings, 40% up on 2014, thanks to buoyant demand and cheap fuel oil. Along with Royal Caribbean Cruises (RCL) and Norwegian Cruise Line (NCL), the trio now control around 80% of the industry.The big three are now piling into the biggest potential market of all, China.In 2016 Carnival plans to increase the number of its ships in China from four to six.Carnival and RCL no longer send elderly cast-off hulks from America and Europe to China. Now they send their newest and best, such as RCL’s Quantum of the Seas.Such are Carnival’s hopes for the Chinese market that it recently moved its chief operations officer, Alan Buckelew, to Shanghai to oversee the firm’s expansion there.The number of Chinese households earning over $35,000 a year—the figure the industry sees as the point at which foreign travel takes off—has increased from 6m to more than 27m over the past decade.
4. The dotcom boom turned to bust, emerging markets are now in poor shape and commodity prices have slumped in the past year.Energy, mining and chemicals firms are expected to slash their capital-investment budgets by 20-50%. Property firms are cutting back too.In contrast, internet, software and other tech firms are on a high, with their budgets expected to expand by a quarter or more.In 2016 the combined capital spending of Google and Apple will be $24 billion, almost equal to Exxon’s $28 billion budget.Measured in dollars, the overall picture is of a 15% fall in corporate capital spending by 2017. Allowing for the greenback’s big rise since 2014, the fall will be just 5% or so in local-currency terms. And the figures exclude research-and-development (R&D) spending. That is rising quickly.
5. It was clearly in part to intimidate feistier members of the country’s online community that the authorities arrested one of the country’s most prominent civil-rights activists, Pu Zhiqiang, in 2014 and eventually put him on trial on December 14th. On the basis of seven messages posted on Weibo, China’s heavily censored version of Twitter, Mr Pu was charged with “picking quarrels and stirring up trouble” as well as “inciting ethnic hatred”. The court handed down a three-year suspended prison sentence, which means that Mr Pu will not be allowed to continue his widely acclaimed work as a lawyer . He inherited an army of internet censors, but despite his efforts to give them more legal muscle (the country’s first counter-terrorism law, passed on December 27th, includes restrictions on the reporting of terrorist incidents), Mr Xi is still struggling.

Economist 1/12/15

1. NEARLY 22m people took a cruise in 2014, according to the Cruise Lines International Association, an industry body. It reckons around 200 people die each year on cruise ships. According to the Telegraph, it all starts with an announcement. “Operation Bright Star”, for example, signals a medical emergency. “Operation Rising Star” means a passenger has passed away. Every cruise ship is legally required to include a morgue, and these must be away from food storage areas.Bodies are removed discreetly, often at the next port, and repatriated.A behind-the-scenes documentary profiling British Airways last year was revealing on the subject. Where possible, the dead are upgraded. According to the person in charge of training BA’s cabin crew, if there is a spare seat in first class, the body is strapped into that, covered to the neck with a blanket, and the passengers around it are informed.If there are no spare seats at the front of the plane, room is made in the economy section and a flight attendant has the dubious pleasure of sitting next to the corpse for the remainder of the flight.
2. So it seemed after German officials leaked to Der Spiegel, a weekly, their assessment that Grexit would not only be bearable but might even make the euro stronger.On January 5th Steffen Seibert, Mrs Merkel’s spokesman, insisted that German policy had not changed: it still aimed to hold the euro zone together. Yet all sides are now debating Grexit.Carsten Nickel at Teneo Intelligence, a risk consultancy, thinks Mrs Merkel is trying to “send a strong signal to Athens” that aid would still be tied to reforms, but that she will be flexible. A deal with Mr Tsipras could include lower interest or longer maturities for Greek debt. But politics limit her room for manoeuvre.This is the tightrope Mrs Merkel must walk after January 25th. Until then, she is likely to keep quiet.
3. Over 1m people, and perhaps as many as 2m, took to the streets for a peaceful “republican march”, after three days of terror in and around Paris that left 17 innocents and three terrorists dead.Leaders from across the world joined François Hollande, the French president, on the march.Equally important, the march was a moment in which France, a country marked in recent years by self-doubt, seemed to rediscover national pride. Now that the march is over, however, questions will start to crowd in. In particular, there are concerns about the capacity of French intelligence services to cope with radical Islamists, given the scale of the networks they are now facing. There are also doubts that Mr Hollande, the most unpopular president under the Fifth Republic, has either the political strength or the credibility to curb the rise of anti-Semitism and Islamophobia.
4. At yesterday’s vast demonstration in Paris of world leaders and ordinary folk, there was no top-level representative of the Obama administration, and on both sides of the pond, some people regretted that.One of the first American responses to the Paris shootings was something like: the Europeans brought this on themselves through their weak-minded appeasement of Islam, and their unwillingness  to defend free speech in a robust way.s evidence of hypocrisy and softness, it is recalled that only a few years ago, President Jacques Chirac put heavy pressure on Charlie-Hebdo not to republish cartoons of Muhammad. But the American administration faced a broadly similar dilemma, and made a broadly similar response, when Pastor Terry Jones was threatening to burn copies of the Koran. Constitutional principles like free speech and church-state separation made it impossible to prevent Mr Jones from doing as he planned; but he came under massive pressure to desist from his plans, from such figures as General David Petraeus (not usually seen as an appeaser) who said the act would endanger American lives.n one instant, and on balance correct response to the Paris shootings, a respected American observer of religious freedom, Nina Shea, argued that Europe must not respond to the atrocity by succumbing to its already entrenched habit of  curbing free expression through “hate-speech” laws.
5. On November 17th United Airlines, one of the three giant American carriers, and Orbitz, an online travel agency, filed a federal lawsuit demanding damages “in excess of $75,000” against Aktarer Zaman, a recent college graduate and the creator and owner of the website Skiplagged. The service enabled users to discover cheap airfares that did not appear on competing engines’ searches by utilising a tactic known as “hidden-city ticketing”, which takes advantage of occasional anomalies in airlines’ pricing algorithms.Ever since America deregulated air travel in 1978, the leading carriers have developed “hub-and-spoke” route networks, which require passengers to connect through a few strategically located airports en route to most destinations.A side effect of this model is that each carrier tends to dominate the market at its hubs, which gives it significant pricing power. Delta, for example, transports three-quarters of passengers at Cincinnati/Northern Kentucky International, a big reason why that airport is the most expensive to fly through in America.In contrast, non-hub cities, as well as markets so big that no airline can afford to ignore them, such as New York and Los Angeles, tend to offer much more competitive fares.Seeing a problem that called out for automation, Mr Zaman set up Skiplagged, which listed hidden-city options alongside conventional fares (with a “NO CHECKED BAGS” disclaimer), and linked to Orbitz to reserve them.