Easy Steps to Jump Start Your PERFECT Vacation

This post Easy Steps to Jump Start Your PERFECT Vacation appeared first on Daily Reckoning.

Summer is in full swing, and vacation season is upon us!

That means a lot of traveling. From road trips, cruises and flights people are seeking their summer time rest and relaxation.

With so many people looking to go to an exotic location, or visit far away family, many of us turn to flying to get around safely and quickly.

Business, being business, means that airlines in turn are scrambling for ways to make an extra buck. One of the biggest money makers is baggage fees.

These can run $30 for the first check-in bag to $150 or more for a fourth bag! And this cash-cow adds up …

The U.S. Department of Transportation reported that domestic carriers brought in almost $5 billion in baggage fees last year … up from $4.5 billion in 2017 and $1.1 billion a decade earlier.

As the price for checked luggage continues to rise, you may be looking for ways to reduce or eliminate the fees.

One idea is to put more in your carry-on.

Planning it Out

Carry-on bags are generally free, although a few airlines have started charging if you can’t fit the bag under the seat in front of you.

And that has prompted passengers to stuff as much as humanly possible into their carry-on.

Before you do that though, you should plan carefully…

What to Put in Your Carry-On

Shoes take up a lot of space.

So wear the heaviest ones you’ll need for your trip and pack the lightest ones.

Only take the electronic doodads you really use, Such as charger cords, charger, earbuds, and headphones. Don’t forget an a/c adapter if traveling to a country that operates on a different electrical system than the U.S.

The snacks served on the plane are generally overpriced and not very nutritious. So bring your own, such as carrots, cut-up apples, a sandwich, and/or walnuts.

It’s important to stay hydrated throughout your flight. And a collapsible water bottle with a filter takes up less room than a standard reusable bottle.

Carry over-the-counter meds that you might need while on the plane. Don’t forget to bring your prescription meds in clearly labeled containers. There may be other requirements depending on your medications. The TSA has a special page devoted to this topic.

Your passport and other documents related to your trip should be in your carry on. You might even print out tickets and itineraries that are stored on your phone… just as a backup.

There’s also always a chance that your luggage gets lost. So, pack a change of underwear, a toothbrush, toothpaste, and facial wipes.

What to Leave at Home

You would think by now travelers would know not to have weapons in their carry-on bags…

But apparently not! 2018 was a record-setting year for the TSA.

The Agency discovered 4,239 firearms — 3,656 were loaded and 1,432 had a round chambered, in other words ready to fire.

Other items found include: smoke grenades, lighter fluid, and fireworks.

In most cases, travelers pleaded that they had forgotten that these were in their bags. Those who were lucky received a stern warning and perhaps missed their flight. Those who were not so lucky were detained and hit with as much as a $13,333 penalty.

Your state and the state you’re traveling to might allow medical cannabis use. Yet it’s illegal under federal law, which means you can’t bring it on a plane.

The TSA says its officers don’t normally search for it. Their priorities are potential threats to aviation and passengers. But, if they do find it, they’ll call the local authorities who will likely write you up and send you on your way.

If you’re not sure what you can bring onboard, click here for the TSA’s list.

Cutting Baggage Fees

1) What’s in your wallet

The premium credit card that you already have might include perks such as a travel credit that you can use regardless of what airline you fly.

For instance, the Chase Sapphire Reserve Card ($450 annual fee) gives holders a $300 annual reimbursement for travel purchases that you could apply towards baggage fees. American Express’ Platinum Card ($550 annual fee) includes a $200 travel credit.

2) Join frequent flyer programs

Most airlines have a frequent flyer program. Some let you check several bags for free, depending on your membership status.

Others offer discounted rates. So before you fly, check and see what the airline you’ve booked offers.

3) Apply for an airline’s credit card

It seems that towards the end of every flight I’m on, the attendants make a pitch for their airline’s credit card. They might offer 50,000 free air miles, a free ticket to Europe, and other goodies to entice you.

Moreover, those cards can come with additional perks, like speedy check in and free checked baggage.

Weigh the costs vs. the benefits.

Is the annual fee worth it? If you are a loyal customer of that airline and fly with them several times a year, it could be a good deal.

Yet, it wouldn’t make much sense to spend hundreds of dollars a year for the card if you shop around for the best price when booking flights.

Of course if the program is free, you have nothing to lose by signing up.

Rules Change When Traveling Abroad

If you’re traveling overseas, laws vary across the spectrum…

For example, I normally put a Swiss Army utility knife in my check-in bag. You never know when a screwdriver, scissors, or bottle opener would come in handy.

But bringing it into Canada or Denmark could get you in hot water as both have very strict laws on what you can carry in public. Yet in Costa Rica, it’s not uncommon to see a Tico with a razor-sharp machete on his belt.

Once you reach a foreign destination the stakes increase exponentially …

For instance, even though cannabis is legal in Canada, it is illegal to bring it in. If you are caught, expect legal prosecution, fines, and possibly jail time.

Sweden has some of the toughest drug laws in Europe. If you are caught with marijuana by Swedish customs officers, you will immediately be handed over to the police and prosecuted to the fullest extent of the law. Your possession and transportation of medical cannabis would be handled as any other drug would.

If you think Canada and Sweden are out to discourage medical cannabis coming into their countries…

In Thailand the law allows for the death penalty for anyone caught with drugs, including marijuana. There are stories of travelers sitting in jail for years while their case drags through the legal system.

Bibles, Sudafed, and cigarettes — are forbidden in some countries, according to a report by the State Department’s Overseas Security Advisory Council.

So if you plan on traveling abroad this summer, you many want to click here for the Council’s full report of other items that are best left at home.

No matter where you’re headed this summer, once you have touched down, enjoy the sights, the sounds, the people you meet, and the memories you make.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Easy Steps to Jump Start Your PERFECT Vacation appeared first on Daily Reckoning.

Air Canada Should’ve Been Buffett’s #1 Pick – Not America’s “Big 4”

This post Air Canada Should’ve Been Buffett’s #1 Pick – Not America’s “Big 4” appeared first on Daily Reckoning.

Last summer on June 28th, I wrote to you and identified Air Canada (ACDVF) as a tremendously undervalued stock.

Since then the rest of the market has caught onto the Air Canada story as the share price has subsequently risen more than 50 percent.

I’m thrilled with how this has played out for us…

But I don’t think that the Air Canada story is done.

This stock is still BY FAR the best value in the airline sector, and today I want to crunch the numbers to show you why.

But first, a quick reminder why we were looking at airlines in the first place.

Warren Buffett is Incredibly Bullish on Airlines

Over the past several years, Warren Buffett has invested billions of dollars into the four main U.S. airline operators.

As of the last regulatory filing, Warren Buffett’s company Berkshire Hathaway owns the following:

  • 65.5 million shares of Delta Airlines (DAL) worth $3.3 billion
  • 54.8 million shares of Southwest Airlines (LUV) worth $2.5 billion
  • 21.9 million shares of United Continental (UAL) worth $1.8 billion
  • 43.7 million shares of American Airlines (AAL) worth $1.4 billion

Combined, that is a $9.0 billion investment which even for Warren Buffett is enough money to show he is extremely bullish on the sector.

The interesting thing about Buffett moving into airlines is that for decades he hated the sector as an investment class with a passion. He once even called the industry a “death trap” for investors.1

So what changed to make Buffett warm up to airlines?

The answer is competition. Or more accurately, the lack of competition.

Buffett started investing in airlines in 2016 after U.S. Airways merged with American Airlines. The consummation of that merger marked the end of a decade-long period of constant airline consolidation which changed the competitive landscape of the industry.

Instead of 20 plus airlines competing relentlessly for passengers, by 2016 the industry had been reduced to mainly the Big 4. Out went an era of discount pricing and relentless competition and in came an era of sensible pricing and widening profit margins.

This industry is now what is called an oligopoly, folks. And while it isn’t great for customers, it is fantastic for airline profits.

Mr. Buffett is Still Missing the Best Airline Bargain

When I wrote last June about airlines, I noted that Buffett should have been looking north of the border at Air Canada if he really wanted to own an airline with some upside.

Since then, I have not been proven wrong with Air Canada’s share price vastly outperforming all of Buffett’s four airline holdings.

Air Canada chart

My opinion is that today it still isn’t too late for Buffett to get invested in Air Canada. The stock still has plenty of room to run.

Buffett has invested in the four major U.S. airlines because the industry is now an oligopoly. In Canada there is even less competition with the market being essentially a duopoly consisting of just Air Canada (55 percent market share) and its main competitor WestJet (37 percent market share).

Further, Air Canada shares are still very inexpensively valued. Today, the major U.S. airlines still trade at twice the valuation that Air Canada trades at relative to EBITDA (earnings before interest, taxes, depreciation and amortization).

That means that relative to the U.S. carriers, Air Canada has both half the competition (only one main competitor) and half the valuation!

When it comes to those two factors, smaller is definitely better.

Additionally, I believe there is a significant catalyst coming that will continue to push Air Canada’s share price higher…

Air Canada’s Cash Flow is About to Soar

With the company now wrapping up a major period of capital investment in new planes, cash outflows are about to decrease significantly which means that the free cash flow the business generates is going to increase.

Capital Allocation Strategy

Source: Air Canada Corporate Presentation

Over the next three years, Air Canada’s management believes that the company will generate $4.0 to $4.5 billion in free cash flow. That is cash flow that is available after paying all of the bills and making all capital expenditures.

If the company were to use all of that free cash flow to repurchase shares, it could retire half of the shares Air Canada has outstanding in just three years.

That’s great news for the share price!

Bottom line: Warren Buffett is bullish on airlines for good reason — the profitability of the industry has seriously improved. However, the best way to play the action is north of the border — where Air Canada operates with less competition, a cheaper valuation, and with a cash flow catalyst just over the horizon.

Here’s to looking through the windshield,

Jody Chudley

Jody Chudley
Financial Analyst, The Daily Edge

1 Buffett Decries Airline Investing Even Though at Worst He Broke Even, Forbes

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