Day tour to Chichen-Itza

Chichen Itza was on our radar ever since it received limelight by becoming one of the new Seven Wonders of the World following the worldwide voting initiative organized by the Swiss based New7Wonders foundation. Chichen Itza tours are offered by various groups. We opted for the Chichen Itza Plus tour offered by the Chichen Itza Tour company. This choice was dictated mainly by the fact that the tour guides of the Chichen Itza Plus Tour are accredited by the Mexican National Institute of Anthropology and History and also that refreshments were part of the deal. Tickets can be purchased from their site, other sites, or directly at tour booking counters in the hotel zone or downtown. The company offers other specialized tours of Chichen Itza such as the premier tour which includes a detour through the historic Spanish colonial town of Valladolid established in 1543, the light and sounds tour which includes both the bus tour of Valladolid and a light and sounds movie show in the evening (one late lunch buffet but no drinks or breakfast), and the VIP tour which is a more private version. Prices vary between $65 and $109 (lower for children) for the plus tour and can go all the way up to $200 for the VIP tour. Our reservation was done through CancunFunTours.com which was priced at $65 and $59 for adults and children respectively in the December timeframe (roughly six months before the date).


The Plus Tour is a well organized ten-hour tour that picks guests up from the hotel around 7:30 AM. Feeder buses pick guests up from hotels, drop them off at a meeting point near the airport and from there the tourists board their respective tour buses. This process takes about an hour and the actual tour starts around 8:30 AM. The tour is managed by four people – the driver, a bilingual head tour guide, a Spanish only tour guide, and a service person. The air-conditioned bus was comfortable for the purpose. Our head tour guide Raymundo engaged us with informational talk. On the two-hour bus ride, he held two sessions educating us about the Mayans, the local flora/fauna, and other things. The roads are devoid of traffic and the landscape itself is very barren – the entire state of Quintana Roo was sparsely populated until development for tourism started in the ‘70s. Even now, the state’s population is less than 1.5 million with the majority living in Cancun city and its vicinity. The infertile landscape is primarily because Quintana Roo and the adjacent state of Yucatan is a limestone slab with a very shallow layer of soil covering it.

The first stop was at the archeological park Cenote Ik-Kil – a sinkhole with access from the surface via steps built on the limestone slab. Cenotes are common in the Yucatan peninsula as the limestone slab just beneath the ground seeps all the water above ground to form underground water bodies. This explains the complete absence of surface water in the whole peninsula. Instead, the area reveals water bodies, caves, caverns, or cenote’s when the limestone is breached due to the dissolution of the rock. Many Cenote’s are tourist attractions. Cenote Ik-Kil is commercialized, complete with two gift shops, rental facility for swimmers, and restrooms all in a beautiful setting. The water is very deep (50 meters or so) and definitely not appropriate for novices. The tour guide suggested two unique gift ideas – a Mayan calendar inscribed with a date and name in Mayan paper (a thick brownish paper with a leathery texture) and a silver pendant with a name inscription in gold – the former is around $12 while the latter can trend upwards of $30 depending on the number of letters inscribed.

Next we stopped for the buffet lunch (included except for drinks) at the restaurant Hacienda Xaybe'h. The menu included chicken and fish (Mahi-Mahi) choices along with Mexican fare and pastas. A Mayan dance presentation was also included. The dancers in colorful outfits provided entertainment for about 10-15 minutes.

We arrived at the Chichen Itza entrance around 1:45 PM. Local artisans displayed their ware in the array of shops at the entrance while street sellers crowded the steps hawking an assortment of stuff for a few dollars. However, we did not find them aggressive. Entrance fees were included in our package – our tickets said 51 Pesos. Our tour group was split into two – Raymundo catered to the group who spoke English while the other guide led those who preferred Spanish. He spent a good hour walking with us and educating us on the history and relevance of significant structures. Some of the more amazing things he explained include:

1. The most imposing structure in the whole area is El Castillo, a structure shaped like a pyramid with the top cut-off which stands 25 meters tall. It represents a Mayan calendar. The total number steps add up to the number of days in a year (365) and each façade has 52 flat panels representing the 52 months of the Mayan calendar. The most amazing aspect of the structure is the appearance of a shadow shaped like a serpent on the first day of Spring and Fall in mid-afternoon. During the Equinox sun rays hit the structure all at the right angles creating the shadow effect which lasts for about three hours. Another shadow effect is when the serpent’s head at the bottom of the pyramid appears to point to the Sacred Cenote (Cenote Sagrado).
2. The ball court, the largest in Mesoamerica, is another impressive structure with an intriguing story. The game is played with a solid rubber ball, and the objective is to get the ball through a tiny circular opening high up on either side of the court. The rules, the size of the ball, and the size of the court varied. The game has religious connotations and culminated with a human sacrifice. It is not clear whether the winning captain or the losing captain got sacrificed. The current belief tends to the winning captain as the Mayans believed the winning privilege allowed for a direct ticket to heaven. Modern science is yet to solve the mystery regarding the acoustics of the ball court– directly beneath the ends of the ball court feature a “temple” structure, where a whisper can be heard at the other end 500 feet away.

Several other structures exist in the area and it is estimated that as many as 50,000 people resided in the surrounding area at one time. The extremely hot sun bearing down with little relief made it a little hard on the kids. We were ready to board the bus for the return trip to Cancun as soon as they opened the door at 3:20. Plenty of cold drinks were on offer. The trip back was uneventful and we were dropped off at the hotel door-step around 6:30 PM. All in all, a great tour and we recommend this tour to anyone without any reservations.


Related Posts:

1. Cancun Trip Report.
2. Day tour to Chichen-Itza.
3. Vacationing in Cancun - Gotchas to avoid for frugal travelers.

Last Updated: 09/2011.

Argentina - Travel/Philately/Numismatics/Memorabilia Profile

Argentina is the second largest country in South America after Brazil. Its land area is over one-million square miles and has a population of around 40M making it a scarcely populated country compared to world figures which are over three times that figure. The per-capita GDP is over $14,000 making it an upper-middle-income country – it benefits from abundant natural resources, a highly productive export-oriented agricultural sector, and a diversified industrial sector. On the flip-side, Argentina experienced an economic collapse in 2002 as they defaulted on their debt, mainly due to mismanagement and corruption.

Travel Resources:

It is very difficult to pinpoint the top attractions, as it is more like visiting many countries given its varied topography and weather. However tourist on a time budget make a beeline to Buenos Aires (Paris of South America), and Iguazu. Buenos Aires is best visited March through May and September through Nov (fall and spring), when the weather is mild. Patagonia and the southern Andes is tourist friendly during their summer (December through February).

Resource	ISBN or ASIN	Best Price	Description
Argentina Eyewitness Travel Guide	978-0756661939	17	2010 Edition. Filled with data on what to see in Argentina. Light on basic travel information such as lodging & food.
Lonely Planet Argentina	978-1741794649	$18	Thick 660 page book, but well worth. Covers Chilean Patagonia and 60 pages of Uruguay. 112 easy-to-read maps.
The Argentina Reader: History, Culture, Politics	978-0822329145	$17	An introduction followed by seventy-seven historical documents form a great historical reference for any traveler.
Streetwise Buenos Aires Map by Streetwise	978-1931257367	$9	Laminated, foldable and tourist areas marked.
Universal Plug Adapter for Australia, New Zealand, Chin, and Argentina (VP 23)	B00374I2T2	$7

Philatelic Profile:

The first stamps of Argentina were released in 1858 and is symbolic of the Argentine Confederation. They were single-colored designs of 5c, 10c, and 15c denominations in red, green, and blue respectively. Due to the crude early production methods, several varieties exist. Mint copies of these stamps are plentiful, with only the highest denominated 15c blue commanding significant catalog value at around $15. Used copies are rare and carry a premium of ten to twenty times the value for a corresponding Mint copy. Counterfeits abound and collectors need to be very careful before paying up. Copies of these stamps on cover are very rare and catalogs for a few hundred dollars. Diagonal half or one-third of the two higher denominations on cover are even rarer and those catalog for a few thousand dollars each. A Seal of the Republic design followed in 1862 (Scott #5 to #7 and several varieties). The most valuable Argentine issue is an unused copy of a tete beche pair of the 15c denomination in blue of which only one copy is known. The catalog value of this is in the $55000 range.

Great Men of Argentina dominated the theme for the early stamps of Argentina till 1891. Many of these stamps catalog in the tens of dollars and some fetch a few hundred dollars. The most prominent among them is the 1864 issue which depicts Bernardino Rivadavia, the first president of Argentina (Scott #8 to #18). They have a wide range of catalog values – for example, a used copy of Scott #20 catalogs for just a dollar while Scott #15a (10c Green) catalog for $4000 either MNH or Used. Other prominent issues include the short-set of five stamps of 1873 (Scott #22 to #26) and the long-set of thirteen stamps of 1888 (Scott #57 to #67 and a couple of varieties) – the former set catalogs for over $200 MNH and just 10% of that for used while the latter catalogs for under $400 MNH and around $50 used. The 1891 short-set of four stamps (Scott #85 to #88) is another interesting set because of its odd vertical orientation. They are valued at around $700 MNH and around $100 used.


A philatelic exhibition was held in Buenos Aires from October 17-24, 1935. A souvenir sheet of four imperforate stamps depicting San Martin, the liberator of Argentina was issued to commemorate the event. The stamps were sold during the eight days of exhibition only. The sheet catalogs for around $75 MNH and $35 Used. The best known stamps of Argentina are the ones that depict Eva Peron, the very popular second wife of President Juan Peron who died of cancer in 1952 at a young age of 33. The first stamps were definitives issued in a set of 12 (two different designs of her portrait) on August 26 1952 (Scott #599 to #610). The set catalogs for just $5 MNH and less than that for used. A sister set in the same design (Scott #611 to #618) catalogs somewhat higher. The 2nd anniversary issue of 1954 (Scott #626 and #627) shows a beautiful design of Eva Peron’s portrait in car rose – the stamps differ only in their watermarks and value – the former catalogs for under $5 MNH and under $1 used while the latter catalogs at over $250 MNH and one-fifth that for used.

Numismatic Profile:

Provincial coins first appeared between 1815 and 1816 and consisted of silver coins denominated in Real. Provincial coins included issues from De La Plata, Buenos Aires, Cordoba, La Rioja, Mendoza, Santiago Del Estero, Tierra del Fuego, Salta, and Tucuman. Conferacion Argentina coins appeared in 1854 followed by Republican coinage in 1882. Numismatic items of Argentina include:

Item	Price Range	Description
Exonumia	$3 and up	Subway tokens, San Martin medals, etc start around $3. 19th century coat of arms and philatelic culture medals start around $15. 19th century national guard army medals, Philanthropic society medals, etc start around $25. St Dominic Christianity Medals, Patriotic Army Condor Medals, etc start around $50. 19th century union province medals, Argentina League Tuberculosis Medals, etc start around $100.
Gold Coins	$100 and up	1880s 1 Argentino and half Argentino Gold Coins start around $100. ONU proofs from 1995, Jorge Luis Borges proofs from 1999 etc go well into the 100s.
Other Coins	$1 and up	Circulated 20th century coins start around $1. Uncirculated coins from the 60s and 70s start around $10. Provincial issues from the 19th century in VF condition start around $30. Recent Commemorative Silver Proofs start around $100. Planchet error varieties from the 60s, recent bimetallic UNC sets, Certified provincial coins in VG and above, etc go well into the 100s.
Paper Money	$1 and up	Common Peso denominations from the 20th century in UNC start around $1. 1M Peso Banknotes from the 80s start around $80. Bundles of lower denominations from the same period, 19th century UNC banknotes, etc go well into the 100s.

Collectible Memorabilia:

Silverware, antiques, handicrafts – arts, crafts, painting, jewelry etc top this list and Argentina has a plethora of shops only too happy to please the tourist.

Resource	Price Range	Description
Badges, Swords, and other Militaria	Varies	Knifes and Swords from the WW era start around $150. Badges from the same era start around $15.
Petrified Wood, Agate Specimens, and other fossils and minerals	$20 and up	Petrified wood from the petrified forests in the Chubut region of Argentine Patagonia and meteorite samples from the provinces of Chaco and Santiago del Estero (Campo del Cielo) are in the market.
Postcards, Maps, and Manuscripts	$1 and up	Postcards that have some historical relevance fetch a sizable premium.
Art	Varies	Soccer and other modern themes can be had for a few dollars while works of well-known artists such as Victor Chab, Daniel Fiorda, Enio Iommi, Carolina Sardi, Daniel Bottero, Enrique Matticoli, Pablo Contrisciani, Karina Chechik, Miguel Ocamp, Eduard Schloemann, etc fetch into the 1000s.

Last Updated: 12/2015. 

Anguilla - Travel/Philately/Numismatics/Memorabilia Profile

Anguilla is a British Overseas Territory in the West Indies, south-east of Puerto Rico. The main island is Anguilla and the territory consists of a few other minor islands. The total land area is only around 100 square kilometers with population just over 13000. Industry is dominated by tourism.

Travel Resources:

Its tropical warm climate is categorized sunny. Though Anguilla's wet season is not wet enough to wreck havoc into any travel plans visiting in January, February, and March will ensure that season is bypassed. For travel after June watch out for hurricane warnings. After the beaches the biggest attraction is the scenery making a scenic drive a must.

Resource	ISBN or ASIN	Best Price	Description
Anguilla: Tranquil Isles of the Caribbean	978-0333659663	$15	One of the only books to cover Anguilla on its own from a tourist perspective.
Fodor’s Caribbean 2011	978-1400004621	$17	Bulky (1168 pages) but the book to have for any place in the Caribbean.
Frommer’s Portable St. Maarten St. Martin, Anguilla and St. Barts	978-0470630990	$11	Detailed maps, reviews of hotels and restaurants, sights, shopping, prices, direction, and insider tips.
A Trip to the Beach: Living on Island Time in the Caribbean	978-0609807484	$12	Story of an American (Vermont) family who moved to Anguilla and set up a restaurant (Blanchard’s) and in the process have become a ‘belonger’ themselves.
Anguilla Adapter Plug D	B001FDA2U4	$6
Anguilla Rentals	NA	Varies

Philatelic Profile:

The first stamps of Anguilla are overprints on St. Kitts and Nevis stamps of 1963 in two designs issued in September 1967– lighthouse in Sombrero, a very small island in the northern tip of Anguilla with a total acreage of less than hundred and loading sugar cane. The stamps are very valuable especially in higher denominations – the total catalog value of the first 16 stamps MNH exceeds $15000 while the used set catalogs for under $4000 (Scott #1 to #16). The overprint reads “Independent Anguilla”. Counterfeits are aplenty as the St. Kitts and Nevis stamps without the overprints (Scott #145 to #160) catalog for less than $20 MNH and around $10 used.

The first original designs were a set of 15 stamps depicting local scenes (Scott #17 to #31) and prominent structures in Valley, the capital city. This is a definitive set and catalogs for around $20 MNH or used. The designs in this beautiful set are: Sombrero Lighthouse, St. Mary's Church, Police Station, Old Plantation House, Mt. Fortune, Post Office, Methodist Church, Airport, Plane sitting on sandy Anguillan terrain, Island Harbor, Map, Hermit crab and starfish, Hibiscus, Coconut harvesting, and the spiny lobster. The butterfly set of 1971 is another beautiful short-set of four stamps (Scott #123 to #126). They are also pretty affordable at around $10 MNH and about half that for used.



Separation issues of 1980 were the next significant issues. These came in two sets. One interesting aspect of the first set is that the designs came from different previous sets with “SEPARATION 1980” overprint. It is a long-set of 22 stamps (Scott #402 to #423) overprinted on the following previous issues – Scott #275, #278, and 280-290 from the beautiful varied scenes set of 1977-78 (Scott #275 to #290), Scott #344 serenade scene from the Christmas set () of 1978-79 (Scott #325 to #330 and Scott #331 to #336), and Scott #400 and #401 from the birds set of 1980 (Scott #398 to #401). The other separation set is an original design with separation related themes (Scott #424 to #428). Both are fairly affordable with the first set cataloging for around $30 for MNH or used and the second set cataloging at less than $2 either MNH or used.

Numismatic Profile:

Eastern Caribbean Dollar is the currency used in this island for commerce. Between 1968 and 1970, a number of dollar denominated coins were released as souvenirs of the revolution. They have low mintages and enjoy good numismatic interest. Numismatic items of Anguilla include:

Item	Price Range	Description
Coins	$100 and up	Liberty Dollar, Atlantic Star Silver etc Proofs start around $100. Gold proofs go well into the 100s depending on bullion value and mintage.
Paper Money	$20 and up	Eastern Caribbean $1 UNC notes from the 1990s start around $20.

Collectible Memorabilia:

Souvenirs from Anguilla would definitely be a capture of the scenery on canvas. Customized Anguillan logos are very popular.


Last Updated: 12/2015. 

Cancun Trip Report

We kicked off this year’s (2009) summer break with a 4-day vacation to Cancun in the 3rd week of June. The package was reserved six month’s in advance through Expedia after comparison shopping at many sites. An overnight flight aboard Mexicana Airways and a 3-night stay in the Hotel Zone came to around $1500 for the four of us. We complimented ourselves on the deal and on our timing, only to find the same deal offered in Expedia for a brief period in mid-February for around $1350 – between the time we reserved (around 6 months before the trip) through late May, the pricing fluctuated between $1350 to as high as $2200. Lesson learned - patience can be a virtue.

The flight was uneventful and the very short break in Mexico City was (less than two hours) was not a hassle. Mexicana service was fairly good – a boxed lunch (small sandwich and snacks) with drinks was offered on all the flights. A peculiarity we noticed at both the Mexico City and Cancun airports were janitors offering trivial services with the expectation of a tip. At Cancun airport the porters hustle you along without waiting for your consent. Quickly getting about one’s business and presenting a token tip for any services that you “caught on the way” is the best option as the other alternative is in one way or the other unpleasant.

Orientation at the Hotel zone is straightforward – Kukulcán Boulevard is the main road running the length. The hotel zone commences at Km-zero just outside Cancun city and covers an area shaped like the number seven, with the short-end starting at Km 0 and terminating at Km 21 near the airport at the long end of the seven. The seven enclose a lagoon and a duo of bridges at the ends of the seven connects the tourist area to the rest of Cancun. The area surrounding seven is a fully-planned exclusive tourist facility complete with around 150 hotels, shopping centers, and entertainment options. Public transportation is the best option to get around and they operate very frequently (every few minutes). Each bus ride is 75 pesos per trip per person including children, independent of distance traveled. Navigating the place via bus is simple once the bearings are in place.

Our hotel was not an all-inclusive resort, although there were three restaurants on-site. Since we had plans in place for sightseeing during the morning hours, this perfectly met our requirements. The facility and the staff were great. Cancun hotels can have several caveats one needs to be aware of:

1. Time-share sales pitches – many hotels are sites were timeshare sales representatives "camp" (sometimes disguised as concierge) pitching their line. Our experience was to the contrary - the solitary solicitation was a phone call from the Expedia desk at the hotel asking us to stop by their counter for tour coupons. We did not avail of that option. Of the three towers at the hotel, one is the Royal Tower featuring suites with terraces and related luxury features - could be that the sales personnel focused on guests in these rooms.
2. Strict prohibition of outside food – since it is not an all-inclusive resort, this restriction makes one feel dining at one of the three restaurants at the hotel is imposed. During check-in, it was mentioned that we had to sign something that said outside food was not allowed. But, the staff made it clear that outside personnel were curbed from delivering food to rooms for security reasons. We did not encounter any problem whatsoever in bringing in food purchased from outside the hotel.
3. “Nickel and Diming” and expecting a tip for everything – our experience was comparable to any US or international hotel (3-stars or above). Availing of bell service is the norm and since our room was at the tower removed from the main building, we were only too glad to let them handle the luggage and to have them escort us in the tram, and point out the various facilities and features of the place. None of the staff displayed any suggestions indicating a tip is warranted, and for us it is only common courtesy to tip for the service provided. We were asked to sign a waiver if we choose not to use the locker at $2 per day. We did avail of this option. Like most international hotels, pre-authorization using a credit card will take care of incidentals. For us, the pre-authorization was for 2000 pesos (less than $200). The charges incurred were for room-service and restaurant dining.

Our reservation was at the tower called the premium tower which had newer rooms with a small balcony overlooking the great ocean. Watching the ships sail by in the horizon was delightful.

Half a km away from the hotel, we found medium priced familiar chains such as Bubba Gump. Though the pricing at this seafood restaurant in the Forrest Gump movie theme is comparable to its US counterparts, the service was a little better. The closest shopping plaza was the Flamingo Plaza - one of the smaller shopping malls that dot the entire stretch of the 20 and odd km of the hotel zone. The plaza itself was devoid of customers in the mid-afternoon hour we visited and the shop-keepers vaguely interested, a far-cry from the “aggressive” nature we were warned of prior to the trip. The pools were fairly crowded in the afternoon-hours, but plenty of beds and sofa parlors were available to stretch out. The pool was lovely and we had a wonderful time there. The private beach-front is excellent when not windy.

The hotel zone has options for activities at various levels. For those interested in the Mayan ruins, the El Rey ruins (37 pesos – roughly US $3 for adults and children are free) are located at at Km 18.5 on Kukulcán. Playa Delfines (Kukulcán, Km 18 near punta nizuc) the highest point in the hotel zone and provides a very good view of the area. Visitors inclined to hone their bargaining skills can find an outlet at the Mercados (similar to flea markets in the US with bargaining being the norm). The one on Kukulcán at Km 9.5 called Coral Negro and three more in Cancun proper – Mercado 28, Mercado 23, and Ki Huic Market are the more popular ones. Route 1 or Route 2 bus from the Ocean side will get one to Cancun downtown from the hotel zone. For Mercado 28 (the most popular one), choose Route 2 and alight at the first stop after the bus passes Avenida Tulum – the driver usually points out this spot, but even otherwise it is hard to miss as it is mass exodus at this point. Route 15 and Route 27 are minor routes that also serve the hotel zone. Buses that say "zona hoteleres" in the front all lead to the hotel zone.

For traditional shopping there are six shopping malls in the hotel zone between Km 8.5 and Km 13. These shopping malls combine both restaurants and entertainment options. The La Isla shopping center (Km 12.5) features an interactive aquarium and the place mimics Venice with bridges and canals in Las Vegas style. Kukulcán Plaza (Km 13), the largest of the malls on the other hand, incorporates movie theaters and bowling alleys in addition to 300-odd shops and restaurants. Flamingo Plaza (Km 11.5), Forum-by-the-sea (Km 9.5), and Plaza Maya Fair (Km 8.5) are smaller malls, but still with their own entertainment options – the Plaza Maya Fair is themed around a rainforest and offers nightly Mayan dance and other music shows while Forum-by-the-sea highlight is a multi-level structure with a large common area in the middle where there are options for rock climbing and other make-shift performances. The mall also features the Rainforest Café on the 2nd floor. The third-floor is a budget food-court – a reasonable dining option for frugal minded travelers. Plaza Caracol (Km 8.5) is on the other end of the spectrum with high-end shops and galleries.

In a nutshell, Cancun delivers for a tourist vacationing in a tropical resort – wonderful beaches, food choices galore, excellent public transportation, organized tours to nearby attractions, and not to mention a large hotel zone completely planned out as a tourist Mecca. Although many would consider a three-night vacation “too short”, for our lifestyle this was wonderfully right on time. Our highlight of the trip was the visit to Chichen Itza, a Mayan ruin which is now one of the Seven Wonders of the World. 

Related Posts:

1. Cancun Trip Report.
2. Day tour to Chichen-Itza.
3. Vacationing in Cancun - Gotchas to avoid for frugal travelers.

Last Updated: 02/2011.

Southwest Airlines (LUV) – Stock Analysis

As blogged previously, SWA’s personality identifies with our frugal consumer lifestyle. In the last fifteen years we have flown domestically 3-4 times annually and more than 90% of the time Southwest has been our airline of choice. Patience and flexibility help the “Wanna get away” fares go further. Southwest’s policy of generally staying away from the main airports in major cities works in our favor as that essentially reduces airport hassles. It also helps that we are a hop, skip, and a jump away from the Oakland airport, one of the top-10 secondary airports served by Southwest. Flight delays or missed baggage has not been our lot so far. However, the minimal catering fare is not commendable especially on coast-to-coast trips, usually in the same flight with one or more stopovers.

Airline industry is an extremely tough business with razor thin margins constantly squeezed and sandwiched between huge fixed costs and heavy regulation. Also with ticket pricing not regulated the formula is carved for an industry with companies competing their way into bankruptcy! Southwest Airlines sports a unique appeal as they were profitable for more than 35 continuous years. This achievement is especially significant considering they are a low-cost airline and as yet not a big player in the more lucrative business travel market.

Business Issues:

Southwest strives for a completely optimized smooth operation. A key factor behind that philosophy is employee productivity and is the distinguishing dynamic even when comparing SWA with other up-and-coming airlines emulating their business model. Specifically, Southwest’s unwritten rule of minimizing layoffs along with significant employee ownership has enabled them to nurture the industry’s most productive employees. It is remarkable that the philosophy stood the test of airline crisis following September 11, 2001. Southwest's strength compared to legacy airlines boil down to:

• Liquidity: Southwest have been able to maintain a high level of liquidity while legacy carriers have long struggled to maintain profitability and have found it hard to raise capital in a low-cost fashion. Indirectly, this results in a combative relationship between the management and the labor unions as management’s effort to decrease costs by reducing salaries/benefits conflicts entirely with the interests of the labor unions, and
• Solid Employee Relationship: Again, SWA has an admirable turnaround of aircraft at the terminal resulting from its highly cohesive relationship among employees in different silos. This is a tall order for legacy airlines as historically, the very rigid line among employees in different capacities make it hard to achieve shared goals.

Even so, there is a downside to Southwest’s strategy. Employee per aircraft, a key metric for performance measurement has varied between the high 60’s and the high 80’s – that number is better low. In a downturn, should the company decide to reduce fleet size, it is inevitable for this number to go high and in extreme cases can spin out of control.

Some well-known business optimization skills pioneered by Southwest that have successfully been adopted by other airlines include:

1. Point-to-point short-haul network of flights instead of the hub-and-spoke method. Historically, hub-and-spoke was considered the most profitable method of running an airline as it allowed for concentrating maintenance staff in one location as well as consolidation of flights thus permitting for market share gains at the hubs which paves way for increased pricing power. Southwest blew away this concept by optimizing for quick turnarounds of aircraft at the gate. Even though, Southwest’s costs per aircraft per minute at the terminal is high, by minimizing the time at the terminal, Southwest proved that costs can be contained to be below hub-and-spoke operators. Further, hub-and-spoke is limited by airport capacity. Southwest’s passenger load factor (a measure of how much of an airlines passenger carrying capacity is used) is stuck in the low 70s and this is one area they can focus to improve.
2. Use of a single aircraft type: Southwest exclusively employs Boeing 737 series aircraft for all its flights. This allows them to streamline operations and reduce cost.

Southwest maintains a fleet of 537 Boeing 737’s with an average age of slightly over 10 years. Of these, 210 (almost 40%) planes are aged over 17 years and the remaining 327 (more than 60%) are around 5 years. Effort is underway to replace some of the older fleet with new ones. In fact, their committed aircraft orders stand at 104 and the total including options and purchase rights add up to 220 over the next 5 years, remarkably close to the number of Southwest airplanes aged over 15 years. It can be deduced that Southwest does not anticipate fleet growth in the foreseeable future.

In keeping with the spirit of a low-cost no-frills airline, Southwest ran a highly successful no-hidden fees marketing campaign. This was especially successful because the timing of the campaign was precisely when competition increasingly started charging fees for almost everything not nailed on - additional baggage, ticket change, booking etc. Southwest has managed to keep add-on fees to a minimum although nominal fees for certain things were introduced recently for –

• From the 3rd checked-in baggage onwards, and
• Unaccompanied minors and for pets.

Other minor business decisions that directly affect the Southwest customer experience include:

• Single ticket class. There is no first-class or business class or elite class on Southwest flights. Recently, they introduced Business select, a glorified regular ticket with preferential seating privilege.
• Tickets are almost exclusively purchased directly from the airline (phone or website) thus eliminating middle-men (travel agents and other travel sites).
• No seat assignments: The boarding pass does not have a seat number assigned and one can choose a seat as long as it is unoccupied. Boarding first is critical and Southwest introduced a new boarding process last year in an attempt to minimize the time customers spent in line. Basically, passengers are assigned to one of three boarding groups depending on check-in time. Online check-in 24-hours in advance is available and if boarding first is a priority, early online check-in is recommended.

These initiatives help create a unique experience for Southwest’s customers and most tend to become loyal. There is a level of resistance among customers that have flown on other airlines to switch to Southwest – the oft cited excuses include lack of service in their “home” airports, and frequent flyer benefits customers wanting to take advantage of, etc. This is a challenge for Southwest as they have not focused enough on the business customer. Southwest’s focus on servicing from secondary airports has slowed its ability to service business customers who prefer main airports despite the consequences. SWA effort to play this market is proving to be a painfully slow process – many of the primary airports are operating at capacity and making the entry tough as costs can quickly become prohibitive. Philadelphia and Denver are success stories and New York should soon follow suit with Southwest’s successful bidding for the 14 take-off and landing slots in La Guardia from ATA airlines, a code-share partner that went bankrupt last year. Minneapolis is another location expected to be served starting March 2009. For Southwest to grow at a healthy rate they need to carve a niche in this area and it is imperative for them to revamp the business model to serve this customer base in a satisfactory manner. The top-three Southwest airports are Las Vegas, Chicago (Midway), and Phoenix. It is expected to remain this way as Southwest cannot afford to lose market share in these routes while attempting to expand in other areas. Southwest’s commitment to existing locations is evident in its support for the extensive plan to revamp the Love Field airport in Dallas, Southwest’s home base.

Another critical route that Southwest has not chartered yet but will need to for growth is International operations. So far, focus has been on local flights but given the size of the airline and the expected stagnation in the domestic market, Southwest will have to tackle the international market sooner than later. Their forays into this space have been modest with a couple of code-share agreements with airlines serving Canada and Mexico - West Jet of Canada and Volaris of Mexico. This could be especially challenging as many of the business strategies that worked well to optimize the domestic area will not apply when the horizon broadens and in certain cases can be counter-productive. For example, Southwest will not have the luxury to work with a single type of airline as it will not be suitable for transcontinental flights.

Financials:

The year over year (yoy) revenue growth for Southwest stood at a respectable 11.8% at the end of 2008. Net income was down 72.4%. Below is a consolidated look at their financials over the last four years:

Year	2008	2007	2006	2005
Operating Revenue	$11.02B	$9.86B	$9.09B	$7.58B
Operating Expenses	$10.57B	$9.07B	$8.15B	$6.86B
Net Income	$178M	$645M	$499M	$484M
Net Margin	1.6%	6.5%	5.5%	6.4%
Fleet Size	537	520	481	445

Revenue went up almost 50% over the last four years. Fleet size increased around 20% over the same period. Net income was all over the place as it stayed steady in the 2nd year, showed a growth of almost 30% in the 3rd year followed by a decline of over 70% last year, clearly demonstrating the cyclic nature of the business.

The company finished 2008 with 1.8B in cash. In a tough credit environment, this is an achievement in itself. $891M was generated in fourth quarter of 2008 by tapping the revolving credit facility and the loan market – these are comparatively expensive loans at an interest rate of over 10%. Additionally, 346M was generated through sale and lease back transactions of ten of its Boeing 737-700 aircrafts. The company still owns about 83% of its aircraft fleet and the non-mortgaged aircraft market value stood at $8-$9B giving a Debt to Capital ratio of 45 % at EOY 2008. As Southwest demonstrated, using sale-and-lease back is a good option that the company can tap in tight credit environments.

Southwest’s hedging strategy accounts for its outstanding performance relative to other airlines in the last few years. When fuel price fluctuated between $35 and $150 last year, Southwest’s hedges at $51 came in real handy and helped it remain profitable. Southwest guessed right that fuel prices were artificially low in the 2003 timeframe by purchasing forward contracts at low fixed prices. As fuel prices rose over the last few years, these contracts rose in value thereby offsetting a substantial portion of its expenses to purchase fuel at higher prices. This is going to be hard to replicate moving forward. As of the end of last year, Southwest participated in 85% of the fall in energy price as they significantly reduced fuel hedges through 2013. As of March 2009, Southwest has started to become more active as they have hedged 29% and 27% of its estimated fuel needs for 2009 and 2010 respectively, primarily using call options at $66. Below is a look at fuel price as percentage of total operating expenses for the last four years:

Year	Cost	Average Cost Per Gallon	Percent of Operating Expenses
2008	$3.71B	$2.44	35.1%
2007	$2.69B	$1.80	29.7%
2006	$2.28B	$1.64	28.0%
2005	$1.47B	$1.13	21.4%

The estimated consumption is roughly 1.5B gallons per year. Thus, a 1c change in price results in 15M change to bottom-line.

Summary:

Southwest is the golden kid of the domestic airline industry as it has managed to stay profitable consistently over the last 35 years, a feat that has never been accomplished by any other domestic airline. Outstanding management and their ability to innovate and optimize Southwest’s operations are directly responsible for this performance. As such, investors should be willing to pay a premium for Southwest shares. Growth prospects in the domestic market are limited but Management has shown a willingness to cautiously enter other potential growth areas such as expansion in the business market and international operations. Given the company’s outstanding performance in the last three decades, timing is right to bet on Southwest growing in new areas in the near future.

Southwest is valued very close to book value. Forward PE is in the 20s as the combination of higher fuel prices and lower demand due to the recession should result in earnings in the low double digits for 2009. As the economy recovers, Southwest’s earnings prospects should improve but it is anybody’s guess as to when exactly it will happen. As such, an investment in Southwest is a gamble on the eventual recovery of the US economy.

Related Posts:

1. Southwest Airlines - An Experience.

Aitutaki - Travel/Philately/Numismatics/Memorabilia Profile

Aitutaki   is part of the Cook Islands, which in turn is a dependency of New Zealand. The island is categorized as “almost atoll” – a Darwinian term describing a fringing coral reef enclosing an island formed by volcanic activity in the tropical sea whereby a slow process of reef growth upwards and subsiding of the island results in a lagoon, forming a topography that is almost an atoll. Tourism and fishing are the mainstays of Aitutaki.

Travel Resources:

The tourist friendly months are technically June through September but the shoulder months of May and October are popular with those seeking travel deals. The mango season of November is another pleasing time to visit. It is known for its turquoise central lagoon and beaches.


Philatelic Profile:

The first stamps of Aitutaki were a set of six which were overprints of the New Zealand issues of 1898. The designs were Mount Cook, Huia Birds, Kiwi, and Hawk-billed parrots and the overprints “AITUTAKI” and the denomination were either in Red or Blue. The first two stamps catalog for under $10 but those used commercially on cover catalog at more than $100. The most valuable stamps in the set are the varieties of Scott #6. The original design, the “1sh scarlet”, catalog in the $50 range for MNH, $100 range for used, and $350 for used on cover. A variety of the same design in orange brown with no period after the overprint “Tiringi” catalog for over $1000. A couple of other overprints and certain varieties were the only stamps issued till 1920. Except for certain varieties, the catalog value of most of these stamps is affordable at under $10. Though the island is minuscule with the spread at 6.97 square miles, they issue their own stamps. The need for their own postal service is a case of economics over social need. For the mere 2000-odd inhabitants, issuing stamps to satisfy the large philatelic community is a very lucrative proposition – there are 50,000 to 100,000 philatelists worldwide for every Aitutakian and every successful sale of a single stamp at penny apiece to each of those philatelists, translates to between $500 and $1000 per person.


In 1920 the first original designs appeared with the release of a set of six stamps (Scott #28 to #33). They depict the landing of Captain Cook, a portrait of James Cook, and certain local scenes. The set catalogs for around $40 for MNH and about $100 for used. These stamps along with a design of the Rarotongan Chief, Te Po in a blue and black design and certain varieties were the only stamps issued till 1931. From 1932 to 1972 Aitutaki used stamps of Cook Islands instead of issuing their own.

The first stamps since the hiatus were Aitutaki overprints on a duo of Cook Islands designs of 1967-69. The set consisting of ten denominations of the Hibiscus design and two higher denominations of QE II design catalog for around $30 MNH and $50 used. A few other overprints were also used in 1972. The first original designs appeared in 1973 with Princess Anne and Hibiscus design. The stamp catalogs well under $1. In 1974, a set of fourteen stamps depicting pacific seashells were issued. The lower denominations catalog in the $1 to $5 range but the two higher denominations ($2 and $5) with a QE head design on the left side catalog around $5 and $30 respectively for MNH and $5 and $15 Used. Well over 500 different designs in varied global themes were issued since 1972. Many of the higher denominations catalog in the $5 range but whether they are collectible is another story.

Collectible Memorabilia:

An authentic Aitutaki takeaway would be something made of Cook Islands black pearl shells or better yet the pearl itself.


Last Updated: 12/2015.

Antigua and Barbuda - Travel/Philately/Numismatics/Memorabilia Profile

Antigua and Barbuda, a small nation consisting of the two islands bearing the same names, has a combined area of around 170 square miles and a population of around 80,000. The country’s economy is centered primarily on tourism as American and European tourists find the beautiful beaches in tropical setting an ideal getaway. The tourism industry is chiefly responsible for the country’s respectable GDP of well over $10K and fine showing in other areas including literacy and health. Of the two islands Antigua is fully commercialized with 365 beaches and accounts for more than 95% of the population. To the contrary, Barbuda is undeveloped with only around 1500 people inhabiting approximately 60 square miles.

Travel Resources:

Antigua and Barbuda is nicknamed ‘Land of 365 Beaches’ and the twin-island nation’s economy is heavily dependent on tourism. Nelson’s Dockyard and the capital city of St. Johns are the most popular tourist destinations. Antigua and Barbuda are considered to be in season from November through April, when it's colder in North America and Europe. The sailing week in April and the carnival time in July and August are crowd pullers.

Resource	ISBN or ASIN	Best Price	Description
Antigua and Barbuda Island Guide	978-0615218373	$14	Written by a former Peace Corps volunteer who lived, researched, and wrote the book. It is a good source for detailed maps, directions, accommodations, and food that can fit your budget.
Antigua and Barbuda Map by International Travel Maps	978-1553411291	$11	1:35,000 scale. Distances in kilometers and miles. Shows airports, bus stations, points of interest, accommodations, beaches, reefs, golf courses, etc.
Antigua Barbuda Grounded Adapter Kit – GUA and GUD	B001FD7BY4	$15
Antigua Accommodation	NA	Varies

Philatelic Profile:

Antigua was one of the presidencies of the British Leeward Island colony with its own stamp issues. The first stamp issued in 1862 was a colonial Queen Victoria keytype design with Antigua inscribed at the top and the denomination at the bottom. This single-color design continued through 1879. The eleven stamps with this design are all valuable with catalog values well over $100. Among these, certain color varieties and imperforate pairs are especially valuable and catalog in the thousands and the most valuable being the 6p Blue-Green (Scott #7) watermarked version of 1872 that catalog for over $500 for MNH. Varieties also exist and the 6p yellow-green variety (Scott #4) is highly prized mostly for its rarity at over $3500 dollars for MNH.

Antigua stopped issuing stamps in 1890 and from 1890 to 1903 stamps of Leeward Islands were used instead. Significant design shift occurred with the 1903 issues of the ‘Seal of the Colony’ in two-color designs. The same designs along with a KGV design in double-colors continued till 1915. The most valuable stamps during this period include the ‘2sh violet and green Seal of the Colony’ design type and the ‘5sh violet and green KGV’ design type which both catalog for around $100 MNH.

The St. John’s Harbor design of 1921 was the first design with an Antiguan theme. Stamps of the same design continued till 1929 in three different sets. The most valuable among them is the set consisting of Scott #58 to #64 in chalky paper (wmk 3) that catalog for well over $300 MNH and over $550 used – Scott #64, the “one-pound violet and black, red” design is the most valuable individual stamp in the set at $250 MNH and over $350 Used. This was followed in 1932 by a set of ten stamps in four different designs issued to mark the tercentenary of the colony. The set is very collectible and catalog for over $200 MNH and over $300 Used for the complete set. A sister-set of twelve stamps issued in 1938 (Scott #84 to #95 that catalog for around $100 for either MNH or Used) along with several common-design types comprised the bulk of stamp issues till 1966.

Antigua became an associated state of the United Kingdom in 1967. A set of four stamps in three different designs to mark the event was issued in February 1967. The designs comprised of independence themes such as the flag, map, the premier’s office building, and the spiny lobster. The set (Scott #186 to #189) is common and catalog for less than a dollar for either MNH or used. Nevertheless, the colorful design marked the beginning of stamps with beautiful designs in multi-colors covering a large variety of local and international themes. Such stamps, although not especially valuable are still part of many collections, as they present really well.

Antigua gained independence on November 1, 1981. Stamps from this point onwards have the inscription ‘Antigua & Bermuda’ instead of just ‘Antigua’. A set of four stamps (Scott #633 to #636 and a souvenir sheet - #636) with different designs were issued to mark the event. The designs were

1. Arms,
2. Flag,
3. Prime Minister Vere Cornwall Bird, and
4. St. John’s Cathedral.

The set is very affordable and catalogs for under $10 for either MNH or Used including the souvenir sheet. Colorful global themes continued to be the mainstay of Antigua and Bermuda’s stamps. Some great examples of such designs include:

1. The Donald Duck Set of nine stamps and two souvenir sheets issued in 1984 (Scott #808 to #818). The beautiful set including the souvenir sheets catalog for under $20 for either MNH or Used, and
2. The Entertainer’s set (Scott #1040 to #1047) of eight stamps issued in 1987 featuring Grace Kelly, Marilyn Monroe, Orson Welles, Judy Garland, John Lennon, Rock Hudson, John Wayne, and Elvis Presley. The set catalogs for around $25 MNH and $10 Used.

Numismatic Profile:

The first coins of Antigua were Farthing denominated copper coins issued in 1850. Five die varieties and certain countermarked varieties exist. The issue catalogs for around $325 for the Proof and for around $20 for Fine. Prior to this, Spanish silver coinage and French colonial Black Dogs were used. Antigua used coins of the British Caribbean Territories from 1955. Between 1970 and 1982, British Administration era issues with Antigua and Antigua and Barbuda inscriptions were used until they were augmented in 1981 by Eastern Carribbean States issues. These issued hold good numismatic interest and are valued high. Other numismatic items of Antigua and Barbuda include:

Item	Price Range	Description
Coins	$10 and up	Proof varieties of the first issue with the helmeted arms with supporters obverse design in copper-nickel go for around $40 while VF condition can be had for as low as $10. 1836 Farthings, 1988 Bird 4 oz Silver Proofs, 1985 $10 QE Visit proofs etc go well into the 100s.
Paper Money	$10 and up	Eastern Caribbean $5 banknotes (UNC) start around $10. 23kt gold notes start around $20 with the 1988 gold foil note in folder going for as high as $100.

Collectible Memorabilia:

Straw goods, batik, printed cotton and silk made by local artisans are good souvenirs.



Last Updated: 12/2015.