Sunday, November 27, 2005

Economics 101

As i was slapped by a bill of RM1000 after servicing the aircon of my daughters car, I got to thinking why are there so much irregularities in life. This has been one huge casualty to my pocket and little does my daughter know of the significant impact it has cause to her daddy. I sometimes wonder whether she understand the value of money.

While trying to rationalise this fact, I got an SMS from my sister who has just touched down in Jakarta having taking my mother on a well deserved holiday using AirAsia. Looking in at AirAsia flight prices, i begin to ponder. How does an airline company offer prices to Penang or anywhere in Malaysia cheaper then the cost of taking a taxi to KLIA or even taking the ERL from Sentral to KLIA.

Can someone explain the economics and price modelling of this? Is it that AirAsia runs more efficently or that other transport companies run innefficiently?. Does the plane on Air Asia run on tap water (since mineral water is more expensive then kerosene - more difficult distilling process I gather) as the planes are less affected to oil price hike then some other public transport? Where do these unnecessary cost come from?. In most businesses, these operating cost are pass on to the consumers.

Argghhh...trying to understand.