Sunday, March 05, 2006

Why Hawaiian Charges A Higher Price To A. Samoa Than To California

Points:

***Governor Togiola demands that Hawaiian charge no more than $400 for a round trip. Tickets now range from $800 to $1000 for a round trip ticket.

***Governor Togiola says people can profit (especially since he profits everyday as a governor), but Hawaiian is too concerned with revenues and not financial burden on families.

***Short Run Costs vs. Long Run Costs

***Economies of Scale

***Property Rights

***Foreign carriers are prohibited from providing service between two US ports because of the Jones Act.

***What have our politicians done to exempt us from the Jones Act?

Note to readers: Feel free to comment on points you like to add or to expand on the points already listed. Thank you.

2 Comments:

At 3:18 AM , Blogger TikiPundit said...

Maybe the Guv just wants ASG to be like the loco Hawaii government. They got a gas tax, Togiola wants what is in effect a ticket tax.

Because who's gonna pay that 400-600 bucks? You and me, that's who. That money will come back to hurt us in some indirect way. A travel subsidy for them means a tax on my finances some way.

Why so expensive to fly there? It's a long way, for one thing. For another, airports are expensive. You have to pay to play to meet USA and ICAO standards. It's not like airlines are gouging customers anyway. They do the danse macabre around bankruptcy so often it's amazing the whole flight industry doesn't fall to pieces. Hawaiian, Aloha, the Hawaiian island puddlejumpers, Delta, United, on and on -- all have been in an out of bankruptcy more than your friendly local Hawaiian god has been in and out of Hotel Street bars.

Guv T is right: Hawaiian is concerned with the bottom line. Like every other global, regional or small business. There is no difference in concern with the bottom line between Hawaiian, Microsoft or Skin Deep Tattooing Waikiki. People care about their own bottom line in the household too. A smart government would also care about the bottom line (but there isn't much of that going around these days among govercrats). And what kine governor would Togiola be if he wasn't all over his personal bottom line? Well, a better one perhaps, but human nature sometimes takes over one's better altruistic instincts.

Jones Act refers to more than ships? Man, I seriously need to get out more.

All that written, I never went south from Hawaii because it was too expensive and I don't like to fly anyway. I like: 1 boat, 2 feet or 4 wheels.

 
At 2:10 PM , Blogger Talifaitasi Satele said...

thanks tikipundit for the comment. many think that despite HAL's need to profit, they should care about the financial burden on their consumers. i think they should too, but voluntarily... if they find value in such charity. another thing is that people don't know or forget that we all work hard to gain the most we can out of what we do. but that selfish or greedy initiative to make the most money is only good where the market is free and open to competition. microsoft is a dominant firm but it can only remain so by providing superior or cheaper service. when government force is used to maintain a monopoly, a business or a government agency has no incentive to provide superior service or the lowest price because they illegalize their competitors. so if you look at hawaiian airlines, they have no competitors because the Jones Act forbids foreign competition between two US ports. that's why we don't have any foreign carriers between two US airports anywhere in the mainland. moreover, our officials in the ASG did a poor job of trying to get an exemption from the law.

an economic lesson for politicians though. when demand rises in the short run, and businesses know their trade to know when demand is temporary and when it is not, there is no need to adjust their capital and labor inputs. if demand remain high for a longer period of time, businesses know that they can make more money selling a thousand widgets for a dollar than one widget for one hundred dollars. therefore, higher demand in the long run gives businesses a reason to adjust their capital and labor inputs to take advantage of economies of scale, which is the lowering of average costs over a greater number of widgets.

 

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