Economics and the Lives of 20 Year Olds

It’s All About the Benjamins, Baby! (A Letter to My Parents) by Trixy Su

2008-05-20T20:02:00.001-07:00

Ever wonder where your allowances go? Ever wonder where my allowances go? To my parents, ever wonder why I’m always out of money?

It’s crazy. I’ve been getting the same allowance since I was in high school, and no matter how much prices go up, I’d still be strolling along the same budget line.

Being a resident in one of the best condominiums in Katipunan, I'm a big fan of fast food joints - I am called to eat at these places. There are just times when you get sick of “lutong bahay” and all you want to do is fatten yourself up with a nice 650-calorie burger alongside a box of deep fried nuggets and greasy fries. Mmmm.

For an allowance of Php1500 (I know!) weekly, I spend a maximum of Php500 in KFC and Php250 in McDo – for every KFC meal I buy, it costs me two meals of McDo. With the circumstances I am sadly and regretfully under, my budget line, or the combination of the quantities of two goods that I can afford with the money I get, is exhibited in the graph below.Since I can only consume along and everything below the budget line, if I won’t be eating in McDo and consume KFC alone, I’d be able to afford 3 meals in one week. If I won’t be eating KFC and just be consuming McDo, I’d be able to buy 6 meals in one week. Beyond that, I cannot afford it anymore. :(

After all the eating, because I am too unfit already to walk to and fro school, I have to take trikes. By all means, trike drivers sure know how to maximize their profits – the economical and uneconomical way (simply giving you lesser change than you’re supposed to get).

Trike rates are as follows: Php15 from the condo to Berchman’s Hall and vice versa, Php20 for trips to SOM.

Because trike prices have gone up (or so they say), I spend Php350 on trikes for the whole week. Insane. But because trikes for me have become a Giffen good, or goods that I will consume even if its prices increase, I pretty much have no choice. :(

Aside from the abovementioned, there exist other variable costs which include trips to Mercury Drug, National Bookstore, 7-11 and Rustan’s. :(

It has become more expensive than you think.

Now, with the knowledge of price hikes and the like, I know I’m saving valuable gas money by staying in the condo, therefore saving money overall.

I know you know where I’m going with this…

Would it help if I say “pretty please?” :)

Too Much by Juris Ida T. Parojinog

2008-05-20T08:30:00.001-07:00

Aah, the co-ed school: the venue for budding young relationships. Be it in grade school, high school or college, the close proximity with the opposite sex (or sometimes, even the same sex) makes love affairs inevitable. A boyfriend or girlfriend eventually enters the myriad of academics, extra-curricular activities, social life and family life that take up most of a student’s time.

However, being young and naïve, most student relationships often turn out to be unpleasant. The lack of experience usually makes them vulnerable to breakups within a short span of time. Common relationship errors often include the inability to commit, lack of time and the feeling of being fed up with being tied down.

There are some relatively successful or serious ones, but sometimes, even those fail. These are the relationships that seem to be perfect from the outside: the boy and the girl appear to be made for each other, and they have been together far longer than other couples their age, occasionally surpassing the one-year mark. The problem of capitalizing too much on emotions, however, is one of the main reasons why both puppy love and young love bordering on being serious fail.

Case No. 1: “Getting There” Couple No. 1. Their good friends, which later blossomed into something more. They shall be called the “confuser” and the “confusee”. The confuser really was a source of confusion. There was no commitment, but confuser acts as if they’re together. Confusee is always just a text message away – he really makes himself available for confuser. When drunk, confusee is the one confuser calls for, and confusee is eventually the one that takes care of him. It even came to a point where, while drunk, confuser hugged confusee and asked if confusee loved him. This drove confusee mad and, obviously, more confused.

While seemingly on the brink of being a couple, confuser decided to end their so-called “relationship”. With much deliberation, confuser admitted that he wasn’t that ready for a relationship with confusee because he says that “confusee was giving him too much; confuser can’t reciprocate the kind of love that confusee was giving.” Ouch.

Case No. 2: “Perfect” Couple No. 2. They had a 5-year relationship, starting from the sophomore year of high school until the junior year of college. They have the perfect chemistry: the guy being timid and shy, the girl being energetic and assertive, and both sharing the same level of humor. The girl even became close to the block mates of the guy.

The breakup of “Perfect” Couple No. 2 shocked everyone. They couldn’t understand how this happened. Upon further questioning, it was found that the guy felt that the girl was putting him on a tight leash. The girl was known to be very caring – and it seemed that she cared too much.

Both cases show a typical lover’s error: loving too much. Giving too much of yourself in a relationship is does not necessarily mean that you’ll have a lasting relationship. Of course, you have to do your part to make the relationship work, but only up to a certain point. Anything beyond that might be detrimental to the relationship instead of keeping it together.

A word of advice to young lovers out there: be wary of loving too much. As the famous Spice Girls song goes: “too much of something is bad enough”. If you are to give yourself to somebody, make sure that your partner is going in the same direction and is willing to give him/herself to you in the same way. This will not only save your pride, but your heart as well.

Of Elasticity, Friends, and the Like by Trixy Su

2008-05-20T08:13:00.001-07:00

It’s funny how friends always say to each other “friends forever!” Do people really mean that? I mean, “forever,” if you think about it, is a very long time. Lots of things can and will happen, and when they do, will you still be able to hold on to that promise?

By saying “friends forever,” it’s as if you’re disregarding everything that will happen from the time that you said the phrase and possibly ‘til the day you die (or even beyond that), that nothing can ever happen to ruin or change the relationship that you have with that person – as if saying “even if you betray me, kill my dog or steal my favorite pair of shoes, or whatever happens, we will still be friends!”

Like some goods, people can be elastic too – that is, easily substitutable. Let's say I'm a consumer of Jack and Jill Potato Chips and, without much ado, the company raises their prices one peso higher than the original. Because this for me is an elastic good, I’d easily switch to Granny Goose brand potato chips.

Based on my experience, friends have literally come and gone. Either I lost touch with them, or something happened that just made me want to not be around them anymore. That’s sad, if you think about it. But how much did I really lose? I’d say almost nothing.

These people that have gone were easily replaced by people that came. Simply put, because my friends’ “prices” have gone up, I demanded them less. I’m more interested in friends that are less “expensive,” yet still offer the same or maybe even better things to me.

In the population of prospective friends, or basically just everybody else, there exists these people who are “less expensive” yet have the same to offer, which makes it easy for someone like me to replace the others -- kind of like a perfectly competitive market, where there are a large number of firms that produce the same homogeneous product.

As a consumer, I know that there will be other places that sell the product I want, and at a lower price than that of others. So why would I tolerate a higher price if I’d be getting the same product anyway? Just the same, why would I stick with friends who cancel plans with you at the last minute or never reply to your emails or don't say hi to you when they see you in school? These friends are substitutable. Sound familiar?

Fortunately, where there is elasticity, there’s also inelasticity. Like goods for which no substitutes exists -- meaning, even if its prices go up, people will still buy it -- I have friends who I know can never, ever be replaced, no matter what the cost.

Economics for the Poor, too!! by Hannah Ang

2008-05-20T07:45:00.001-07:00

The common perception of economics is how to make the rich, richer or how to make the most out of the money the rich people already have. For the less knowledgeable, economics is just a tool used for evil big-time conglomerates to make it harder for the consumers. I had a similar perception of how economics is used in big business and how it could be used to maximize my limited weekly allowance. However, I learned otherwise in a class that I took in my stint as an exchange student in Japan. This class was Financial Markets in Asia, wherein I was astonished by the concept behind the Grameen Bank.

Grameen Bank was conceptualized by Muhammed Yunus, who won a Noble Peace Prize for this innovative idea in 2006. Yunus is banker, economist and former professor in Bangladesh, wherein women were the targeted borrowers. He introduced the idea of group lending, which ensures the repayment instead of asking for collateral. They would borrow in groups, in which the members become the co-guarantors of repayment. They would also create a support system for their efforts towards economic self-advancement. What makes this concept innovative is that Yunus was able to think outside the common concept that the poor could not afford transaction cost or effectively invest and get high returns. In short, the poor is not bankable. In addition, the interest rate in these loans actually the prevailing commercial interest rates, yet, it is able to enjoy a high repayment rate. The logic behind this is that the poor would have a significant increase in the return on investments as compared to big companies whose return on investment per dollar would be smaller. This is because the poor have more to gain than the rich and as matter of fact, the rich has more to loose. Therefore, it more profitable for lending firms to lend to the poor than to the rich.

It has also been applied in other countries and is proven to be effective. An example of which would Indonesia. In Indonesia, the Bank Rakyat Indonesia, which is a state-owned commercial bank, applied this concept and created a branch specifically for financing the poor. Its program the Badan Kredit Desa targets the poorest households, which are most women. No collateral is required because it drives on the so-called social capital, wherein the borrowers would be ashamed if they are not able to repay the loan. Or in our society, they have to maintain their kahihiyan towards other members of the community because it is ran by the head of the village. The average loan size is approx. USD 33, which is normally repaid in 10 to 12 equal instalments. Its effectiveness is asserted because of the high repayment rate (more than 97%) with gross loans reaching more than USD 2.4 million.

This model is currently adapted by the ABS-CBN Bayan Foundation through their program, “Pangkat-Buhayan”. In this loaning scheme, the community meets once a week to talk about concerns within their community and their small business that can from micro-financing. The loan sizes could start from Php 4,000 to 40,000. It currently has a 97% repayment rate. However, it has limited coverage with a total of 50,000 clients for the past 10 years. Sadly, other financial firms in the Philippines and NGOs have not caught on this concept despite its proven effectiveness.

Study Hard, Party Harder? by Juris Ida T. Parojinog

2008-05-18T04:31:00.001-07:00

Without a social life, Juris Ida will be dead. Period.

Ever since coming back to school from my Junior Term Abroad (JTA) in France, I have been attending school NON-STOP. My fellow ComTech JTAers will attest to that. For our 2^nd JTA Semester in Ateneo, we had Statistics, Marketing, Communications, Philosophy, and Theology; a relatively lighter load as compared to our 1^st JTA Semester. This was to be followed, with ideally just a weekend for a “semestral break”, by our fully-loaded Summer Semester, which has Political Science, History and Economics.

However, the forces of nature seemed to think that we had too much of a grand time abroad and hence, we have to make up for it here. Although the subjects in the 2^nd JTA Semester were supposed to be easier, it demanded a lot of work. That’s not a good thing for a full semester to be taken up in only three months, with three subjects to be taken up in six weeks following suit. There was actually an overlap that happened because even though our summer classes already began, we still had to pass a paper for Statistics and Philosophy. We are basically pressed for time because the dean promised us that we will graduate on time, along with the rest of our batch mates, but there will be suffering. This was not expressed outright – we had to learn it for ourselves.

So what now is Juris Ida’s status? Comatose? Dead on arrival?

Fortunately, Juris Ida is still alive. Despite her hectic academic schedule, she managed to sneak in some parties, hangouts and football games. She has social activities at least twice a week, and that’s exclusive of hangouts in between class and weekend getaways, thanks to a certain group of friends who always contacts her to have a few drinks, go to Tagaytay, go clubbing, etc. This still does not include the physical activity she gets from playing football for fun, getting the adrenaline rush from keeping the enemies from putting any balls inside her goal – goalkeeping with passion.

From the outside looking in, one might think that Juris Ida is spending too much time with her friends as opposed to concentrating on her studies. I beg to differ. When I get home, I immediately catch up on my readings and do anything possible to make sure that I do not lag behind in my classes. Despite all the fun and games that have kept me sane throughout the nonstop studying I’ve been doing, I make it a point never to set aside my studies. No way am I letting my parents’ money go to waste that easily. I just put in a little spice in my academic life to make sure that I don’t get too boring or worse, end up being depressed and burnt out from all the school work I’ve been doing.

I’ve never been that grade-conscious, and I always make myself available for my friends. Whenever somebody invites me to hang out, I just tick off the things I have to do for school, figure out how I can accomplish it, and tag along. In spite of this, I make sure that I don’t party too hard that I leave my readings and books in the corner of my room, gathering cobwebs and dust. This, in Microeconomics, is what we call Convexity, wherein averages are preferred to extremes. I’m not saying that every student should follow this type of lifestyle; this is purely subjective. I just believe that this setup works fine for me. I pass my subjects and never miss out on the fun.

For me, that’s college life in its finest.

Which Superhero Would You Be? by Ck Chua

2008-05-16T17:08:00.000-07:00

If given the choice to become a superhero (existent or self-invented) who would it be?

If I were to come up with a superhero, I guess I’d have to involve one of the most favorite things I like to do – shopping and what I would like to do in the future – create a retailing business. I love to shop. I am a shopaholic. So I’m told. I even get comments like: “Ck! You shop like a girl!”. I don't really see anything wrong with a guy that likes to shop. Nothing would relax me more than a day in the mall with an unlimited wallet (I wish!) and countless shopping bags in my hand. For all you avid shoppers out there, don't you just love the feeling of holding a shopping bag in your hand?

I’m also a cheapskate when it comes to buying things. I particularly like finding bargains especially in flea markets or tiangge’s. I get this gratifying feeling whenever I buy something that I feel is underpriced than what’s its actually worth. It's like walking into those 100-peso stores and getting something that’s very useful. As a frequent shopper, I’ve always wondered how retailers actually price their products. I base my decision when buying things mostly on price; price can also affect how much I buy of that specific product. I am what you call a price elastic consumer in that I am very responsive to price changes and my decision to buy products is heavily influenced by price changes. Most people, unless your filthy rich are like these, their purchasing decisions are heavily based on price thus making them price elastic consumers.

Having studied Microeconomics and being a shopaholic, I feel that I have a responsibility to tell all my fellow shopaholics out there in the world what firms are really up to and aspire for. See if I am a firm, there is actually only one thing I have to posses to able to make my business into a profitable one – the power of telepathy. I know this sounds kind of crazy but its true. Economics tells us that one of the most efficient ways to actually maximize the profit of a firm is to be able to minimize costs and at the same time generate a lot of sales. Price discrimination in economics occurs when a firm can charge different prices to different consumers on the basis of non-cost related characteristics. Not having a fixed price can be very advantageous to them since they can set prices at a high and some people would patronize their products. The most efficient form of price discrimination is perfect price discrimination where a firm can charge a different price for each consumer w/ the price exactly equal to the maximum price the consumer will pay. But in reality, this can’t happen. No one in this world can actually tell what consumers think or how much they’re willing to pay for a product. Therefore, the salesperson not knowing this, he won’t really be able to maximize profit. No one in this world would be able to achieve this except for… Telepahty Man! Yes, Telepathy Man has the capabilities to read people’s minds and know what people are willing to pay for a certain product.

So shoppers beware, if I become a superhero and have a business of my own in the future, get ready cause Telepathy Man will surely empty your wallets and rip you off! If I am able to do this, I will be filthy rich… take that Gokongwei!

cartoon taken from: http://www.alexhughescartoons.co.uk/Home/labels/illustration%20friday.htm

Noli Me Tangere! The Science of Sensual Shopping by Hannah Ang

2008-05-16T02:59:00.001-07:00

As the Filipino culture culminates, we seem to find ourselves gravitating towards into black holes found randomly around the metro, which also known as shopping malls. The train lines seem to have stops that are built and integrated with the mall/s. An example is LRT2, where the Cubao station is integrated into Gateway, through which you connect to more malls and to the MRT line. Even real estate seems to be affected by this gravitation towards these black holes. The brochures handed-out to sell residential properties would include what are the nearest malls because it is a sure-fire way to increase real estate value.

Ironically, even the churches that during the Spanish colonization were the center of the community are now found inside the malls right in the center of the food courts.

Shopping indeed has changed the way we live our lives but what is not noticed by the average shopper is that we also have changed the way of shopping works. Take for example, in the Philippines, decades ago when the only bookstores were the Institute of National Bookstore, Goodwill and Expressions, most of the books that were sold were heavily wrapped in plastic. In those days, we would find books wherein the plastic was forcibly opened.

According to Paco Underhill in his book, “Why We Buy: the science of shopping”, customers want additional information because of the wide variety of choices that the customers are faced with. In those days, the only information you would get was a very short summary at a back which is insufficient information for the customer. It doesn’t assure the customer that this book interests would interest me more than other books.

From the retailers’ point of view, an uncovered book would just lead to merchandise to spoil and incur more cost. While that maybe true, Underhill says that these type of retailers loose important profits from customers who gets frustrated due to the lack of information but that has changed and been innovated by Powerbooks, Fully Booked and alike. They provided customers with chairs and tables, comfy corners where they could read open copies for most books that they consider buying. Some customers would skim through the chapters or others would read until the third or fourth chapter before deciding to buy the book. Either way by the time the open copy is ruined they already have covered the cost of the open copy with the number of books they sold. We as consumers now demand experiencing the product with our own senses before we purchase it.

Some bookstores are still reluctant to adapt to this and even some industries which might benefit in adapting to this business strategy are reluctant as well. Nonetheless, these businesses could use the economic concept of profit maximization. These firms should examine the marginal profit obtainable from selling (instead of producing, since they don’t really produce) one more unit while acquiring one additional capital (or in this case, the open copy). This information can be vital to determine if this strategy would be effective for their business.

Personally, I recommend business strategy to vendors of gaming consoles. Right now, I am having a hard time contemplating which would be a better purchased when I have finally saved up. PSP or Nintendo DS Lite? It’s hard to decide because most of the time they are locked behind a glass display, screamed Noli Me Tangere. But trying each console for a couple of hours would really help me decide. ;-)

Shopping is a Girl’s Best Friend (by Katrina Co)

2008-05-14T05:57:00.001-07:00

I actually like shopping less than the average girl. To be more accurate, I only go shopping when I’m abroad because I see it as a recreational activity. Here in the Philippines, I rarely ever have time or feel the urge to splurge on anything except books. In recent years,
I’ve become a fan of the renowned Spanish brand Zara (was never a fan of Mango), and H&M as well when I first discovered it in 2006. Zara because of its trendy, fun and stylish designs; H&M because it used to have such nice clothes that were really, really cheap!

The clothing industry, with focus here on women’s clothing, is characterized by monopolistic competition. There are a lot of firms involved in the trade: locally there’s Zara, Mango, Kamiseta, Bayo, Topshop, Plains & Prints, and a host of others; in Europe there’s Stradivarius, Mim, Pimkie, Bershka, New Look, Jennyfer, and many more. There are so many players in the game because of free entry and exit in the market.

It’s relatively easy to start your own brand and produce some articles of clothing—even my cousin is starting her own swimsuit line from scratch. It’s also easy to extract yourself from the market if profits aren’t turning up as they should, since no heavy investments in machinery is involved or anything. Many clothing companies actually outsource their products.

The products being sold are also differentiated, but highly substitutable. At the end of the day, clothes are clothes, but to the target market of these companies (trendy, vain fashionistas of the world), the brand itself is a status symbol, and clothes certainly make the woman. Differentiation comes from many sources—the brand, the overall style of the clothes, the impression they give off, and the marketing strategies employed by the firms.

Mango, in what seems like many eons ago, was once the household name for chic, fashionable clothing. But right now, it doesn’t take a marketing consultant to notice that sales have been on the decline, and it’s no longer the brand to have. This loss of popularity could be attributed to the entrance of strong contender Zara in the international arena, which offers consumers the same—if not more stylish—clothes at a more affordable price. Also, I personally think the fit of Zara’s clothes is more responsive to the different body sizes and shapes out there. Mango’s clothes generally only look good on stick-thin people (see right).

Another thing that Zara is doing right is its advocacy of Fast Fashion. They’ve placed primary importance on responding quickly to consumer demands, and thus have implemented a series of strategies in accordance with this knowledge. Zara store managers are given more responsibility to decide which garments to put on sale in their stores, leading to speedy decision making. The firm also keeps updated on the latest trends instead of producing classics, which has kept goods moving and has increased impulse purchasing. Aside from that, vertically-integrated manufacturing operations has enabled Zara to move designs from conception to the store racks in a span of just three weeks. All of these strategies certainly sets Zara a cut above the rest in terms of differentiation.

H&M on the other hand seems to be focusing all on price. They produce generic, plain styles excessively and sell these at extremely low prices. But what you pay for is really what you get, since the quality of these clothes leaves much to be desired, and they’re just not made of the finer fabrics available in the market. Most of their selection consists of simple tops, but there are some products with really audacious designs.

It’s a well-known fact that the more you prefer something, the more money you are willing to spend for it. Personally, as a consumer, I have a much greater preference for the style and fit of Zara’s clothes (and actually Pimkie as well in Europe) than other brands such as Mango or other nameless stalls in tiangge. Thus I’m perfectly willing to pay the amount on Zara’s price tags, which I deem to be fairly affordable and worth it.

Because of Zara’s limited monopoly power in the industry, it can afford to charge a price higher than its marginal cost of production, that is the extra cost of producing an additional unit. That’s why its prices are noticeably higher than those of local brands. However, the firm must be careful not to push the prices to high because that might lead consumers to search for cheaper alternatives. The demand curve for clothing is fairly elastic, in that if there’s an increase of a few hundred pesos in a garment, it’s likely that it won’t sell as much anymore.

I think this type of competition, a monopolistic competition, makes every shopping experience an adventure, to say the least. As they say, variety is the spice of life, and these companies provide exactly that. It’s always good to have a plethora of brands to choose from that fit varying budget constraints and personal styles. Though the continual entry of new players may lead to an oversaturation, it would indeed be interesting to see what innovations new firms can add into the mix.

My First Love by Ck Chua

2008-05-13T00:16:00.002-07:00

The feeling of love is amazing as one who has ever fallen in love can tell you. Some of us fall in love at a very young age, but for most of us this happens during the transition from grade school to high school or somewhere in between. Let me start of by saying I’m not normal. I fell in love at the age of 1 day old. Yes, I know what you’re thinking, this guy’s insane. And I bet you’re asking: How did I know I was in love then? Simple. I couldn't live without her, every time I saw her it gave me pleasure, there was this deep feeling inside me telling to go and look for her every single moment and indulge her. The very first moment I saw her, I knew this was it. I knew right then and there it was first love, a love that would last a lifetime.
Most of us get hurt with our first love, we tend to be so affected with it and try not to love anymore. I am proud to say that I am still together with my first love and we both have never hurt each other. Ever. A lot of you may be so awed by what I am saying now, but yes, this is all true but a lot of you are also thinking that’s my first love is a person, it isn’t. It’s food. Yes, food cheers me up when I’m down, it helps me cope with the various stresses in school and everyday life. It’s always there, never turns you down and most importantly, it accepts you for who you are. My love affinity for food has started way back when I came out of my mom’s womb, so I’m told. I guess since I was born I just kept eating and eating everything and I guess that’s also the reason why I’m so big now.
It’s a given that we all love to eat, we all have our favorite foods and we rank them in terms of preference. But have you ever tried giving a rating for each of the foods you consume? Here’s a list of the foods I usually eat and their respective satisfaction ratings:

Food, Satisfaction (in units)
KFC Fried Chicken 15
Yellow Cab Shrimp Pizza 12
Starbucks Caramel Macchiato 7
Home Cooked Chicken Wings 9
Manangs’s Grilled Liempo 8
McDonald’s Cheeseburger Meal 4
Outback Steak 13
Lucky Me Pancit Canton 3

Well, as you can see the food that gives me the most satisfaction amongst all the food I eat is KFC’s fried chicken. Once you’ve actually listed down all the rating satisfactions of the foods you eat, wouldn’t it be interesting to find out how much tradeoff you actually do with the foods you eat? For a food fanatic like me, this would be really interesting. An economic concept called the Marginal Rate of Substitution (MRS) actually measures the rate in which an individual is willing to tradeoff one good for another, in my case, at which rate am I willing to trade one food for another. The MRS can actually be calculated by dividing the marginal utility or satisfaction of one good over the other. For example, in my case, if I want to know what my MRS for YellowCab Shrimp Pizza to Lucky Me Pancit Canton, I just divide my satisfaction for the pizza by the satisfaction of the pancit canton which gives me a numeric value of 4. The value you get is interpreted as the number of good Y you are willing to trade for good X. So in this case, I’m actually willing to trade 4 pancit canton’s for a slice of shrimp pizza. The concept of MRS can actually be applied to anything, and yes, that means this can be applied to clothes for you girls.
For food fanatics like me, I hope that next time you consider eating something, you think about what your trading of for that good. Especially if you value quantity over quality. So the next time I go to McDonalds, i’ll actually think that i can trade three of these burgers for a slice of yellow cab pizza heaven!
I’m a nerd. I know. Now you try it!

P.S. I'm sorry maam Macaisa, I'd willingly trade 2 Caramel Machiatto's for KFC Chicken!

Battle of the Budget Airlines (by Katrina Co)

2008-05-13T00:16:00.001-07:00

I love to travel. That’s one of the reasons why I chose France as my Junior Term Abroad destination last year, and boy did I have the time of my life backpacking—or should I stay “stroller-ing”—all over Europe. There were 14 of us from Ateneo who were fated to live with each other for 4 months in the beautiful, bustling city of Lille, one hour north of Paris via TGV.

In the course of those wonderful months, we did a little studying, a little partying, and a whole lot of traveling! Me and my IESEG-mates Karla, Bev, Ivy and Mich journeyed to the most amazing countries almost every weekend, averaging 1 or 2 days per city. My record was around 26 cities, namely: Paris, Reims, Blois, Marseille, Mont St. Michel, Rennes, Nantes, Brugge, Amsterdam, Venice, Florence, Pisa, Rome, Madrid, Barcelona, Monaco, Nice, Frankfurt, Cologne, Athens, Vienna, Innsbruck, Munich, Nurnberg, Prague, Moenchberg, and London. But Dan-J from ESPEME totally beat us all. I have no idea how many cities he got to travel to, but I have a feeling it was more than 30!

Lille is one of the most perfect JTA destinations if all you wanna do is travel, because it’s like 30 minutes from Belgium, a couple of hours from the Netherlands and Germany, and just a night train or short flight away from Spain, Italy or Greece. But traveling isn’t all fun and relaxation—planning how to get there actually involves a lot of preparation. And I mean a LOT. From the insane amount of time we spent researching on tourist sites, clicking on train schedules, hunting for the cheapest airlines and booking the cheapest hostels, we’ve practically become certified travel agents.

A complete detailing of our adventures and misadventures, especially lessons learned regarding the use of our precious Eurail pass, would take way too many hours of my life and probably bore you to death, so allow me to just talk about one thing in particular: the ever-reliable budget airlines we used to fly to Greece, Italy, and other far-away places not logically accessible via trains.

The 5 of us IESEG girls would be seen in the computer room or kitchen of Residence Valentine Charrondiere obsessively typing and clicking away at our laptops. We used to work in Teilhard's top floor until Valentine got wifi. Not a few French dormers have commented that we’re totally uptight nerds, but really, we were just planning the perfect weekend/mid-sem break. :D For all our railway needs there was the SNCF transportation system whose reach extended all over Europe. But for places that would take 14 hours or more via train, of course we had to take the plane.

From previous experience, I already knew of two budget airlines, Easyjet and Ryanair. Actually when this French guy found out we were planning to book on those planes, he laughed like there was no tomorrow and freaked out my friends by saying those planes never arrive or depart on time, or they crash! What a weirdo.

Anyway, I think that the budget airline industry is an example of a market with perfect competition for several reasons. One, there were actually of companies that provide cheap airfare aside from those two. There’s kayak.com, and for a more exhaustive list, skyscanner.com is the way to go. But Easyjet and Ryanair were really two of the cheapest we could find. Two, those firms sold a more or less homogeneous product, which is a sure, speedy way to get where we wanted to be. Three, they were price takers whose actions don’t really have a direct effect on market price. And finally, in a perfect world, there’d be perfect information too. Well in this case it wasn’t exactly perfect, but we had enough data to make a pretty informed choice.

What determines our preference for one airline over another is mainly the price. Actually, bargaining for the cheapest fare is often extremely frustrating and anxiety-inducing. Why? Because you have to be quick on your fingers! If at this moment you see a deal that says €29.99, by the time you finish purchasing the seat, you might very well get an error message saying there are no more seats for that price. We had to learn that the painful way.

As students, we’re constrained by a very definite budget. And we have so many other things to pay for—actually, we had everything to pay for, and I would much rather spend on food (yum!) or clothes (have to look good in pictures). There was a time when we were planning our 2-week mid-semestral break, which included a flight from Rome to Madrid. When Bev checked one day, she said it was still cheap, no problem. The next day? The price skyrocketed, which made us panic and immediately whip out our laptops to book the seats. So we were all supposed to press at the same time…but alas, only two people were confirmed! The rest of us were greeted by a message saying the seats ran out, and the new prices were around 10 freaking euros more! So for example, from €60 to €70! That’s outrageous for a budget airline, although prices have been known to soar to the €200’s. It’s very true that the early bird gets the worm, and also that these companies are very manipulative, money-grubbing scum trying to push us into bankruptcy! On the other hand, sometimes there are promos that drive down prices to practically nothing, like our Spanish friend who got a €10 euro plane ticket to Rome from France. He’s so insanely lucky.

So as I was saying, as the price of one airline increases, we automatically shift to the alternative. But of course, we’re also constrained by the date and time of departure. Since our travel days are strictly numbered, each hour counts in maximizing our stay in a particular city. Also, we can’t take super early flights because we usually have to travel to Paris (where the planes depart/arrive), or take super late flights because there’s no way to commute to the airport
(which is usually far away so it’s cheaper for the budget airlines).

Another factor affecting our demand is the baggage limit of the carriers. Ryanair only allows 15kgs of bags spread over 3 bags, while Easyjet allows 20kg of baggage spread over 8 bags. We always struggled with luggage capacity, especially during our 2-week break to Italy and Spain because of all the shopping we did! So we usually preferred Easyjet first, also because they were very lax with baggage policies (except on one of our last flights where this really evil woman made us pay for and check-in our bags which had always passed other inspections. I hate her. That was €12 euros totally gone down the drain).

Another reason we preferred Easyjet is because the prices it lists are final already, with all the add-ons and tax included. This undoubtedly makes it easier for us to compare prices. However, with Ryanair prices are a bit deceptive because the price you see on the main page is misleading. The next click shows a lot of additional tax, resulting to a price way higher than you originally thought.

There was also a lot of multimarket price discrimination going on. Of course airlines usually charge different prices for different consumer groups, especially international carriers such as Cathay Pacific, Emirates, and Singapore Airlines. How about budget airlines? Well technically there is no label of first class, business, and economy, but there are other price distinctions. For example, Easyjet has this Speedy Boarding option which gives one the “widest choice of seats provided you’re at the gate when boarding starts” for €13.50. I think it’s just another overpriced money-making scheme. There’s also the option to check-in hold bags for €9 if you do it online. If you choose not to and then some menopausal lady makes you check them in at the airport itself, then it’ll cost about €12. As for Ryanair, it has something like speedy boarding but it only costs €5. They have another add-on, optional travel and medical insurance for €14.50. For paranoid consumers, they’ll probably purchase all of the extras, but most of the normal consumers will probably not, because the point is to spend as little as possible. Period. These add-ons just transfer wealth from consumers to producers since they’re trying to extract as much money from us as they possibly can.

Well that’s more or less all I wanted to say about the beloved budget airlines we patronized during our JTA in Lille. I wonder if you, dear reader, have actually reached up to this sentence. Obviously, I like writing and tend to get swept away by the flow of my thoughts…This is why I don’t write so often, because when I do I just can’t seem to stop. ☺