Expanding Airport Parking Options Without Building new Parking Lots or Parking Garages

One of the major differences between economic decisions in a free market and decisions by government bureaucrats in a socialist economic system is that anyone in a free market has freedom to see a perceived need and try to satisfy it while bureaucrats tend to be limited not only to their area of expertise but also limit themselves to the constraints of the status quo.

I saw an example of this on a recent trip which took me across the nation by air.

Once airborne, airplanes are a fast way to travel over a long distance.  However, getting to the airport can be both time consuming and stressful.  This is especially true when one lives in a small city, like Tucson where I live, and decides to take advantage of more choice and often lower fares offered by a major airport in a nearby large city like Phoenix.

While there are often van and bus lines offering reasonably priced service to nearby large airports, there is still the problem of scheduling and parking.  For early morning flights there is the added problem of first, the service not offering service early enough to make the connection and, second, even if they do offer early service this usually requires getting up at one or two in the morning in order to catch a shuttle in time to make your flight.

Driving to the airport is an option but here one has to contend with the congestion that surrounds large airports as well as having to leave your car in some expensive and often distant lot with little security.

A few years ago I discovered some motels near Phoenix Sky Harbor Airport offering free parking to those who spent the night before the flight at their hotel.  This enabled my family and me to drive to Phoenix the night before, get up at a reasonable hour for the flight and take the motel's free shuttle directly to the terminal while leaving our car behind in their lot.

For my wife's and my recent trip only a couple of motels offered this service and the parking was limited to one week while we were going to be gone for three weeks.  With a 7 a.m. flight there was no question of whether or not my wife and I would spend the night before the flight in a motel.  The only question was how to handle the logistics of finding a place to stay, finding convenient long term parking and getting to and from the airport with the least amount of time and stress.

In searching the web for the simplest way to juggle hotel, car, parking and getting to and from the airport to the car with all our luggage I came across an outfit called Global Airport Parking.

Not only did this service provide the simple parking and travel solution I was looking for, I was also intrigued by their business model.

Their website states that they are a national company offering parking services located near both airports and cruise ship ports in cities around the U.S.  However, they appear to be basically a virtual company that doesn't own or lease any of the parking real-estate that they rent out to customers.

Instead, the company contracts with hotels and motels located near airports and cruise ports to rent the unused parking spaces that these establishments have.  For motels much of their clientele are travelers traveling in their own cars.  Thus, with the exception of some in large cities where real-estate is scarce and expensive, parking is provided at no extra charge along with rooms.

Since, it is not common for these establishments to have every room rented every night they usually have some empty parking spaces most of the time.  Also, some of their business travelers don't come with cars which leaves additional spaces available.

Global Airport Parking is thus able to rent these unused parking spaces to travelers like my wife and I who need a place to park our car while flying off to some other vacation destination.

All the motel has to do is judge how much unused parking space they will have at a given time and make that space available to Global Airport Parking to rent out.  In return the motel gets to share in the revenue paid by people leaving their cars in these otherwise unused spots.

The motel also gains from possible additional customers for their rooms as many with early morning departures and/or late evening arrivals also rent a room at the beginning and/or end of their trip as well as renting the parking space for the duration of their trip.  Further, in addition to the potential for additional room rentals the motel also benefits from more potential customers visiting their site and remembering it for future trips requiring motel accommodations.

Finally, in addition to more parking choices for tourists continuing their trip by air or sea and the opportunity for additional marginal revenue for the motels, society also benefits from the fact that the additional parking space for out of town travelers has been created not by bulldozing more land and building more parking structures but by utilizing the existing, but un-used, parking space in motel parking lots.

Another example of how entrepreneurs create more goods and services while utilizing fewer resources.

National Brewers Day - Celebrating Russia's Brewing Industry

The second Saturday in June is National Brewers Day in Russia.  This is the date chosen by the Russian brewing trade group known as the Union of Russian Producers of Beer and Soft Drinks.

Today, a little over two decades after the fall of communism in Russia in 1991, the twelve year old brewer’s trade group and the brewing industry itself offer a glimpse of the massive economic change, and the prosperity that has accompanied that change, that has occurred in Russia.

While workers groups were common in the old Soviet Union, trade groups are a product of the post-Soviet era.  

Under communism, production and other economic decisions were made by  bureaucrats.  Consumers had no say in the process and were left to purchase and consume whatever was available.  Planners, managers and workers got paid regardless of whether consumers purchased the products they produced or not.  

With no market prices to guide them and no profit to motivate them, workers and managers simply sought to produce the quantity planners decided upon.  

So long as a bottle factory produced the required number of bottles and a brewery produced the target quantity of beer things were fine.  This despite the fact that the bottle factory was often located in one part of the nation and the brewery in another and no means to get the bottles to the brewery or no means to get the bottled beer to stores.  

Quality was poor while shortages and misallocations were common. However, that was life under communism.

With the switch from communism to a market economy things changed.  Now, consumers no longer have to settle for low quality goods or buy vodka instead of beer when vodka is all that is available.

Today, Russian drinkers can not only have their choice of beverage types but also have the opportunity to choose between competing brands of the same beverage.  Gone are long lines outside of stores, half empty shelves inside and having to settle for whatever is available.  

Not only are there a variety of beverages to choose from on store shelves, there are also a variety of competing brands for each type of beverage.  

A 2011 census of breweries estimated that there were between 600 and 1,000 companies operating breweries in Russia.  Other sources estimate that, of these, about 40 large companies produce the majority of beer with smaller local operations and restaurants producing for their own use, making up the remainder.

So, let us lift our glasses and toast Russian brewers and their accomplishments in the new Russia.

Profit – Its Definition and Use

Profit is the term used to describe the revenue produced by a corporation that is in excess of its expenses. Profits are necessary for a firm to grow and expand. Without profits a firm would be unable to purchase the additional resources necessary to expand the firm's productive capacity and increase output.

The accounting formula for the calculation of profit is:

Profit = Total Revenue – Total Cost

If total revenue exceeds total costs the resulting surplus is called profit. However, if total revenue is less than total cost, we have a loss and the firm is forced to borrow, dip into reserves or sell assets in order to make up the difference.

Legally, profits belong to the owners of the business and in the case of a singular undertaking such as the construction and sale of a single home or group of homes, the owners dissolve the business once the objective has been met, the profit is divided among them and each goes their own way. In the case of an on going business such as an oil company or TV network, the firm calculates its profit and divides it up periodically. In this case the owners usually take part of the profit in cash for use elsewhere and reinvest the remainder in the business in order to expand the business and increase future profits.