Florida suspended road tolls as a way of encouraging people to get out of affected areas. I’m not sure drivers are price sensitive enough to base an evacuation decision on toll road pricing. However I suppose a creative solution to encourage evacuation would be a negative toll, pay residents to leave. Freeway throughput aside I guess they just don’t want the optics of charging people to leave danger, rather than actually doing something useful. Isn’t that often the way?
People have been complaining about expensive airfares to fly out of Florida. With everyone leaving because of the hurricane, there are few seats left. Last seats are generally priced at full fare. This isn’t airlines ‘raising prices because of the hurricane’ this is the standard way they sell tickets faced with unusually high demand.
JetBlue however capped ticket prices at $99 for non-stops and $159 for connections out of hurricane-affected Florida including for last seat availability. American also capped the prices of its flights.
Mommy Points says they did the right thing. I’m not so sure. I’m certainly not going to criticize them for dropping prices, but I’m not sure it’s laudable either.
- Full planes are full planes. Dropping the price doesn’t mean more people are going to be able to fly to safety.
- I worry that more people could buy tickets speculatively at $99. Worry that your flight might cancel? Buy a $99 ticket from JetBlue and a $99 ticket from American as a backup. Will artificially cheap prices lead to hoarding, and keep people who might otherwise evacuate by air from buying a ticket once planes sell out at these prices?
Travis at One Mile at a Time says at these prices ‘book now, ask questions later’ isn’t he making my point?
- There’s no question people need help given the risks of the storm. While South Florida gets hurricanes it’s at least 25 years since we’ve seen one with the same potential to wreak havoc as Irma.
- But does indiscriminately pricing at $99 provide that help? Does a financial services executive or a ball player deserve the cheap seat at the expense of the shareholders of the airline — teacher pensions, for instance? It’s not going to take a ton away from a teacher’s retirement account, but that’s not the point, this seems morally ambiguous at best.
It’s one thing to help people who need the help, versus subsidizing everyone including those better off than you are.
When you drop prices you sell out even more quickly. It’s not obvious that’s a good thing.
Adding flights is a good thing. But $99 fares isn’t increasing the number of people who evacuate to safety. It just isn’t.
Full planes are full regardless of the price the tickets are sold at. If the price is too low fewer people may get to safety because of a run on the flights either by people booking more than they need or people booking speculatively rather than when they’re certain they’ll travel. As a result while I am not criticizing $99 fares, I’m not ready to applaud them either.
Of course it’s great publicity. That’s the REASON for this post. They’re getting praise. Do they deserve it? I say not so clear.
It builds long term shareholder value. Hence by definition it’s the right thing for a company to do.
And it has the side benefit of being a feel good story. Airlines rarelry get to wear white hats while building long-term value. Surely you can give them this…
AA is now capping seats out of Florida at $99, too. Of course, there are basically no seats left. And, at those prices, no economic reason for AA to add flights.
I think “society” would be better off if AA made some other aircraft available (it is one of the slowest travel weeks of the year), flew them down to Florida and charged everyone $300 for a seat.
But that’s not what’s going to happen.
@Coconuts: “It builds long term shareholder value. Hence by definition it’s the right thing for a company to do.”
Evidence please.
@Joelfreak: “No one is advance purchasing a ticket to evacuate, just like no one is comparison shopping between hospitals for the best price AFTER they get hit by a truck.”
Heard of HMOs? Insurance? Market response to possible event with unknown timing.
Understand the market before you criticize it. It is a wonderful thing.
In fact, this is an appropriate time to test your understanding of the market. Back to my original question, since you evaded it:
“September 6, 2017 at 6:05 pm
Joelfreak: When Uber applies surge pricing, what immediately happens to the number of Uber drivers?”
@Ted: Nothing to do with gates. Re-read my post.
Uber surge prices to increase incentives to drive rather than drivers doing their next preferred choice of activity.
Price gougers don’t exist, the term is meaningless, so you can’t prosecute it.
Generally. Stay away from sticks. You seem to be unusually adept at grabbing the wrong end of them.
@gary: I am appalled, appalled I tell you, that Rolls Royce of Miami refuses, utterly refuses, to rent me one of their showroom cars for a few days to leave Florida and return at some indeterminate future date.
In fact, I expect the rental to be free, because I…am a good person. Not only that, i am getting gooder every day.
Their behavior is disgraceful and reflects how unfair society is. Denying ME such a basic necessity.
@Andrew: learn to spell. :p. And learn to read as I addressed your question above.
Don’t confuse the positive outcome of price as a mechanism to balance long-term supply and demand with a monopolistic (or oligopolistic) situation. In the Florida event airlines found themselves having, for the short-term,extremely strong oligopoly power due to a sudden, low duration, exponential increase in demand. Pricing never has, and never will, clear such a market, and no economist thinks that oligopolies absorbing all the consumer surplus bu jacking up the price above the long-term competitive price is a good thing. Your argument does not pass economics 101.
Finally, no economist thinks that their models fully capture human “utility” functions. Indeed, the incorrectly applied reductionist views of this article would also lead you to recommend that your readers never help anyone in need (for example choking on a piece of food), as the monetary gain of doing so is negative: nothing gained but an opportunity cost of wasting time doing the Heimlich Maneuver instead of doing something more productive. “Do no harm” is important to individual human happiness (score of surveys report that people are happier when they live in a just system) and is completely ignored by most economic models, which can lead to outcomes where individuals are worse off.
“Don’t confuse the positive outcome of price as a mechanism to balance long-term supply and demand with a monopolistic (or oligopolistic) situation. … Pricing never has, and never will, clear such a market,..”
All totally wrong. Re-read the monopoly chapter of an econ 101 book and report back for a re-test.
Wow! You are really straining to find something to criticize here. And don’t say ‘I’m not criticizing $99 fares’. You most certainly are.
Another reason for the low airfares is that airlines typically move their fleet away from risky areas. @Gary, is there any data on airfares and flights to Florida? It will be interesting to see if flights to Florida are uninterrupted, though when I looked at MIA arrivals table there are many cancelled flights.
Spot on Gary. I don’t give two Sh!t$ who donates money or about this type of crap. It’s bubble gum feel good rock n roll…meaningless.
I wanted to help you understand better why tolls have been suspended. The suspension of tolls itself is not meant to encourage people to leave by saving them a few dollars. That is a common misconception although it may encourage a few people. The primary reason to suspend tolls is to ease the movement of traffic when the roadways may be overwhelmed due to a disaster or evacuation. Suspending tolls means that toll booths are less of a bottle neck at entry and exit points reducing potential for accidents from already stressed drivers trying to get onto the roadways. And for slipway tolls between exits it means that traffic can keep flowing without persons who would have to pay cash needing to exit onto the slipway toll and then back onto the road. It is purely to reduce the chance for accidents during an already stressful situation and to promote more continuous movement of traffic.
As for you analysis of the fare situation, I don’t agree.
as of 9/8 630pm est there are NO seats MIA to PHL or FLL to PHL. so that $99 offer is mute.