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.
When a natural disaster hits, you don’t horde. There are legal implications if airlines charge walkup fares ONLY when a disaster strikes. Saying that lowering pricing causes people to abuse it, and thus the people who need it shouldn’t have access to it is just…dumb. Only rich people should be able to evacuate?!
@joelfreak no one said “only rich people should be able to evacuate” that’s a ludicrous read of this post.
How very libertarian of you (meant as a complement).
Also, it isn’t practical and it feels dirty to even propose, but high fares would give airlines incentive to shift flights around to maximize flights out of Florida. If you can sell coach tickets for $1000, it might make it worth your while (AND increase capacity out of the danger zones). I don’t think capacity will increase by “doing the right thing”.
@Gary you are stating that the market should dictate the price for evacuating via air from a state of emergency. Stating that airlines not charging walkup fares, which are generally highway robbery to begin with is wrong is stating that only those who can afford to pay those fares should be able to fly on them. I stand by my statement.
Gary- Are you ever happy with actions of US airlines? If they hadn’t, I have no doubt you would have posted the exact opposite article. Or is TMZ quality good enough and your ultimate aim?
@ Gary — There’s the Gary I know and enjoy reading….spot on. It is fun to bash airlines for supposed gouging and to look at Photoshopped photos of $7,000 United coach fares from MIA to DEN, but airlines typically charge high prices for last minute fares on full planes, so the crying really is unjustified.
Whats next? Shelters shouldn’t hand out food, as it costs money to get to the shelter? Gas stations should be able to charge $500/Gallon? Bottled water should be $50/case? We have seen that before, and as a people we don’t want that on our watch.
@Joelfreak where did I say what the right price was, I said simply that $99 isn’t obviously a better price. You are mood affiliating not engaging the post. If you want to attribute statements to me, why not find them in the post and quote them..?
@Pat there has been some extra capacity though not necessarily as much as we might like to see, on the other hand it’s hard to add capacity quickly since you have to pull the aircraft from somewhere (although there are MD80s parked in the desert that American still owns). There are gate constraints, Miami is a mess as it is.
Gary: Congratulations on a post of clear and incisive economic thinking. And to Pat for amplifying that we want prices to rise to their market level to encourage potential assistance to switch away form other pursuits (e.g. watching the start of the football season) to applying their own self interest to helping people in Florida.
i tend to agree with most of your points here. And actually, it’s the people who could afford to throw-away $99 backup tickets who can jump the lines instead of first-come first-serve re-booking channels.
Tired of waiting 4 hours on the phone ? just book the $99 first. So in a sense, it’s actually people with more disposable income that this policy is benefiting.
@Joelfreak : there’s no one buying walk-up fares. the inventories are designed so that no one in their right mind buys the ticket, and the agents can actually have inventory to work with to re-accomodate passengers instead of a throw-away tickets.
Joelfreak: When Uber applies surge pricing, what immediately happens to the number of Uber drivers?
Joelfreak: This blog isn’t for you.
@Joelfreak: ” Gas stations should be able to charge $500/Gallon? Bottled water should be $50/case? We have seen that before, and as a people we don’t want that on our watch.”
Yes we do. You want to see Joelfreak land? Go to Venezuela. No profiteering there! No food on the shelves either. I wonder why?
Agree with your point that decreasing the price won’t help more people evacuate via airplane. But it would clearly change the composition of people who can evacuate via airplane.
Ah, it’s so nice to see libertarians dream. Everything works out perfectly with the free market. Never mind that it doesn’t, and as a civilization we decide upon rules for how those who have treat those who want or need. People walk up to evacuate because no one KNEW about the Hurricane before a few days ago. 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.
As a (newish) central Florida resident right on the cluster of spaghetti predictions, I am getting the hell out by Amtrak auto-train. I am hoping that if Amtrak cancels Saturday service, they do it very soon so I can maybe get one of those cheap fares. I’m not poor in miles or money, but I will not pay $1000 or its equivalent to leave. I think that $99 is unnecessarily awesome, because no one has a threshold of $100pp to evacuate. Heck, you could charge $9 and a big chunk of this state still couldn’t afford it. And those who will pay $99 would not falter at $149 or $199. There won’t suddenly be a swathe of people able to afford evacuation because of the airlines’ generosity. BTW, this state has a law against price gouging…while you are all right about the last few tickets going at top price normally, I think they’d still have their feet put to the fire at least, fair or not.
@Andrew if you want to live somewhere where the suppliers are allowed to gourge, feel free. Thats NOT the US, or ANY western democracy. Thats a nightmare.
It’s obviously a marketing expense… Management is expecting increased shareholder value with the expense. “Teacher pensions” that own airline stocks should benefit not suffer.
Any speculative bookings will get filled by the hundreds of people on standby. Seats are not going out empty, so I don’t buy that argument. I personally know people who were looking to drive instead of flying because they couldn’t afford the ticket prices so they aren’t even getting a fair a chance.
@MMKate
” Heck, you could charge $9 and a big chunk of this state still couldn’t afford it”
They most certainly can. Even the poorest have cell phones and if they can afford that luxury they can certainly “afford” paying up to save their lives. By saying stuff like that you’re treating saving your life as a luxury. It’s not. You make the necessary trade-offs to safeguard your life.
I find it silly that you claim to have money but would refuse to pay $1,000 to spare your own life. That seems utterly ridiculous to me, but then who am I to say what your life is worth? Maybe you are worth less than $1,000, who knows? I know that I would personally pay very large multiples of that per person for to spare the lives of each of my family members. I’d make the necessary trade-offs because I’m not going to need that money if I’m dead.
If you want to reduce it to strictly economic terms, what about the marketing angle of selling $99 fares? Much easier, more effective, and cheaper than a traditional ad campaign. Running an airline isn’t strictly butts in seats.
Easy way to shore up JetBlue’s position of “Inspiring Humanity” while United burns cash having to change campaigns over and over.
@Joelfreak: There hasn’t been a single case of “price gouging” (meaningless term). There has been massive stock destruction in Joelfreak land, where, I repeat, the shelves are empty.
BTW: Market pricing is the norm in democracies. Postwar communist countries got rid of their system of the state control of prices because it Joelfreaked the economy.
What people in Florida need now is other people’s self-interest harnessed to help them. Sanctimonious pity is not going to help.
I’m not really sure what the airlines SHOULD charge for these seats (there are good arguments on both sides), but I will say this: JetBlue’s move was a terrific publicity stunt. Since I’ve got family in South Florida, I was looking at fares and availability on Tuesday in case they wanted to fly out (they decided not to). I saw the absolutely insane way seats were selling that day: you’d think it was the last flight out before the fall of Saigon. So by the end of business on Tuesday, there were effectively no more seats to buy out of South Florida. So today was a great day to make the remaining seats $99. 🙂
Did JetBlue or the other airlines actually add flights? Now THAT is the humanitarian thing to do. And I’d personally charge the average daily fare for the new flights. No reason to give it away, no reason to try to make a mint on it. Nobody really NEEDS to fly in this situation. Honestly, for most people who feel a need to leave, it makes way more sense to drive (this way you’re mobile as the storm track moves, and have the flexibility to return when conditions warrant). I do have a bad feeling that the people who arguably need these airline seats the most aren’t the ones who will actually get to buy them.
I’m a shareholder. Unless someone is going to bail me out for days and days of lost activity in Houston and Miami, why should I have to bail out people who choose to live in harm’s way?
Airlines shouldn’t gouge, but they shouldn’t spend my money subsidizing others. I was going to contribute to a Miami hurricane relief fund…but since Jet Blue did it for me, now I will not.
This is the conclusion I’ve come to: people would rather suffer shortages than be faced with higher prices during an emergency. It’s completely asinine, but it seems to be true.
Jet Blue will be celebrated for lowering fares even if it actually does no good. As you point out, lowering fares doesn’t increase supply and during evacuation what’s needed is a supply increase. If they jacked up the price and added flights or at least switched equipment to larger planes as a result, then that would be actually helpful.
Yes, sure, the trailer park crowd may not be able to swing the price and the middle class may have to forego vacation this year to safeguard their lives if they want to fly, but on net everyone would be better off. For one thing, there would simply be more escape options. Those who decide its worth the price would take that option, easing the congestion on the roads for those evacuating by car, making both the poor and the rich better off.
More supply is better. Always. But that’s not how the average Joe sees it because the average Joe is an economic illiterate.
No price gouging, eh:
http://www.nj.com/mercer/index.ssf/2013/07/mercer_county_hotels_settle_with_state_over_alleged_price_gouging_during_sandy.html
http://www.nbcnewyork.com/news/local/Hurricane-Sandy-Price-Gouging-Scams-Investigation-177279531.html
https://www.cnbc.com/2017/08/28/price-gouging-during-hurricane-harvey-up-to-99-for-a-case-of-water-texas-ag-says.html
http://www.businessinsider.com/price-gouging-in-texas-gas-prices-hurricane-2017-9
http://www.caribflame.com/2017/08/more-than-500-complaints-of-price-gouging-after-hurricane-harvey-up-to-99-for-case-of-water-10gallon-for-gas/
Tons more where that came from.
@Andrew
Profiteering from natural disasters is illegal in many (most?) states. Unless you consider Texas and Alabama to be the political and social equivalent of Venezuela: http://whnt.com/2017/09/04/gas-prices-will-rise-but-unreasonable-prices-are-illegal/ and http://kxan.com/2017/08/27/price-gougers-beware-were-going-to-find-you/
When Uber uses surge pricing, they are not contending with a limited number of gates. They are contracting out demand to 3rd parties.
Airlines and airports don’t exactly work that way…
Miami, FLL, Palm Beach all have a set number of gates, which can only be turned around so quickly. Don’t forget you need capacity at their destination airports also.
Airlines only have so many available planes to handle that additional load. And of course, those flights can’t take-off/land at destinations if they don’t have the proper capacity, so airlines have to find available capacity on both ends without severely undermining the entire network.
But yeah, if you’ve figured it out, maybe you should tweet the airlines and let them know!
This post points to the problem with a system of pensions being based upon market investments instead of having the amounts guaranteed. It is problematic for individuals to be forced to participate in the market, thus having stock prices impact their retirement (rather than just having this impact those who choose to take the risk, for which this can then be considered their fault for choosing to invest in something risky).
Companies should be able to incentivize behavior that benefits those other than just their investors. People should be able to have retirements guaranteed, so that corporate decisions do not impact them, unless they choose that to be the case. One problem with the US system is that companies are forced to care completely about the interests of the shareholder. Caring about people suffering from disaster should be more important.
Why does someone who can afford a 2000 ticket have more of a right to evacuate than someone who can only afford a 99 dollar ticket? There may be a limited number of seats, but why should one’s wealth determine who gets those seats? Perhaps the problem is in part that there is no fair way to allocate who gets the remaining seats, but it is problematic to value someone’s life more because the person has more wealth.
I agree with those pointing to the Uber argument much more than Gary’s argument–if increasing the prices would bring about more flights, I could see justification for higher prices. But I am against having higher prices just because it benefits the shareholders.
Yup. Actually water should be $50 a case. People have been unable to buy water at all, because other people buy far in excess of what they might need. Somehow we understand demand pricing for a resource like Super Bowl tickets, but when it comes to rationing water, gas or airline tickets for a hurricane we don’t.
Nick has it right. Witness the Texans filling 55 gallon drums full of gasoline last week. They had plenty but others got zippo because the price was not allowed to rise to market. How is that fair?
Sorry, Gary, you’re way off base here. The shareholder argument is also bunk.
@Daniel,
Let’s take it a step further. Why should people who have access to a car be allowed to evacuate by car when other people don’t have access to a car? Car owners lives are more valuable than the carless? I don’t think so! And what about the legless? At least the carless could presumably walk, but the legless can’t even do that. So, why should we allow people to walk to safety and prioritize their lives over the legless? That’s just inhuman!
And you’re right. I should not worry about my investors. I should take all my investors’ money and give it to victims of natural disasters. I’m sure if you decided to forgo consumption or another investment to invest in my company you’d be thrilled to suddenly discover that I’m not working for you but rather I’ve decided to give away your money. Here you thought you were saving for retirement and *SURPRISE* you’re actually a philanthropist. Wouldn’t be my fault, though because as you say “for which this can then be considered their fault for choosing to invest in something risky”.
Also, I like guarantees as much as much as the next gal, but the thing about life is there aren’t any. I am not guaranteed to survive crossing the street. The only realistic pension guarantee you have is a big goose egg. That is the only amount anyone can actually guarantee you. If you want more than zero, you’re going to have to take some risk.
10 families. 20 cases water. Regular price $5/case. Natural disaster strikes. Scenario #1 – “Price gouging outlawed”. Price remains $5/case. First 10 families arrive first and buy all 20 cases of water at regular price. The other 10 families SOL. Scenario #2 – Prices allowed to rise. Water priced at $30/case. First 10 families only buy one case each at the higher price thus allowing the 2nd 10 families to purchase water. It isn’t rocket science. Higher prices result in rationing and a more equitable distribution of scarce resources.
@methinks Your comments regarding cars and legs are absurd.
Shareholder argument is trash. The long term capital they built up completely outweighs the lost incremental profits on a few days flights from a couple origins.
There’s a reason that people (such as myself) will not think twice about paying $15 more for a flight on JetBlue than United. AA and JetBlue operate critical hubs in South Florida and just bought cheap bargaining chips with the airport and county commissions.
That’s where your executive team just created shareholder value.
The passengers on these flights are benefiting from the fare caps but this was not done out of the warm spot in Doug and Robin’s hearts.
Rental car rates for the eclipse were sky-high. Those rates made it profitable to move cars to the eclipse path even for a 1- or 2-day rental. As a result you did NOT read hundreds of news stories about people being turned away at car rental counters. Supply increased to meet demand.
A smart airline could have similarly canceled low-load flights and moved aircraft to Florida for evacuation at higher but break-even fares. But due to the ignorance of the general public including media reporters, the public would have been convinced that the airline was making a ton of money. The media scolding would have cost the company future business. The safe play was to do nothing rather than serve the public.
Thank goodness the rental car companies did the right thing last month.
Good luck if you bought a basic economy ticket or don’t have a seat assignment now. The flights are way oversold. If you can’t afford a $1500 one way ticket then you need to get in your car and start driving now. The airlines will be bumping people with cheap tickets so they can accommodate people willing to spend more money.
The comments in this thread are quite entertaining for various reasons.
As someone in the area likely to feel some degree of the storm, I think it’s great that they’re doing this. Listen, everyone can benefit. You’re talking 150 total seats on a plane for the next 3ish days. JetBlue is going to cap at $99. They have lots of flights less than that out of MCO (where I fly from) on a regular basis. They’re not giving away the farm here. Most flights out of MCO by my experience are pretty full already given the tourist population (even now), so by capping the remaining fares you might be talking about 1/3 of the plane tops.
Where they’re going to gain is the PR/Advertising arena. As a Central Florida local, I’ve already seen mentioned on twitter a few times and it’s been shared on Facebook about a dozen times that I’ve seen in the last hour. It’s a story that the local news is probably going to pick up on by tomorrow and praise the leadership of the company. That’s press that people around here are going to remember when it comes to booking their leisure flight some time in the future. It’s not completely altruistic on their part, but so what, it helps people. People talk, and they remember who helped them out when things got bad.
It’s going to help a few hundred maybe a couple thousand people feel better about booking a ticket for $99 to get the heck out of here, and I can’t blame them for that. Maybe someone wanted to get to the Northeast to be with family instead of being near FLL when it hits and they don’t have a ton of money. It will keep those people off the roads evacuating, which will help a little bit with traffic that is already building. $99 gets them out of here. Not a bad thing.
I do applaud the airline because it’s going to help some people get a decent deal to get out of here, but in in the long run it’s going to help the airline itself with the good PR it’s receiving. Win-win.
Yes Bill, they are absurd. As absurd as the comments about airplanes. That’s the point.
Your blog sucks dude. Your hard-on for AA gets old, yet the fact that you take the cynic approach with this statement from the airlines just goes to show how fucking bitter you are. I get it, you are on the downward swing from your once prominent position in this industry, yet the newer folks adjust while you continue to be the Kmart of blogging.
@Booger Your grammar sucks…
What nonsense is this guy peddling. My parents have been calling and online for 3 days without any tickets. Flights on Wed were canceled too. Get a life.
Been trying to book a flight out of FLL to most anywhere from yesterday on. Found a few on B6 and UA. Everything looked good until the buy now click and whoosh ……. …..nothing.
UA wanted <$1100 to get to DEN via IAH and only one seat. I needed 2.
Going to ride it out at a hotel with a generator
Since Florida has variable tolls and a cashless system, without this announcement of suspended tolls what driver would trust escaping IRMA on a Florida toll road and automatically getting scalped with never ending toll increases while stuck in traffic? Florida did not invent highway robbery – we just perfected it.
“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.”
I took a pause from reading the comments to post this, so I hope it’s not repeated, but Airfare isn’t the only factor. Once you get to your “safe” destination, food, lodging and ground transportation cost are still a factor. Evacuation is an expense and air travel is a luxurious way to evacuate.
I live in Houston and considered evacuating to Dallas, but not to a shelter, but to a hotel for a $200 a night and I would have paid more if I needed to. The people considering flying out of a disaster zone are not those in most need and there is no reason why airlines shouldn’t follow established business practice and price tickets based on supply and demand.
It’s FEMA/State government’s responsibility to otherwise facilitate mass evacuations and the nature of Airlines is they aren’t an instrument of mass movement of people. If traveling by air was the only means of movement out of the zone, the military would be using the same transports they use to move troops around the world.
The government can pay the airlines to move people the same way they pay for convention centers to serve as shelters, otherwise Airlines are a business just like the gas companies that sell fuel to the drivers evacuating (the relative increase in price per gallon of gas over the last two weeks is more than equivalent to the rise in airfare).
I’d suggest that those unhappy with this post, donate the 70,000 mile bonuses they got for there new Amex Sapphire Metal whatever card or the other 100,000’s of miles your hording to go to Maldives in an airline penthouse sleeper seat.
Delta has added flights and has implemented equipment swaps to dramatically increase capacity in the FL market. They have also put in to place a $399 price cap. These actions are in addition to standard waivers for flight changes.
Usually love your posts and like your blog, but this one is just stupid. I don’t think in a projected tragedy this is the focus that needs to happen. The airlines need to be applauded for doing what’s right. Leave it at that.
It’s rare that airlines put people before profits. Let’s celebrate that.
Alex nailed it: the price caps are totally rational and really a brilliant free market move taking a longer and broader term perspective.
It costs relatively little and gains a Great deal of positive publicity as well as counsumer and regulator goodwill.
This is so obvious that I’m surprised this was not mentioned in the post.
I don’t think that this being a bad move would have crossed my mind. While I am not sure that the $99 is necessary, I applaud Delta suspending fees that make the regular flyer frustrated: checked bags, pets, etc.
If anything, this speaks to the absurdity of these fees. In a disaster, if you have to suspend a fee to make flying more accessible and less cumbersome, should you be charging the fee in the first place.
Finally, given all the negativity towards airlines lately, can we not just stop to applaud them doing something good to potentially save lives?