Robert Silk
Airlines occupy a unique position in U.S. society.
On one hand, they're private businesses, subject to the usual shareholder demands for profits. But they're also an essential service that people depend on to connect to the commercial world as well as families around the nation and around the globe. And, yes, they also serve as a lifeline in times of danger, such as during the buildup to an arriving hurricane.
Early this month, while Hurricane Irma pointed toward Florida as the fiercest tropical storm the world had ever seen (at least as measured by the length of time it was able to sustain winds of at least 185 mph) airlines ultimately made sensible choices, but not before walking into a public relations snafu that executives should have had the foresight to anticipate and avoid.
Four days before the storm hit, a Wednesday, stories began proliferating on social media and in the media about alleged airline price gouging ahead of Irma.
One woman, for example, put out a tweet that went viral complaining about a Delta flight from Miami to Phoenix that magically multiplied in price from $547 to $3,258 once she clicked to book.
Similarly, Dan Rather's News and Guts media company posted a screenshot on Facebook of a United Airlines search that returned roundtrip tickets between Miami and Denver mostly in the $6,000 range. When I ran my own Miami-Denver search shortly thereafter, the lowest price point I could find was $2,500.
Reports alleging price gouging even provoked a response from Florida attorney general Pam Bondi, who told journalists that she had no regulatory authority over airlines but that she would reach out to the White House (Bondi is an ally of President Trump) if need be.
It's not clear how many of these expensive tickets were actually sold at the reported prices.
That Delta passenger, Leigh Dow, ended up working with Delta agents who sold her a much cheaper ticket, as Dow noted in a follow-up tweet.
United, meanwhile, explained that those $6,000 tickets were the result of a glitch in its system. The carrier said that it doesn't usually fly its larger planes on domestic flights, so the upgauging confused its computers, which showed first-class fares.
Both airlines told me that they did not increase the way they price tickets as a result of Irma.
That could be true. As anyone who even perfunctorily follows the airline industry knows, carriers routinely increase fares rather dramatically on close-in bookings. Those prices can often be five to 10 times the price of the cheapest economy fare, according to Patrick Surry, chief data analyst for the airfare tracking app Hopper. It's an important part of airline revenue models.
As allegations of price gouging began circulating that Wednesday, George Hobica, who runs the website Airfarewatchdog.com, told me he hadn't seen anything outside the norm.
"It's just the computer programs doing what they do when it's last-minute and seats are scarce," he said. "If there's any gouge, it's just the last-minute walk-up airfares that are designed for desperate business flyers."
Hopper put that theory to a test, doing an analysis on that same day (Sept. 7) on the manner in which one-way fares to the New York area out of Miami, Fort Lauderdale and Orlando had trended compared with how such fares had trended for flights two Wednesdays earlier.
The chart showed that prices on those routes were virtually the same on Sept. 7 as they were on Aug. 24, though the Sept. 7 flights had trended more sharply upward for close-in bookings.
Hopper concluded that the prices ahead of Irma were within the normal range of airlines' typical preprogrammed prices.
"[I]t seems like a case where consumers are looking for last-minute tickets and seeing the short advance pricing that business travelers often face," Surry told me.
A Hopper chart comparing one-way fares to the New York area out of Miami, Fort Lauderdale and Orlando on Aug. 24 and Sept. 7.
As negative news stories proliferated, airlines responded by altering their usual revenue management practices. JetBlue, which is the largest carrier in Fort Lauderdale, was the first to cap remaining one-way, nonstop, economy-class tickets at $99. American, South Florida's largest carrier, followed suit, and Delta capped one-way flights in all fare classes to and from Florida and the Caribbean at $399.
Along with capping prices, airlines added flights in the days before they had to halt Florida operations due to Irma, a fact that they touted in press releases before the storm. American operated 23 additional flights, mostly with widebody aircraft. Delta added 24 flights, amounting to 5,000 seats, in Florida, the Bahamas and the Caribbean. United added 11 flights into southern Florida on the Thursday and Friday before Irma hit, selling those tickets for an average of $285, the carrier said.
Of course, adding flights, while presented by the airlines as an act of community service, could well have simply made business sense, assuming they were able to make a profit on the prices they offered. There certainly was no lack of demand among people attempting to escape the storm.
As a South Florida resident myself, I tried to find seats to New York at the last second, but each time I clicked for a purchase, the advertised seat was already gone.
Ultimately, airlines are a business. And nobody should begrudge them for making money.
But since they are also an essential service, airline executives should have known that ahead of a storm as powerful and as scary as Irma was, their typical pricing model -- designed as it is to soak profits from business and other last-minute travelers -- would be a public relations fiasco. That was especially the case in these times, with the public dissatisfaction stoked by the violent removal of ticketed passenger David Dao from a United Express flight in April still relatively fresh in people's minds.
At the time of this writing, we don't know how the bottom lines of airlines might have been impacted by the storm. Presumably, the days' worth of cancellations and disruptions that were a result of Irma much more than erased any extra profit they might have made from the surge of close-in, high-priced bookings that preceded their eventual last-second price drops.
I have no doubt that the management of our nation's airlines understands the role they play as an essential service and that they take that role seriously. While their primary task in times of peril is to fly as many people as possible to safety, they also provide all sorts of other crucial assistance.
After Irma crossed Puerto Rico, for example, United flew in quickly with a widebody Boeing 777 that carried not only volunteers but also water, amenity kits and food. American staged supplies ahead of the storm in Miami and its Charlotte hub so that it was ready to help with post-storm relief efforts as soon as possible. Delta ran a humanitarian flight to St. Thomas on Sept. 11, taking in supplies and returning with 150 Americans.
Still, Irma should serve as a lesson. As soon as a hurricane looks perilous enough that emergency management officials begin planning mandatory evacuations, airlines should suspend their usual close-in price modeling as a perfunctory measure.
It's not just good corporate citizenship. In light of the sharp gaze that airlines receive from the media and the American people, it's also good business.