Monday, April 19, 2010

Supply and demand or plain old Price-gouging?

My mother was supposed to fly to Dublin last Saturday. Needless to say Iceland's volcanic ash put paid to that and she's now had to re-book the flights. Because her homeward bound flight wasn't technically canceled, instead of shoving the whole booking along by a few days, she had to cancel the original booking and basically book herself new flights. Lo and behold she is now paying about five times more than she originally did, even though it's with the same airline and they canceled the flights. I realise that the airlines were at the mercy of the gods, and were losing millions of dollars per day during the flight ban, but jacking the prices up for existing customers seems a tad erm, well, disgusting to me.

I suppose it's the old supply and demand argument. Or is it? In my opinion this is plain greed, or price gouging, definid by Wiki as "a type of a speculation with a seller (speculator) pricing much higher than is considered reasonable or fair." In some states here it is illegal in times of civil emergencies.

And the airlines weren't the only greedy basterds. Apparently people stranded all over the world suddenly found hotel prices had more than doubled following the erruption. Eusrostar's prices also rocketed as everyone scrambled to reach the Continent by other means and Eurostar hadn't even been losing money hand over fist in the previous few days.

There's one argument that, in times of crisis, if people don't raise the price of everything, shoppers will clean the shelves of the stocks and thereby deprive everyone else of them. Okay, I get that. After hurrican Katrina, vendors not only raised the price of a bag of ice from $2 to $10 but they limited the amount you could buy. That way everyone (who could afford it) had a fair shot.

Unfortunately this doesn't quite fit the airlines' price-gouging. These were existing customers who had already paid for a ticket. Sure. they'll get a refund for the canceled flight, but charging them hundreds more for something that wasn't the customer's fault in the first place just seems to be plain wrong.

16 comments:

  1. Here in Texas that practice is illegal. After Hurricane Ike many hotel owners were prosecuted for price gouging after charging inflated rates to evacuees.

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  2. It should be illegal to put the prices up.
    This volcano is causing chaos for everyone and theres nothing we can do about it.

    Nuts in May

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  3. Absolutely agree.

    And what about the Russians who were charging people to renew their visas because they were physically unable to leave the country? That real is taking advantage.....

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  4. I completely agree! It's totally unfair and taking advantage of these people's desperation. My boyfriend's mum has been stranded in Spain since Friday. She's now made it over to France and was going to take the train over to England, but what used to cost 60 GBP has been raised to a 300 GBP train ride. I think it's terrible.

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  5. You're so right EPM. My brother, stranded in France, had to pay 400% extra for a ticket as a foot passenger to get back across the channel. WTF?

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  6. I agree, my sister is stuck here in Germany with her 13 year old. She has a life and business she needs to return to. As much as I love having them here in Germany she is consumed with worry.

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  7. PLain greed that's what it is. Name and shame! Perhaps that may make a difference if not now then in the future!

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  8. I went on BA yesterday for economy flights to £1500 return from London in July. Say what?

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  9. I agree with you 100%. My work colleague is stuck in Munich. Last night his hotel cost $137 & when he tried to extend for tonight they told him $339. Even Dick Turpin wore a mask.

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  10. I can't believe the UK tabloids aren't unmasking them all.

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  11. I totally agree. I think the whole thing is disgusting. Just goes to show how low the human race can sometimes sink in times of crisis.

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  12. People are willing to pay it, so the airlines/hotels etc. will continue to do it. It is really just supply and demand and free markets. We've all gotten so used to dirt cheap flights and hotels that we're surprised when an alternative reality presents itself!

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  13. HI! you've won a blogger award - the sunshine award. You can go here to claim it: http://jollyoldengland.blogspot.com/2010/04/sunshine-award.html Of course I had to share it!

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  14. The whole thing is sureal and I still can't believe it all happened.

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  15. NFAH - I understand the supply and demand argument, but when vendors are taking advantage of people who have no choice, to me it's different. You can bet if one of the hotels had a reduced rate most people would choose to stay there; they are only paying the ridiculous prices because otherwise they would have to sleep on the streets.
    'C the P - why thank you so much!

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  16. Absolutely - this isn't a case where people were willing to pay the higher price. They had already paid a lower price, and through no fault of their own, and with no other recourse got bullied into paying a higher price. The original flights should have simply been re-booked at the same price.

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