How airlines price flights when disaster looms

Local News

WARWICK, R.I. (WPRI) — When disaster strikes, does money matter? That’s the question many Floridians had to answer when finding ways to flee the state this week in preparation of Hurricane Irma.

Tim Howes, an associate professor at Johnson & Wales University, has been watching flight prices in recent days. His expertise is finance, and he tells Eyewitness News that airlines often use a computer algorithm to figure out flight pricing. He says the algorithm figures out how to maximize how much revenue a flight can attain.

However, in recent days, Howes says that very algorithm has worked against some airlines that have increased prices for any flights out of Florida ahead of the storm.

“Anytime you see demand, if you’re an economist, you’re gonna say ‘look, increased demand with limited supply means much higher prices,'” he explained.

Earlier in the week, some flights out of Florida cost travelers well over $1,000. On Wednesday, one airline stepped in to help.

“One airline in particular has stepped up, and that would be JetBlue,” Howes said.

JetBlue decided to cap the cost of remaining flights out of Florida, charging $99 for a direct flight and $159 for any flight with a connection. American Airlines and Delta then followed suit.

“I’m sure they thought about it and said the additional revenue we’re going to get isn’t worth the bad PR,” Howes added. “Let’s do something good.”

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