Hurricane Sandy!

A friend of mine leaving New York City yesterday bound for California on one of the last flights out of JFK before the airport closed, a flight attendant told him that he was lucky to already have his ticket. In light of the pending hurricane, the airlines had just hours before jacked up ticket prices on the flight to $4,000 (He had paid a few hundred dollars when he bought it last week).

As a result of the last-minute rush for tickets, the flight was oversold by 47 passengers. So the flight attendants offered money to any passengers who volunteered to switch their tickets to the next flight out of NYC, whenever that might be. The first offer of $200 wasn’t enough to elicit 47 volunteers, nor were the subsequent ones of $300 and $350. An offer of $400 finally did the trick. 

Assuming that the 47 extra passengers had each paid $4,000 to get onto the plane at the last minute, and the 47 who gave up their seats for them received $400 in return, the trade would have been “rational” in narrow market terms. After all, the seats were “worth” $4,000 to those who bought them at the last minute, and switching to the next flight (whenever that might be) was “worth” $400 to those who agreed to do so.

But the transaction was also deeply exploitative. The airline netted a huge profit because of the impending storm.

Since I lived in NY for a long time, I left behind lots of friends and a very special bond with that state. I couldn’t help think this was a miniature version of the America in high tides. This is what capitalism is all about, making money on expenses of others necessities, no matter in which form they came, in this case Hurricane Sandy. Rational and efficient in terms of supply and demand, guaranteed to maximize profits, but fundamentally unfair. I hope that mother nature is not as ferociousness to the New Yorkers as their rulers and businessmen.

God bless!!!

DiL