Business Today

Profiteering from tragedy

In the midst of what was one of India's biggest natural disasters, some of biggest airlines were insensitively profiteering from the tragedy.

twitter-logo Rajeev Dubey        Last Updated: January 23, 2017  | 14:26 IST

Rajeev Dubey, Managing Editor, Business Today
During tragedies, there are Good Samaritans-and the bad. This piece is about the latter. In the midst of what was one of India's biggest natural disasters that left nearly 6 million marooned in an around Chennai due to floods arising out of incessant rains, some of India's biggest airlines were rather insensitively profiteering from the tragedy.

Their demeanour poses a question whether India needs a law that dictates how to do business in times of tragedy, crises and natural disasters.

Jet Airways tickets on at 9 pm on December 4

At the peak of the three-week downpour when the Chennai airport was flooded and shut down for nearly a week, outbound tickets from Bangalore saw an unprecedented demand as those stranded began flying out from there.

And that gave some of India's largest in the aviation and hospitality sector an opportunity to make a killing from the disaster through what is termed as 'surge' pricing or 'dynamic' pricing--the bane of demand-supply economies. Companies that ought to have been good Samaritans in the thick of a disaster of this proportion actually turned a blind eye and began making a killing from it by shamelessly overcharging the desperately harassed traveller. Their moves was not just in bad taste but was practically inhuman.

Airlines such as Jet Airways (@jetairways), Vistara (@airvistara), IndiGo (@IndiGo6E) and even the government-owned carrier Air India (@airindiain) joined hands with travel portals such as (@makemytrip) and (@cleartrip) to put surge pricing to effect, pricing the tickets exorbitantly. Surge or dynamic pricing is a technique based on demand and supply where an algorithm throws up the rate at which the product or service must be sold basis the surge or drop in demand. As a result, prices are lower when demand is low and they start shooting up as demand surges.

Vistara tickets on at 10 am on December 5

The Bangalore-Mumbai sector, the most in demand, saw air fares surge to as high as Rs 1,01,895 (see screenshot) for a Jet Airways flight on at around 9 pm on December 4. The 1.15 hour flight normally costs under Rs 5000. Instead, airlines and hospitality portals such as Makemytrip offered the tickets at more than 20 times the normal price. Earlier in the day, a family with an infant and a pregnant mother bought tickets at Rs 35,000 per head to evacuate them via Bangalore.

The next morning around 10 am Tata-owned Air Vistara had priced its ticket for the Bangalore-Mumbai sector on Makemytrip at Rs 41,500, over 8 times the normal. State carrier Air India and IndiGo were selling tickets for between Rs 23,000 and 46,000 on travel portals. Thanks to surge pricing, the fare rises as it gets closer to the date and time of travel.

Interestingly, neither the airlines nor the travel portals take ownership for the pricing. My tweet on the exorbitant fares elicited a response from Jet Airways via a tweet blaming the travel portals: "…Some fares seen on third party online travel portals are constructed by those websites by combining the last available Premiere cabin seats on indirect routes and stopovers to create a roundabout itinerary."

MakeMyTrip first hid behind the fig leaf of a 'bug'. But later lobbed the ball in the court of the airlines saying the pricing was decided by the airlines, not MakeMyTrip.

MakeMyTrip tried to 'help', asking "Could you please confirm the date of travel and no. of passenger's that you are trying to book?" Thankfully, I didn't need any 'help', nor was I an affected party. But it does raise a larger question about corporate behaviour in times of tragedies. Greed, after all, is hard to overcome.


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