Kenya Airways Price Gouging On Rescue Flights?

Filed Under: Other Airlines

A lot of people around the world are trying to get home right now before borders close even more. Global aviation is obviously in a tough spot, as immigration rules change constantly.

In addition to regularly scheduled flights, we’ve seen some airlines offer repatriation flights for citizens of certain countries.

Just how much does a seat cost on one of these?

Kenya Airways operating last flight to New York

Per an announcement on March 22, 2020, Kenya plans to suspend all international flights in and out of the country effective midnight tonight, Wednesday, March 25, 2020. For those looking to leave the country, this is more or less the last chance.

While Kenya Airways has otherwise cancelled their nonstop Nairobi to New York flight, the airline is willing to operate one last flight.

The US Embassy in Nairobi sent out an email today indicating that Kenya Airways is willing to operate one last flight to the US tonight, departing at 9PM, just hours before borders close.

Kenya Airways 787 economy class

However, they’ll only operate the flight if they can sell all seats. How much is Kenya Airways charging for the 234 seats?

  • Booking one of the 30 business class seats will cost $4,000
  • Booking one of the 204 economy class seats will cost $3,350

Yep, that’s the fare for a one-way ticket from Nairobi to New York. As you can see, the fare difference between business and economy is minimal, and that’s likely because they realize demand for this flight is pretty inelastic, and getting people to spend an extra $650 over the already super high fare might be tough.

Kenya Airways 787 business class

Is this price gouging, plain and simple?

We’ll see if this flight actually operates. They’re taking bookings today, and claim they’ll only operate the flight if it’s full.

That raises the question of whether Kenya Airways is price gouging, or whether this is just the free(ish, yet very government subsidized) market at work.

If they do indeed sell all seats, they’d be looking at $803K in revenue. Presumably they’ll have to fly the plane back empty, so let’s really call it just over $400K in revenue in each direction, to spread it out over the roundtrip journey.

I’ll admit I’m not familiar with Kenya Airways’ exact operating costs compared to other airlines, but that seems outrageously high, more than they’d get on virtually any other flight.

Put another way, are they averaging $1,700+ per person fares one-way between Nairobi and New York under normal circumstances, with a 100% load factor? I’d guess not.

Normal roundtrip economy fares are closer to ~$1,000 on this route, and I know for a fact the airline isn’t running anywhere close to a 100% load factor on this route under normal circumstances.

Kenya Airways 787-8

Bottom line

While some airlines are operating special flights, they sure do come at a cost. Some airlines are being reasonable and just trying to cover their costs, though it seems to me like other airlines are really trying to take advantage of this situation to profit.

I can’t help but feel like Kenya Airways falls in the latter camp here.

At the same time, if people haven’t returned home at this point, to some extent I feel like it’s on them? Obviously there are some exceptions (like those who have been trying to help during this crisis), but aside from that…

What do you make of Kenya Airways’ New York flight this evening — are they being reasonable, or is this price gouging, plain and simple?

Comments
  1. It’s price gouging!!!!

    Hopefully they go bankrupt and liquidate after this pandemic is over, if not sooner!!!!!!!!!1!!!!!

  2. Demand for hand sanitizer, masks, special rescue flights are through the roof, but anybody looking to supply these things in the face of scarcity and adversity is accused of price gouging. This sort of attitude will assure that nobody is willing to supply these things.

    In my opinion KE’s position here is highly reasonable. Its passengers — if there are any — will clearly value their flight at higher than the demanded fare (or else they wouldn’t buy a ticket and stay put) and will come out ahead in this transaction. If KE is incentivized to provide the flight and also benefits, that’s a bonus.

  3. ‪Interesting.. considering they got a lot of praise for offering free flights f‬or Kenyans on their “last flight” from JFK to NBO yesterday. This is so inconsistent but I am not surprised given it is coming from KQ (I talk from experience, KQ left me stranded so many times in NBO and when the flight actually operated, my bags often didn’t show up for days…

    https://twitter.com/kenyaairways/status/1242353568553803776?s=21

  4. Yes this is price gouging. Kenya Airways was never shy about the fact that it operates the JFK flight for reasons of national pride, rather than to make money. They have never made money on the JFK flight. I don’t see why they suddenly have a desire to make money on this flight at such a trying time.

  5. No expert here, but as you point out the flight has to fly back empty for one, and there is probably some additional expense / risks in offering a one off service like this. If they were regularly selling OW for 1K and now they are charging 1.7K I wouldn’t call that gouging in terms of airfares. One can easily see airfares double on any given day based on supply / demand under regular conditions and we don’t consider it gouging.

  6. To lend some insight, KQ offered to fly people back to Kenya for free from JFK which was supposed to be the last flight on the route. I am not sure how many people were able to take advantage of this though as they announced it maybe 15 hours before departure (12am EST).

  7. Kenya Airways (like all airlines) will lose A LOT of money over the next month or so. They could just not operate the flight. If they are to operate it, they reasonably need a good incentive to do so. Trust me, Kenya Airways won’t be raking in excess profit this year.

  8. Just checked the official web of Kanya Airways

    It is a B fare economy, which is not only economy flex,
    but also entitled earn 100% full fare miles (175% J class for Skyteam elites).

    While flex could mean minimal to the pax, one has to be reminded that the pricing of a same day booking should NOT be compared with a “normal” advance purchased tickets. I guess $3350 is not far from the full fare Y if you purchase at gate, not to mention the J class.

    Even if $3350 higher than the normal price, it is still understandable,

    I saw many people always accusing of people’s “price gouging” action without knowing the fact that this is just a “risk premium” of business operation. One must concede that operating a flight now has a higher risk than normal, infection chance is prominent, even insurance may not cover at all.

    If all taxi drivers, businessman are not allow to mark up a bit for compensating their risk of operating business in a storm, in turn nobody will do the job.

  9. I’ve got no issues with it (doesn’t seem that outrageous to me), though i’m generally a free market kind of guy.

  10. Actually, KQ posted yesterday on their FB:
    As our last flight departs JFK today (March 24th), we are offering one-way complimentary tickets to Nairobi, to Kenyan citizens in urgent need. Please contact our team on +1(866)5369224 for more information. *All passengers will be subjected to and must abide by the entry/screening procedures instituted by the Ministry Of Health.

  11. I think the price is about right. They don’t have any obligation to foreigners so it is pay for convenience .
    When China operate a charter plane from Iran to evacuate their citizen , they charge about $400 ( 3000 yuan ) but you have to be Chinese citizen to use the service.

  12. Stuff like this is why people are hesitant to bailout airlines. If there is a chance to squeeze/nick and dime the passenger they will.

  13. Not justfying it but consider this in lieu of a chartered flight that US government is offering and charging at remote places with minimal in flight service. Our citizens have had plenty of warnings.
    Have you ever seen the price list of hotel rates in back of front door that may be charged. Last time it was six times what I paid.

  14. Actually, I think the bigger question is why an America carrier is not offering repat flights for Americans wanting to leave Kenya.

  15. Air Canada did this too. When the call to return to the country was issued – they started price gouging, mainly from Europe, offering only B/Y fares on half empty planes.

    But thats to be expected from the same despicable company whose criminal CEO (who just sold $25M+ of stock btw) is crying for a govt bailout.

  16. @EL: A risk premium justifies a mark up, certainly, but doesn’t justify price gouging (esp in a state of emergency when gouging is against the law).

    @James: This is not about economics.. We’re not in a business-as-usual situation, so maximizing profits and supply / demand considerations don’t (or at least shouldn’t) be the determining factors here.

    Hope you’re all staying safe and well.

  17. It’s happening in Peru as well, the US embassy in Peru sent a few emails with updates for the American tourists wanting to flight back home before the mandatory quarantine ends on April 1st, in one of those airlines like AVIANCA and LATAM were listed.

    There are only a few options, either humanitarian or chartered flights, the latter flight is LIMA-MIAMI, the flight on a regular day prices starts @ $166, but considering the situation now it’s listed as $1300 (one way).

    Everyone blames the government’s lack of action, embassies, politicians, but at the end of the day, it’s the airlines taking advantage of the situation.

    shame on these airlines!

  18. Question for all:

    For non-US airlines flying to/from the US (e.g., the Kenya Airlines example cited above), do US laws apply? If so, they couldn’t price gouge could they? Or is gouging only prohibited in the US?

  19. Price gouging should be legal and ethical. If you would like a lesson on free market economics, we can have a live chat so your readers can understand.

  20. Just check out what Lufthansa is doing:
    Cancelling flights that are nearly fully-booked
    not refunding customers (against EU261/04 regulation)
    only offering them a laughable voucher
    and then operating the exact same flights they cancelled before as new “rescue” flights for double the price even though it is sold out
    So essentially customers are paying 3x times the original price.

  21. For all of the pearl clutching over “price-gouging,” two unarguable facts remain:

    1) The supposedly awful price gougers are actually increasing the supply of goods and services into a market which demands them;

    2) People complaining about price gouging are not only doing nothing to supply these goods and services, but by shaming those who are trying to, actually help to decrease the supply of these scarce goods and services from the market.

    Who is more deserving of our opprobrium? I think the answer is obvious.

  22. @Bob, Sandeep, et al.
    Thanks, that’s what I was going to add as well. A number of airlines (including Air Canada and Lufthansa) did essentially the same thing right before India shut its borders to international flights. The last YYZ-DEL flight had one way economy at CA$6000+, while business was CA$8000+.

    Not sure how that classifies as free market but if a non-Western airline does it it’s called price gouging.

  23. @max rescue flights are only permitted for repatriation due to restrictions at the other end.
    Eg airlines are prohibited from flying to Peru Hence from Europe to Lima they can only carry Peruvians and returning residents. The inbound from Lima will only be allowed to carry EU residents . That means others who were booked on those flights cancel and those seats are released and can be sold Several major EU airlines are selling “ rescue fares “ which are reasonable

  24. To add I’m aware of someone who bought a rescue fare from Ecuador for around euro 650 to Europe

  25. How can one calculate the rough cost to an airline of running a flight? There’s also a ton of people in South Africa looking to get back to the US. What is South African’s rough cost to fly their A350 to NY?

  26. Just to be clear, price gouging as we’re using here is a significant mark up (usually doubling or more) or price ***during a state of emergency*** when the rules of free market either do not or cannot apply and citizens’ primary choices aren’t dictated by $$. It’s not about price determination during usual market operations. If we don’t differentiate the two, or if the goal is to maximize profits even in times of crises, what’s to stop a company from suddenly inflating the price of face masks or purrell 100 fold ? Let’s stay there’s still someone willing to buy– does that render it ethical?

    I’m not blanket disagreeing with Jeremy, Mak or others who advocate for this– in general free market should rule — just saying decisions right now should not be based solely on profit incentives when people’s lives are literally at stake.

    There’ll be plenty of time for that.

  27. If you look for same day/ next day one way ticket, it is always quite expensive. So they are just pricing these seats as same day/ next day one way ticket level. I don’t see anything wrong with it. And truth be told, you have to be pretty dumb to leave US (unless for family emergency) after March 1 as anyone with an ounce of brain can figure out world is shutting down due to Covid 19.

  28. If they we’re being responsible and looking for a <50% loading (e.g. Distancing by only selling odd numbered rows) there might be a sort of excuse.

    No. They're risking infections at an exorbitant price. Shameful.

  29. A week ago they were super proud to still be operating, counting on making a killing at shuttling cargo JFK-NBO-AMS (yes they were advertising this to clients). Then cancelled, then reinstated, then cancelled again.

    If they can fill this flight it’ll be the only time they’ve ever made a nickel on JFKNBO.

    I’d be utterly shocked if the KQ2/3 rotation ever happens again.

  30. In a way this price gouging makes me feel a little better.

    To MOVE an existing business flight from Lisbon to Toronto on TAP that was scheduled for March 24 forward to March 21 (best available) I grudgingly paid an extra $3500 (OW for 2). The original fare was also about $3800. So I paid double just to get out of Portugal before the borders might close.

    I’m glad I did but was unhappy about the fare increase!

    In this case it’s a one time only and perhaps they could have charged even more.

  31. It’s reasonable for KQ to want to fully cover its costs on this flight. It’s main purpose is to get Americans home and there is no reason any of that cost should fall on the Kenyan government.

    Operating a one-off flights like this one has high operational costs and I don’t see what KQ is doing in this instance as price gouging.

  32. @Jeremy
    @Mak – By the way leave the Koreans out of this, they are KQ. Do some due diligence please.

    Are you by any chance Matt and Noah Colvin?

    And Jeremy you might think you get an A on free market economics but definitely an F on ethics. Legality I give it some arguing points. Ethically, can’t be more clear and because you can’t even understand it, you get a straight F.

  33. There’s lots of price-gouging. The little demand left is inelastic so the airlines will get their pound of flesh. Example: LAX-Beijing on Air China is about $4K in coach!

  34. This is sensationalism. They have been selling one way coach flights back to the US for ~$800 for the last 2 weeks, well within market rate for a one way, including by phone, online, and at the airport. It’s only the people that waited until the very last day that have an issue.

  35. LATAM are putting on special flights to repatriate Australians from Lima and BA. 5000 AUD one way. Last I hearD they were close to selling out. Whilst I agree people should have come home earlier, some of the people were stuck were in Antarctica trips so not much they could do.

  36. To be honest, seeing how the POTUS is handling the Covid19 situation, If I were in that position I would stay in Kenya. Good luck US citizens… a Spanish living in South Africa.

  37. All in one sentence – If you scold airlines this time of marking up the price, there will be no airlines flying in such occasions next time, as simply grounding would be easier.

  38. As we all know, not every passenger in the same cabin has paid the same price. So do we know that KQ are charging the prices quoted for every single seat in that cabin? Could it be that 90% of the cheapest fares have all been sold, leaving only the highest fares left? This would be standard airline inventory management practice….
    As a second query – they say it will only operate if 100% of seats are sold. What if 90% are? Will they turn away that business and disappoint so many people?

  39. Does this price include blocking out the adjacent seats to your butt? I see the price justified if there’s a pronounced separation of alternating rows with 1 passenger per trio set of seats on the 3x3x3 layout of the B787.

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