Leader of the Opposition McKeeva Bush has called for an investigation into Cayman Airways for price gouging people evacuating as Hurricane Dean approached last weekend.
Some passengers paid more than US$1,000 to fly to Miami on the national airline. Cayman Airways has responded by saying a computer glitch caused the high fares and have offered refunds to people who paid more than they should have.
Mr. Bush said he is not buying the computer glitch explanation
‘From where I stand, they were trying to take advantage of our situation and I know that the Government has come out and said there was a glitch, but you can get a computer glitch for a couple of hours, but this thing went on for days,’ he said.
‘I don’t think there was any glitch. I think it was a deliberate attempt to make money and price gouge to make money.’
Mr. Bush believes the CAL fares were illegal under the price gouging law introduced after Hurricane Ivan.
‘Of course it is,’ he said. ‘They increased the fees at a time of impending national disaster.’
Under the Price Gouging Control (Emergency Circumstances) Law, 2004, people and companies that are convicted of price gouging can be fined $100,000. The burden of proof to show that the price increase was reasonable and not unconscionable lies with the accused person or company.
In addition, where the price gouging is proved to have been committed with the consent, connivance or neglect of any corporate officer of a company, the law says those corporate officers are also guilty of price gouging and liable for individual punishment.
Mr. Bush said the fact that a refund was offered does not change the fact that CAL might have transgressed the law.
The high fares charged by Cayman Airways might have led other airlines servicing Grand Cayman to increase their fares, according to reports Mr. Bush received. He said the law makes anyone that operates in Cayman subject to the price gouging prohibitions.
Although he emphasised that he had nothing but praise for CAL employees, Mr. Bush blamed Minister of Tourism Charles Clifford, Cayman Airways CEO Patrick Strasburger and the airline’s consultants for the circumstances that led to the higher prices.
Mr. Clifford called Mr. Bush’s accusations ‘an unjustified, irresponsible and selfish act’.
‘He has demonstrated more than once that he will do anything in an attempt to gain political points,’ he said.
During last Friday’s Cabinet press briefing, Mr. Clifford said only a small amount of the 5,300 people evacuated by Cayman Airways as Hurricane Dean approached paid higher fares than they were supposed to.
‘I have been advised by the management that 104 of those individuals were affected by the higher fares,’ he said. ‘So, when you look at the overall picture and the effort by Cayman Airways, it is really unfortunate that you would have those types of allegations coming forward, especially so quickly after the event.’
CAL Chairwoman of the Board Angelyn Hernandez called the allegations extremely disappointing and chalked them up to ‘political games’.
‘Cayman Airways has acknowledged and explained the situation, which affected a small percentage of tickets sold to passengers over the period of August 17 and 18,’ she said.
‘The Central Reservation System worked normally in setting prices based on demand and supply. However, the command to adjust pricing to one low, fixed price was entered, but before this command could be fully processed in the system, customers had already begun to purchase tickets.’
Ms Hernandez said there was a brief window where pricing errors occurred before the flat fare was processed ‘because as soon as flights were uploaded in the system, the tickets were immediately being purchased due to the abnormally high demand’.
‘As soon as I became aware of this problem, I contacted the CEO and this was resolved immediately,’ she said. ‘As such, by the time the Leader of Government Business [Kurt Tibbetts] had received such a complaint and approached the CEO, the matter was already corrected.’
Ms Hernandez said the computer reservation system worked normally and in accordance with international booking systems.
‘What we at CAL did was to override that system and to institute a flat rate in consideration of the extraordinary circumstances,’ she said.
At the flat rates charged for the additional charter flights hired by Cayman Airways, the airline actually lost money per seat, Ms Hernandez said.
‘When Cayman Airways contacted some charter operators, we were quoted fares as high as $600 one way,’ she said. ‘After consulting with the Hon. Charles Clifford, the decision was taken to secure the additional airlift and still sell the seats at $240 one way plus tax, a price which is below the actual cost of acquiring the extra flights.’
Ms Hernandez said Cayman Airways greatly regrets the error it made and that safeguards were now in place to prevent the mistake from happening again in the future.
‘However, for accusations to be made that this mistake was deliberate undermines the valiant efforts of the team and ignores the abnormal circumstances, which existed and insults the staff of CAL,’ she said.