An independent investigation has found that Cayman Airways did not price-gouge customers who were evacuating the island ahead of Hurricane Dean’s arrival in August, despite reports of passengers paying up to $1,200 a ticket.
However, the Office of the Complaints Commissioner’s report, released Wednesday in Legislative Assembly, said some customers were overcharged largely because the airline’s staff did not know how to use a computer programme that sets ticket prices.
The report also blamed the overcharges, and some under charges, on a failure to communicate within the airline and with CAL’s external partners, including the Sabre ticket reservation system and travel agents.
‘The situation…was not the result of a computer glitch or a failure of the Sabre system,’ Complaints Commissioner John Epp’s report read. ‘CAL did not attempt to mislead the public and did not state that the problem arose from a computer glitch.
‘The problem was a result of inadequate training to key staff and failure to communicate,’ the report read. ‘Under the Price Gouging Control (Emergency Circumstances) Law, price gouging is considered an unconscionable increase in prices of commodities during a declared state of emergency.’
In this case, Mr. Epp said CAL was not attempting to make a huge profit from people stuck in a difficult situation and noted the airline has taken action to refund money to people who were overcharged.
Mr. Epp said both Cayman Airways CEO Patrick Strasberger and Vice President John Wrightington had previously described the ticketing problems in various media reports as a ‘glitch.’ The commissioner’s report stated the first public reference to a ‘computer glitch’ came from Opposition Leader McKeeva Bush more than a week after the evacuation.
The report said Mr. Wrightington claimed full responsibility for the failure to make changes to the computer system, which would have eliminated the overcharges.
The complaints commissioner also noted several other areas where Cayman Airways’ response in the run up to the hurricane could have been improved.
First, the report stated that CAL failed to properly prepare for hurricane season because it had no policy for ticket sales in an emergency situation.
Communications were also identified as a major problem.
‘Communications within the CAL organisation, as well as communication between CAL and other organisations, was lacking throughout this event,’ Mr. Epp’s report stated.
Finally, Mr. Epp’s report revealed that Cayman Airways had not taken action to improve its customer complaints process, despite being warned about the need to do that by his office in April 2006. He said this slowed things up when CAL customers attempted to get refunds from the overcharges.
The airline has pledged to refund all those who were charged too much for plane tickets on 16 and 17 August. The airline said all local customers have gotten their money back, but Mr. Wrightington said some who live overseas may not have known they were due refunds.
The airline estimated in August that about 100 customers were overcharged. Mr. Epp’s report did not identify how many customers had overpaid.
The complaints commissioner’s review said the failure to implement a formal customer complaints process amounted to maladministration by CAL.
How it happened
The problem, which led to CAL customers being overcharged, was caused by a failure to make the necessary changes to the airline’s reservation system, according to the complaints commissioner.
Mr. Epp’s investigation found that the Sabre computer system worked normally in the days just before Dean, setting prices based on demand and supply. He said CAL did enter a command that would have adjusted ticket pricing to one low rate, but before that command was processed by the system, people were already evacuating the island and had started buying tickets.
According to an accounting firm hired by the complaints commissioner, the overcharging of passengers took place on 16 and 17 August. As of 18 August, airline officials said all problems had been sorted out and that all one-way coach fares to Miami were available at $169 plus tax.
Mr. Wrightington said CAL executives were aware of the problems by 17 August, but a press release was not issued until four days later to explain the fares that people should have been charged and to tell customers how to apply for refunds.
The decision to adjust the fares to the $169 rate was made on 16 August, and CAL informed its team in Miami of the change the same day.
The OCC said there was a delay in getting those fixed rate fares to customers ‘due in part to miscommunication as well as to insufficient experience and training in manipulating the Sabre system.’
The airline told commission investigators that its staff in Miami had to go back and physically change the ticket prices in the system, allowing enough time for certain tickets to be sold at higher prices.
‘CAL management now realises that they have to change their processes to accommodate the fact that in emergency situations they will need to make changes simultaneously as they enter new flights,’ the OCC report read.
Cayman Airways switched from its previous reservation management system to Sabre in January 2007, and admitted additional training was apparently needed in the wake of the Hurricane Dean evacuation.
A CAL executive was sent to Texas in the fall for more training on how to update the Sabre system for future emergencies.