Market price method of allocating scarce airline seats

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Reference no: EM13869350

Panic in paradise: Are high fares the new reality for Hawaii?

On March 31, 2008, Hawaii lost 15 percent of its air service as Aloha Airlines and the cheap-flight airline ATA suddenly shut down. Stranded travelers were offered flights to West coast cities at $1,000 one way. Within a month, the fare to west coast cities dropped to about $200 a round trip. Stranded travelers complained of price gouging.

Source: USA Today, April 23, 2008

Under what conditions the $1,000 fare would be considered “price gouging”? Under what conditions would the $1,000 fare be an example of the market price method of allocating scarce airline seats?

Reference no: EM13869350

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