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Air Fares To Woodstock For Capitalists Go Sky High

Warren Buffet is in Omaha, hence flights to Omaha cost more than to Paris

Jamie McGee and Joel Schectman  Apr 01, 2010

A nonstop airline ticket from New York to Paris on the first weekend in May costs $1,142. A Continental Airlines Inc. flight to attend Berkshire Hathaway Inc.’s annual shareholder meeting in Omaha, Nebraska, the same weekend: $1,433.

As investors have been making plans to attend the event that Berkshire’s chairman, Warren Buffett, calls the “Woodstock for capitalists,” carriers including Continental and Delta Air Lines Inc. have been raising prices. They’re asking four times the normal rate for round-trip tickets, which means New Yorkers will pay more to visit Omaha for the May 1 meeting than London, Rome or Barcelona.

Continental added one flight from the New York area on April 29 and three on April 30, said Mary Clark, a spokeswoman for the airline. Customers who bought tickets earlier paid less for their seats, she said. Now, the Houston-based company is demanding a premium for the spots that remain.

“There does appear to have been high demand,” Clark said. “Since many of those fares have already been sold and there are very few seats left, the seats that are left are at the higher fares.”

Last year, even as the threat of swine flu kept some shareholders away, a record 35,000 people flooded Omaha’s Eppley Airfield and filled the hotels in the city of 439,000. Three days of events this year start with a reception at the Berkshire-owned Borsheims jewelry store on April 30 and conclude with waves of diners eating steaks at Gorat’s and Piccolo Pete’s, two eateries where Buffett pledged to appear on May 2.

Mona Lisa, Notre Dame

Visitors to Paris that weekend could watch the May Day parade from the Place de la Bastille, see Leonardo da Vinci’s Mona Lisa at the Musee du Louvre or take a boat ride on the Seine past Notre Dame Cathedral. The horse-chestnut trees bordering the Champs Elysees typically bloom in May, while classical musicians stage twilight concerts at the Jardin du Luxembourg.

The Berkshire investors who pick Nebraska instead will fill the Qwest Center arena to listen to Buffett, the so-called Oracle of Omaha, as he takes questions from the audience on investing, politics and the economy for more than six hours. Extracurricular activities may include visits to former President Gerald Ford’s birth site, the Freedom Park Navy Museum, and the world’s largest indoor desert, according to the city’s Convention & Visitors Bureau.

‘Nothing Compares’

“Paris and London, all those cities are so boring,” said Mohnish Pabrai, the founder of Irvine, California-based Pabrai Investment Funds, who has attended every annual meeting since 1998. “Omaha is where all the action is. Why would you ever want to be in Paris on May 1?” he said. “Nothing compares to Omaha.”

Investors hoping to fly nonstop from New York to attend all the events Buffett has scheduled would need to buy a ticket from Continental that leaves New Jersey’s Newark Liberty International Airport on April 30 and returns May 3. The economy-class fare is $1,433, including taxes and fees, according to Continental’s Web site yesterday.

Two weeks later, the same round trip to Omaha costs $309 in coach, according to the Web site. Nonstop flights from New York’s LaGuardia on Delta are sold out on April 30. The remaining coach seats on an April 29 nonstop Delta flight from LaGuardia cost $1,188, according to the airline’s Web site.

“Any event that draws additional demand from our customers is good for business,” said Kent Landers, a spokesman for Delta. “Whenever possible, we will add seats to make sure we can accommodate as many customers who choose to fly Delta as possible.”

Up the Ladder

Delta hasn’t added flights for the annual meeting because passengers can book trips that include stopovers in other cities, Landers said. The airline is offering a flight from LaGuardia to Omaha on April 30 with single stops each way for $443. The return flight includes a 30-minute layover at Detroit Metropolitan Wayne County Airport.

Rick Seaney, chief executive officer of Dallas-based, said airline ticketing systems raise prices automatically based on the need for seats and employees can review the demand and increase prices further. If the company added flights, it would incur extra costs while driving down the cost of the tickets, he said.

“It’s probably easier for them to charge $1,200 or $1,500 for that round trip than it is to bring another plane in and charge $600, because they end up making the same amount of money,” Seaney said. When the computer detects that seats are selling out, “it raises the price to the highest level of a price ladder,” he said.

London, Rome

The cheapest round-trip, nonstop flight from New York to Paris on the same dates is a Newark-to-Roissy-Charles De Gaulle flight for $1,142 on an Air France-KLM Group plane. Tickets to London’s Heathrow Airport are $661 on Delta. AMR Corp.’s American Airlines will fly round trip from JFK to Barcelona for $757, and nonstop between JFK and Rome’s Fiumicino airport costs $790 on Delta.

Last year, Berkshire shareholders shunned those cities and flew instead to Omaha from across the U.S. and about 40 foreign countries. Flying Delta from Memphis nonstop to Omaha costs $618 on the weekend of the meeting, 26 percent more than two weeks later, and a Midwest Air Group Inc. trip from Washington is $410, a 22 percent increase.

“If you sit down on the airplane, on both sides of you there are going to be Berkshire-holics next to you,” said Pabrai, a Berkshire shareholder. The passengers headed to the meeting “have their Berkshire Hathaway annual reports open as if they are cramming for an exam.”

‘Limited Resource’

Buffett, 79, built Berkshire into a $200 billion company over four decades by transforming a failing maker of men’s suit linings into an enterprise with businesses ranging from ice cream and underwear to power plants and rail transport. The shares traded at about $15 when he took control in 1965; the Class A stock closed yesterday at $122,459. Buffett didn’t respond to requests for comment about the air fares sent by e- mail to an assistant.

“Warren Buffett is a limited resource,” said Guy Spier, a principal at Aquamarine Funds LLC who has attended the annual meeting for about 15 years. “Every year that goes by, his premium value goes up.”

Spier, who will fly to Omaha from Zurich, said he typically depends on being a member of Hilton Hotels Corp.’s customer loyalty program to book rooms when he travels. The membership has little value during the Berkshire weekend, he said, since the meeting is held in the arena across the street from the hotel. “I try to pull my elite status -- it’s not good enough,” said Spier, 44. “The whole building is booked up.”

Sold Out

“By the end of the meeting we will be 100 percent sold out for the next year,” said Robert Watson, general manager of Hilton Omaha. “The impact for Omaha is really incredible,” he said. “It’s a big deal for the surrounding businesses. It’s probably a 30 to 40 percent increase for hospitality businesses around the surrounding community.”

Watson said rates typically increase during major conventions and declined to say how much the hotel is charging during the Berkshire meeting.

Marriott Omaha, owned by Marriott International Inc., charges $269 a night during the meeting, 23 percent more than its normal rates, said Paul Tunakan, the hotel’s director of sales and marketing.

“Friday night for us is a mad-house,” Tunakan said. “It’s just stuffed full of people.”

“The entire hotel is a who’s who -- all these hedge fund managers and well-known investors, authors,” said Pabrai, 45, who’s staying at the Marriott. “Just sit in the lobby for a couple of hours. It’s like being at the Oscars.”

Warren Buffet is in Omaha, hence flights to Omaha cost more than to Paris
Warren Buffett / Image via

Source: Bloomberg

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