LOS ANGELES (CN) - Gogo, the in-flight Internet provider, stifles competition and stiffs passengers with long-term airline contracts, a class claims in federal court.
The first of Gogo's exclusive airline contracts does not expire until 2018, lead plaintiffs Joel Milne and Joseph Strazzullo say.
This leaves major airlines, and their passengers, stuck with a provider that charges up to $17.95 for in-flight Internet service, according to the complaint in the Central District of California.
"These exclusive contracts have the purpose and effect of thwarting competition on the merits and on price, and have permitted Gogo to charge supra-competitive prices on consumers like plaintiffs and the members of the class they seek to represent," the 22-page complaint states.
Gogo allegedly communicates with commercial planes by using air-to-ground technology to transmit signals in a "general vertical direction."
Competing providers use a less expensive satellite-based system and they offer faster broadband speeds and uninterrupted worldwide service, according to the complaint.
Southwest Airlines' in-flight Internet provider, Row 44, has an unlimited satellite based service for $5, according to the complaint.
Gogo, by comparison, allegedly charges $17.95 for fights longer than three hours or $9.95 to get online via mobile device.
The "high barriers" to entering the in-flight internet market - including legal restrictions and regulations, and the cost of transitioning to a satellite-based system - have helped cement Gogo's 85 percent share of the market, the class says.
Gogo is allegedly locked into long-term 10-year exclusive contracts with AirTran, Alaska Airlines, American Airlines, Delta, Frontier Airlines, United Airlines, US Airways and Virgin America.
"Rather than achieving or maintaining its monopoly market power through innovation or competition on the merits, however, Gogo has achieved or maintained its dominant market power by resorting to anti-competitive agreements with the airlines on whose planes Gogo's equipment is placed," the complaint states.
The class is represented by Roy Katriel of San Diego, Calif. It seeks unspecified compensatory and treble damages for violations of the Sherman Act, the California Cartwright Act and California's Business and Professional Code.
Gogo did not immediately respond to a request for comment.
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