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Monday, July 15, 2024 | Back issues
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Judge Grounds Airline Travelers Fighting Gogo

SAN FRANCISCO (CN) - A federal judge tossed claims from airline passengers who say that in-flight Internet provider Gogo stifles competition with long-term airline contracts.

In an antitrust class action complaint, lead plaintiffs James Stewart, Joel Milne and Joseph Strazullo claimed that passengers on many major U.S. airlines are stuck with Gogo whether they like it or not.

They said the provider charges up to $17.95 for in-flight Internet service under its exclusive 10-year contracts with major airlines. The first of Gogo's exclusive airline contracts does not expire until 2018, according to the complaint.

The $17.95 charge allegedly applies to fights longer than three hours, whereas it costs $9.95 for passengers to connect their mobile devices.

Gogo is allegedly locked into those contracts with AirTran, Alaska Airlines, American Airlines, Delta, Frontier Airlines, United Airlines, US Airways and Virgin America.

Meanwhile Row 44, which acts as the in-flight Internet provider to Southwest Airlines, offers unlimited satellite based service for $5, the class said.

U.S. District judge Edward Chen disagreed Wednesday that Gogo had monopolized in-the-air Internet service, rather than tie the airlines only on an "aircraft-by-aircraft" basis.

He said the class failed to show why "airplanes that could be equipped" with Internet service, not just those that actually did have internet capability, "should not be included in the full range of selling opportunities reasonably open to a competitor."

Factoring in all North American aircraft that could be fitted to provide Internet access, Gogo argued that its share of the market was only 16 percent, not the 85 percent or higher alleged by the class.

For that reason, the passengers failed to show how the contracts demonstrated a "substantial foreclosure of competition in the relevant market," according to the ruling.

"Plaintiffs do not allege, for example, that there are substantial technological or design barriers to installing a competitor's internet connectivity services on such planes, nor do they allege that there are substantial financial barriers which prevent competition for these planes," Chen wrote, dismissing the class's claims under the Sherman Act and Cartwright Act. "In the absence of such allegations, the court agrees with Gogo that plaintiffs cannot focus solely on planes that are actually equipped with internet access, and, as a result, plaintiffs' allegation that Gogo dominates the market with respect to North American aircraft that are actually equipped to provide internet connectivity to passengers (85 percent) shows little."

Gogo argued that airlines can terminate the contracts if a competitor offers a better service. Without reaching the merits, however, Chen said it is not as simple as that for airlines to walk away.

Based on the language in the contracts, "an airline cannot terminate simply because a competitor of Gogo offers a superior service or business arrangement," Chen wrote.

"Rather, there is an additional condition that must be satisfied - e.g., 'failing to adopt [the competitor's] service would likely cause competitive harm to the airline,' and not, notably, the passenger on the airplane," he added.

The class has 30 days to file an amended complaint.

Joel Milne and Joseph Strazullo filed similar claims in the Central District of California but voluntarily dismissed the case in October 2012.

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