Tech Firms to Face Class Action Over Flight Fees

     (CN) — Travelers on nine major airlines can sue tech firms they say charged billions in inflated fees annually to give travel agents flight schedules and prices, a federal judge ruled.
     Consumers filed a class action in Southern New York Federal Court in June 2015 on behalf of those who have bought plane tickets from nine major carriers in the past 10 years.
     The defendants are global distribution systems, or GDSs — technology providers through which airlines provide fare and schedule information to travel agents.
     They include Amadeus IT Group S.A., Amadeus North America Inc., Amadeus Americas Inc., Sabre Corp., Sabre Holdings Corp., Sabre GLBL Inc., Sabre Travel International Limited, Travelport Worldwide Limited and Travelport LP.
     Airlines must pay these firms a fee each time a consumer books a flight segment from a travel agent using such a system, according to the consumers’ complaint.
     Those fees add up to about $2.4 billion a year, the consumers say.
     Concerned in 2006 about airlines’ content and service concessions to favor low cost, new market entrants, the GDSs allegedly conspired to stifle the growing competition.
     Sabre and Amadeus promised to supply each other with any content that airlines provided to only one of them, while all the defendants demanded “substantively identical terms on a take-it-or-leave-it basis” during their 2006 contract negotiations, according to the complaint.
     The terms — an “abrupt and radical departure” from the past — barred airlines from offering different content or lower prices through other distribution channels, the consumers say.
     The GDSs allegedly kept pursuing their collusive strategy in 2009, 2010 and 2011.
     They charged inflated fees, which in turn raised fares for all travelers, the consumers say. Plus, the defendants gave kickbacks to corporate travel agencies, the complaint states.
     The class-action lawsuit asserts violations of various federal and state antitrust and state consumer protection laws, including the Sherman Act.
     The defendants moved to dismiss for lack of standing, preemption, and untimeliness.
     But U.S. District Judge Katherine Polk Failla partially denied the motion Wednesday.
     The judge upheld the federal antitrust claim, finding that the consumers alleged a direct path to their own harm from the defendants’ anticompetitive behavior.
     “Notably, while the alleged violations caused harm to the airlines by restricting their bargaining power with GDSs, the contractual restraint preventing airlines from offering lower fares through alternate platforms would seem to most directly harm consumers: Airlines themselves pay nothing to any GDS when they offer an airfare directly from their own website, but consumers nevertheless allegedly pay more for that fare,” Failla wrote. (Emphasis in original.)
     The judge added, “As defendants highlight, the majority of the plaintiffs in the instant case are precisely those sort of direct-from-the-airline purchasers, who were forced to pay GDS fees on their tickets even though the airline did not pay GDS fees for those particular tickets.”
     The consumers have standing to bring their federal injunctive claim, even though “there might perhaps be other motivated parties,” the ruling states.
     But the judge rejected the state-law claims, finding that although the airlines no longer own the defendants, the state-law claims are necessarily “related to” ticket prices and services, so they are preempted by the Airline Deregulation Act of 1978.
     In dismissing the state-law claims, Failla dismissed all of the consumers’ claims for damages. Their federal antitrust claim is for injunctive relief only.
     The consumers’ lead attorneys, James Anderson, Vincent Esades, Ian McFarland, and Renae Steiner with Heins Mills & Olson in Minneapolis, did not return a request for comment Wednesday.
     One of Amadeus’ attorneys, M. Roy Goldberg with Steptoe & Johnson in Washington, D.C., said he will provide a press release once issued.
     A conference to discuss next steps in the case is slated for July 26, according to the ruling.

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