American Airlines has filed a lawsuit against Skiplagged, the online travel search engine that alerts customers to hidden city ticketing options. Unlike during the failed United Airlines lawsuit, Skiplagged is no longer just a meta search page and American’s complaint is actually not so unreasonable.
Skiplagged Faces New Lawsuit From American Airlines
First, let’s make clear our terms. Skiplagging is a term that has become synonymous for hidden city ticketing or throw-away ticketing, the idea that A-B-C is cheaper than A-B because carriers charge a premium for nonstop pricing, so you book A-B-C, walk away at B, and pocket the savings.
Here’s an example. Say you want to fly from Miami to Charlotte. American Airlines charges a premium for this nonstop flight. But add a connection to Washington and you can save a tremendous amount of money:
When you choose your “hidden city” ticket option, you will be presented with the following warning:
If your booking includes an international throw-away segment, your disclaimer is even longer:
In 2015, United Airlines sued Skiplagged and lost (on jurisdictional grounds). But the Skiplagged business model has morphed from simply a meta search page like ITA Matrix in which you could not book tickets directly (deep links to airline websites or online travel agencies were available) into a page that issues tickets for a fee…a potentially huge source of revenue.
Returning to our Miami – Charlotte example, you are no longer given the option to book it yourself (though you can take the routing information and try to replicate it directly on the American Airlines website). Instead, you are only given an option to buy the ticket directly on Skiplagged. And note the 10% service fee…
Skiplagged then completes the booking via a programmed API that purchases the ticket directly from the American Airlines website and charges the service fee as a separate line item (sometimes, tickets are purchased through scam travel agency Kiwi).
And this more recent revenue-generating innovation may be what makes the outcome of this case different than past lawsuits.
The Complaint From American Airlines
Let’s look at the complaint.
Skiplagged is not, and never has been, an authorized agent of American. It is a middle-man improperly inserting itself between American and flight consumers. It employs unauthorized and deceptive ticketing practices, entices consumers to participate in those deceptive practices by promising savings, and then doesn’t deliver. Instead, Skiplagged often charges consumers more than if they had booked a ticket directly with American or through an authorized agent of American.
This is true…you will pay more to book a ticket on Skiplagged than you do on American Airlines when the service fee is added. American Airlines sees this as a predatory and misleading to consumers (since American Airlines has been known to cancel hidden city tickets). I expect Skiplagged to aver that it makes very clear the risk to passengers at the outset.
The key here is less about the practice of “skiplagging” itself, which is not illegal, but whether the Skiplagged method of booking is suspect.
The AA lawsuit continues:
Skiplagged has never had an agency agreement with American and has never had any authority, whatsoever, to sell tickets for American flights. Indeed, Skiplagged developed methods to illegally obtain access to tickets and offer them to consumers – tickets which are at risk for immediate invalidation – because only an agent of American has the legal authority to form a valid contract between a consumer and American.
The interesting thing here is that Skiplagged is not issuing the tickets per se. It is using programming to issue the tickets directly on the AA website. So the “legal contact” for the airline ticket is between American Airlines and the consumer and the contract for the service fee is between Skiplagged and the consumer.
But American asserts that the manner in which Skiplagged books tickets on its website violates the terms of use of AA.com and therefore makes the tickets subject to cancellation.
So consumers are left with the following problem: booked via Skiplagged and your tickets are theoretically subject to cancellation. Book yourself on AA.com and Skiplagged may not survive without that stream of revenue. In the pre-Skiplagged period, finding hidden city pricing yourself (on a trial and error basis) was a lot more time-consuming.
American Airlines is also suing Skiplagged for trademark and copyright infringement, since it uses the AA logo when it diplays airfare on American Airlines. Furthermore, it is suing Skiplagged for falsely associating Skiplagged with American Airlines in cases in which a deep link is still used to bring consumers directly to the AA website to complete the booking.
You can review the complaint here.
CONLCUSION
Skiplagged is no longer a Robin Hood fighting the big bad airlines. Instead, it has used hidden city ticketing to profit and indeed done so in a manner that can confuse and deceive customers (and the Trump campaign).
I look forward to reading the response from Skiplagged, but at this point think that American Airlines has a solid chance at prevailing.
