By: Amelia Okulewicz
Volume IX – Issue I – Fall 2023
Introduction
Skiplagging occurs when travelers buy a cheaper ticket with a multi-stop layover and exit before their final destination instead of paying for a direct flight. This practice is also referenced as hidden-city ticketing and point-beyond ticketing. Flights with connecting flights tend to be cheaper than those directly transporting travelers from Point A to Point B, as direct flight eliminate inconvenience for customers. Skiplagging works by booking a flight to Point C, but leaving the airplane at Point B from Point A. [1] On August 17, 2023, American Airlines filed a lawsuit against Skiplagged.com, INC, alleging that Skiplagged.com has no authority to sell and distribute tickets from American Airlines and believes that the website is deceptive to customers. [2] Additionally, American Airlines claims that the tickets sold on Skiplagged.com are priced higher than those on AA.com, the official American Airlines website. Thus, the question arises if American Airlines is protecting consumer interest or engaging in monopolistic pricing to increase revenue.
I. Overview of Skiplagged.com
Skiplagged.com, INC was founded in 2013 by Akarter Zaman to provide loopholes in ticket pricing to consumers by encouraging the practice of skiplagging. The company’s mission states, “We even show you flights the airlines don’t want you to see. Our goal is to empower consumers to use their buying power however they please. We exist to just find the best prices for you.” [3]
II. Legal Precedent
i. The United Airlines Lawsuit
Although the company presents a positive connotation and mission for the benefit of consumers, they have faced several lawsuits since its founding. For instance, in 2014, United Airlines and Orbitz filed a lawsuit against Skiplagged.com in Chicago, Illinois, alleging that the company promoted unfair competition and deceptive behavior. [4] However, the court dismissed this lawsuit due to a misalignment of the jurisdiction of Skiplagged.com where United Airlines filed suit. Though United Airlines is based in Chicago, Illinois, Skiplagged.com, INC’s corporate address is registered in New York City, New York. Thus, the Court drew precedents for its ruling from Adams v. Raintree Vacation Exchange, LLC and American Patriot Insurance Agency, Inc. v. Mutual Risk Management, Ltd., where there was no record of affiliation or mutuality. [5]
ii. The Southwest Airlines Lawsuit
A similar situation emerged in 2021, when Southwest Airlines sued Skiplagged.com and Kiwi.com for displaying the airline's trademarks and fare information without authorization. This lawsuit was similar to the 2023 lawsuit filed by American Airlines. Southwest Airlines alleged that Skiplagged.com does not hold the authority to display the previously mentioned elements and sell tickets on Southwest Airlines for a marked-up price. In a similar case in 2004, the ruling favored Southwest Airlines Co. in Southwest Airlines Co. v. Farechase, Inc., giving precedent for the success of Southwest in this lawsuit. Skiplagged.com allegedly used Kiwi.com to harvest flight information and pricing, which violated the Terms & Conditions presented by Southwest Airlines. [6] In this instance, both the plaintiff and defendant decided to dismiss the case and privately settle this discrepancy out of court. [7]
iii. Skiplagged.com v. American Airlines
In the lawsuit filed on August 17, 2023, American Airlines has alleged Skiplagged.com breached the Use Agreement and Conditions of Carriage, interfered with Conditions of Carriage, infringed trademarks, and perpetuated a false designation of origin and unfair competition. [8]
III. Use Agreement and Conditions of Carriage
Under AA.com, the official American Airlines website, the “Intellectual Property Notifications” states that “You may not copy, display, distribute, download, license, modify, publish, re-post, reproduce, reuse, sell, transmit, use to create a derivative work, or otherwise use the content of the Site for public or commercial purposes.” [9] Skiplagged.com has not only displayed pricing information but encourages skiplagging, even though AA.com clearly states in the Conditions of Carriage that “Reservations made to exploit or circumvent fare and ticket rules are prohibited,’ including ‘purchasing a ticket without intending to fly all flights to gain lower fares (hidden city ticketing).” [10,11]
Skiplagged.com’s Terms and Conditions reiterate abiding by AA.com’s terms under the “Travel Supplier” section, stating “You agree to abide by the terms or conditions of purchase imposed by any Travel Supplier, whether that Travel Supplier is selected by you or by Priceline, including, but not limited to, payment of all amounts when due and compliance with the Travel Supplier's rules and restrictions regarding availability and use of fares, products, or services.” [12] Skiplagged.com directly states that all regulations presented by AA.com must be followed.
When consumers purchase tickets from both American Airlines and Skiplagged.com, they engage in express conditions, delineated from the contract agreed upon when purchasing tickets. Express conditions constitute, “condition on the duty of one of the parties to a contract that is expressly created by the terms of the contract.” [13] This directly lies in the Conditions of Carriage and Use Agreements that are agreed upon by all users of AA.com. Thus, the violation of skiplagging may result in denial of service from American Airlines and potential bans associated with violating this agreement.
i. The Lanham Act
1. Section 32
Section 32 of the Lanham Act states:
“Any person who shall, without the consent of the registrant use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” [14] Section 32 also describes the violation of using a domain name, such as AA.com, to be linked to another website without agreement and permission. [15]
American Airlines states that consumers are provided information under false pretenses, as they never granted written permission to Skiplagged.com to be affiliated, connected, or associated with its trademark, goods, and services. [16] Because of Skiplagged.com’s usage of AA.com and the American Airlines name while selling their service, American Airlines claims the company has primarily suffered monetary losses. [17] The losses were not directly quantified, but American Airlines expects all sales by Skiplagged.com to be reimbursed, including but not limited to “all ill-gotten or unjust revenues, profits, and benefits that Skiplagged derived as a result of its trademark infringement, copyright infringement, and other misconduct alleged herein, pursuant to the Lanham Act.” [18] This is due to Skiplagged.com providing less expensive trips through booking cheaper flights with a layover.
2. Section 43
Section 43 of the Lanham Act states:
“Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” [19]
American Airlines claims that Skiplagged.com promotes misleading information and causes confusion, mistake, or deception of American Airlines’ services. [20] Skiplagged.com’s use of American Airline’s logos suggests a correlation between the two brands, merging their images. It presents the idea that American Airlines may approve of skiplagging and is partnering with brands such as Skiplagged.com. Because American Airlines has federal trademark rights in American Marks, the usage of their logo, website, and information is a direct violation by Skiplagged.com. This, again, incites the notion that American Airlines is subjected to monetary harm through Skiplagged.com’s use and violation of its trademarks.
VI. Airlines and Antitrust
Recent events spurred the question of price collusion between American Airlines and JetBlue in an unofficial agreement titled the Northeast Alliance. [21] Although the airlines insisted that this did not yield a monopoly in the Northeast region but instead gave consumers more “options” in the Northeast. [22] The “alliance” included coordination of schedules, shared revenue from airports like LaGuardia, JFK, Newark, and Boston, and they sold seats on each other's planes. This alliance allegedly brought in an additional $700 million of income for each airline, posing potentially unfair competition for Delta and United Airlines. However, in September 2022, the Justice Department sued this collaborative pricing and claimed it infringed on Section 1 of The Sherman Act. [23]
i. The Sherman Act
The Sherman Act “prohibits contracts, combinations, and conspiracies that unreasonably restrain trade.” [24] In this context, conspiracy is defined as “an agreement between two or more people to commit an illegal act, along with an intent to achieve the agreement's goal.” [25] Under the assumption that the Northeast Alliance was a conspiracy, given no legal agreement between the two airlines, this in turn violated Section 1 of The Sherman Act. Section 1 directly “prohibits unreasonable restraints of trade or commerce among the states or with foreign nations.” [26] The court ruled against the Northeast Alliance, claiming that this increased fares and monopolistic behavior among airlines within US domestic markets. [27] The section that directly ties to commerce and competition among the airlines in the United States, where the consumers of the northeast region are benefitting from two airlines’ collaborations, potentially hindering the sales of both United and Delta. Though JetBlue and American Airlines are smaller companies, their combination creates an unregulated and unofficial merger, which if solidified delves deeper into antitrust violations.
VII. Conclusions
The collaboration between airlines provides Skiplagged.com with the premise that it was fighting against monopolistic pricing behaviors through its website. However, through their infringement on the Use Agreements, Conditions of Carriage, and copyright, American Airlines has strong reason to sue. Had Skiplagged.com, INC. taken upon this case through an antitrust lens and gained all of the necessary resources to legally display information from American Airlines, the pricing monopoly questioned by the Justice Department would be in part regulated through Skiplagged.com’s efforts to gauge fair pricing and competition for consumers. To the consumer, Skiplagged.com is opposing higher pricing towards direct flight bookings, exposing the “loophole” that American Airlines designed for a higher profit per flight. The current regulations against the practice of skiplagging can be perceived as anti-consumer, where American Airlines deliberately makes customers pay more for traveling the same distance. The conclusion lies in Skiplagged.com’s ability to justify its use of logos and blatant violations of the contracts it directly engages with through its services. Thus, suing under the assumption of trademark and logo infringement is masked by the underlying notion that American Airlines is losing key profit through skiplagging, and this effort is to not only gain back their losses but stop the “loophole” operation.
Endnotes
[1] Edwards, Jonathan. “American Airlines Sues Skiplagging Site, Claiming It Tricks Passengers.” The Washington Post, August 21, 2023. https://www.washingtonpost.com/nation/2023/08/21/american-airlines-skiplagged-lawsuit/.
[2] Case 4:23-CV-00860-P document 1 filed 08/17/23 page 1 of 37 ... - flyertalk. Accessed November 26, 2023. https://www.flyertalk.com/wp-content/uploads/2023/08/AA-vs-Skiplagged-Lawsuit.pdf.
[3] “The Smart Way to Find Cheap Flights.” Skiplagged. Accessed November 26, 2023. https://skiplagged.com/about.
[4] Musumeci, Natalie. “Airlines Have Tried to Fight the Computer Whiz Who Popularized ‘skiplagging’ in Court. Their Lawsuits Have Been Either Thrown out or Settled.” Business Insider. Accessed November 26, 2023. https://www.businessinsider.com/airlines-fiGht-skiplagging-court-lawsuits-thrown-out-settled-2023-7.
[5] United States District Court for the Northern District of ... - govinfo. Accessed November 26, 2023. https://www.govinfo.gov/content/pkg/USCOURTS-ilnd-1_14-cv-09214/pdf/USCOURTS-ilnd-1_14-cv-09214-0.pdf.
[6] View from the wing - thought leader in Travel. Accessed November 26, 2023. https://viewfromthewing.com/wp-content/uploads/2021/07/Southwest-lawsuit-against-Skiplagged.pdf
[7] Musumeci, Natalie. “Airlines Have Tried to Fight the Computer Whiz Who Popularized ‘skiplagging’ in Court. Their Lawsuits Have Been Either Thrown out or Settled.” Business Insider. Accessed November 26, 2023. https://www.businessinsider.com/airlines-fight-skiplagging-court-lawsuits-thrown-out-settled-2023-7#:~:text=United%20and%20Orbitz%20filed%20suit%20against%20the%20Skiplagged%20CEO&text=A%20Chicago%2C%%2020Illinois%2C%20judge%20tossed,an%20interview%20with%20CNN%20Money.
[8] Case 4:23-CV-00860-P document 1 filed 08/17/23 page 1 of 37 ... - flyertalk. Accessed November 26, 2023. https://www.flyertalk.com/wp-content/uploads/2023/08/AA-vs-Skiplagged-Lawsuit.pdf.
[9] Legal information − support − American Airlines. Accessed November 26, 2023. https://www.aa.com/i18n/customer-service/support/legal-information.jsp.
[10] Conditions of carriage − support − American Airlines. Accessed November 26, 2023. https://www.aa.com/i18n/customer-service/support/conditions-of-carriage.jsp.
[11] Case 4:23-CV-00860-P document 1 filed 08/17/23 page 1 of 37 ... - flyertalk. Accessed November 26, 2023. https://www.flyertalk.com/wp-content/uploads/2023/08/AA-vs-Skiplagged-Lawsuit.pdf.
[12] “The Smart Way to Find Cheap Flights.” Skiplagged. Accessed November 26, 2023. https://skiplagged.com/terms.
[13] Russell, Irma S., and Barbara Kay Bucholtz. Mastering contract law. Durham, NC: Carolina Academic Press, 2011.
[14] “15 U.S. Code § 1114 - Remedies; Infringement; Innocent Infringement by Printers and Publishers.” Legal Information Institute. Accessed November 26, 2023. https://www.law.cornell.edu/uscode/text/15/1114.
[15] Ibid.
[16] Case 4:23-CV-00860-P document 1 filed 08/17/23 page 1 of 37 ... - flyertalk. Accessed November 26, 2023. https://www.flyertalk.com/wp-content/uploads/2023/08/AA-vs-Skiplagged-Lawsuit.pdf.
[17] Ibid.
[18] Ibid.
[19] “15 U.S. Code § 1125 - False Designations of Origin, False Descriptions, and Dilution Forbidden.” Legal Information Institute. Accessed November 26, 2023. https://www.law.cornell.edu/uscode/text/15/1125.
[20] Case 4:23-CV-00860-P document 1 filed 08/17/23 page 1 of 37 ... - flyertalk. Accessed November 26, 2023. https://www.flyertalk.com/wp-content/uploads/2023/08/AA-vs-Skiplagged-Lawsuit.pdf.
[21] American Airlines pushes back on antitrust ruling - thestreet. Accessed November 26, 2023. https://www.thestreet.com/travel/american-airlines-pushes-back-on-antitrust-ruling.
[22] Ibid.
[23] “Justice Department Statements on District Court Ruling Enjoining American Airlines and JetBlue’s Northeast Alliance.” Office of Public Affairs | Justice Department Statements on District Court Ruling Enjoining American Airlines and JetBlue’s Northeast Alliance | United States Department of Justice, May 19, 2023. https://www.justice.gov/opa/pr/justice-department-statements-district-court-ruling-enjoining-american-airlines-and-jetblue-s.
[24] Fox, Byron E., and Eleanor M. Fox. Corporate Acquisitions and Mergers, by Byron E. Fox and Eleanor M. Fox. New York: M. Bender, 1968.
[25] “Conspiracy.” Legal Information Institute. Accessed November 26, 2023. https://www.law.cornell.edu/wex/conspiracy.
[26] Fox, Byron E., and Eleanor M. Fox. Corporate Acquisitions and Mergers, by Byron E. Fox and Eleanor M. Fox. New York: M. Bender, 1968.
[27] Justice Department Statements on District Court Ruling Enjoining American Airlines and JetBlue’s Northeast Alliance.” Office of Public Affairs | Justice Department Statements on District Court Ruling Enjoining American Airlines and JetBlue’s Northeast Alliance | United States Department of Justice, May 19, 2023. https://www.justice.gov/opa/pr/justice-department-statements-district-court-ruling-enjoining-american-airlines-and-jetblue-s.