American Airlines (AA, Dallas/Fort Worth) has filed suit against air travel consolidator U.S.A. Gateway d/b/a GTT Travel, accusing the company of unjustly enriching itself through unlawful ticketing practices, hiding travel agency mark-ups from consumers, and charging fictional fees, amongst others.
According to the docket (Case 4:23-cv-00781-O) filed in the US District Court for the Northern District of Texas, Fort Worth Division, these actions violate numerous clauses of GTT Travel’s contracts with American and constitute breach of contract, trademark infringement, unfair competition, and dilution.
As a consolidator, GTT Travel has access to discounted fare codes of American and other airlines. It earns incentive-based commissions from the airlines on volume-based sales targets. It achieves this by signing up smaller travel agencies as “sub-agents”, which pay GTT Travel for the volume-based fares it has negotiated with the airlines. According to the suit, GTT Travel profits from the fees it receives from the sub-agents and the airline’s incentive-based commissions. This way, the consolidator is able to post an annual turnover of more than USD2 billion, the docket reads.
American alleges that GTT Travel is breaching its contract with American in “permutations […] too numerous to list”. Apart from the allegations above, it claims the consolidator takes active steps to hide sub-agents’ identities, fails to train and monitor their behaviour, and circumvents transparency requirements American imposes on all its travel agents.
It claims GTT Travel’s sub-agents prevents consumers from dealing with American directly “by tricking consumers into calling the wrong phone number”. “These consumers end up booking tickets through GTT, which increases GTT’s bookings, commissions and incentives.” The airline accuses GTT Travel and its sub-agents of inflating fares and pocketing the difference; of using prohibited practices to lower ticket costs without passing the saving on to the consumers; and of neither monitoring, auditing, or imposing quality controls on its sub-agents. American also asserts that GTT Travel and its sub-agents wrongly let consumers believe the airline sponsors or approves their actions.
Among the specific allegations is that some sub-agents are “simply lying to consumers”. “If a ticket costs USD500, the sub-agent simply tells the consumer that the ‘best price’ for this trip is USD800,” the airline claims.
Another allegation is that GTT Travel helps its sub-agents to hide extra travel agency fees from consumers. An example involved a sub-agent reserving a ticket for a passenger with a layover, where the actual fare was USD1,000, but the passenger was quoted USD1,500. GTT Travel allegedly collaborated in hiding the additional USD500 by employing an “in-house” charge. This process involved charging the consumer’s credit card USD1,500 directly and then using GTT Travel’s own payment method to cover the flight cost. This way, the consumer only noticed a single USD1,500 charge from GTT Travel, masking the true nature of the transaction, the airline claimed.
In another example, it accused GTT Travel and its sub-agents of charging egregious “change fees” where no such fee was authorised by the airline.
GTT Travel and its sub-agents are also accused of booking flight itineraries knowing those passengers would miss their connecting flights, a prohibited practice known as “hidden city” ticketing.
American said it had identified several sub-agencies of GTT Travel that had committed fraud, but GTT did nothing despite repeated red flags, including frequent credit card chargebacks and complaints.
The airline said these malpractices damaged its reputation and its passengers. Consumers were being charged inflated fares they believed to be genuine, were being misled by fictitious fees, and were provided with itineraries that did not adhere to American’s rules.
Texas District Court judge Reed C. O’Connor has granted GTT Travel an extension to September 22, 2023, to respond to American’s complaint.
GTT Travel attorney Michael Hurst has told Skift the company “strongly denies the allegations in this litigation”. “In this case, and in other recent filings, American seems to be blaming the industry’s operational deficiencies on its business partners and others. GTT values the company’s decades-long relationship with American and regrets the rush to litigate, and hopes to amicably and productively work together to resolve any issues. If the parties cannot successfully resolve this matter, GTT is prepared to vigorously defend itself against these unfounded claims,” he said.