The jury awards American Airlines $9.4 million against “Hidden City” ticket provider Skiplagged

A federal jury in Fort Worth on Tuesday awarded American Airlines $9.4 million in the airline's lawsuit against Skiplagged Inc., a website that promotes bargain fares through “hidden city” ticketing, a practice that saves many passengers money However, as American claims, it cost airlines millions in unrecognized revenue.

The jury in U.S. District Judge Mark T. Pittman's court ordered Skiplagged to pay $4.7 million in actual damages for copyright infringement; and $4.7 million to disgorge “ill-gotten gains” from Skiplagged’s misconduct.

That's about half of what one of the American lawyers, Paul Yetter of Yetter Coleman in Houston, asked the jury in his closing argument last Friday. In addition to its copyright claim, the airline sought damages for trademark infringement. The jury on Tuesday did not award damages in the trademark lawsuit.

William Kirkman of Fort Worth, one of Skiplagged's attorneys, said: “We are very pleased with the jury's decision on AA's trademark claim, as that claim dominated the trial.” As for the copyright damages, there are still further phases to go “The procedure must be carried out before a final decision can be made.”

An American spokesperson called the ruling “an important next step in protecting American’s intellectual property and valuable brand.”

Hidden city ticketing, also called “skiplagging,” in some cases allows a traveler to save money by booking a cheap flight to any location, with a stopover at the traveler's true (but hidden) destination, to which one more ticket would have cost. The traveler then gets off at the intermediate airport and skips the remaining connecting flight(s).

For example, a one-way economy flight from Charleston, SC, to DFW International on a weekday in early November costs $159 on American Airlines. A skipper traveler could make the same trip by purchasing a $99 ticket (also one-way economy on American) from Charleston to New Orleans with a stop at DFW. The traveler gets off the plane and does not reroute to begin the New Orleans portion of the trip.

Au revoir Crescent City, hello $60.

Yetter said Skiplagged misled its customers into believing the website was an authorized ticket distributor for the airline, including by using American's name and logo.

“Nobody would buy a ticket on a website if they didn’t believe the website was authorized to sell tickets,” he told the jury.

American's written agreements with authorized travel websites such as Expedia, Orbitz, Travelocity and Priceline prohibit the booking of hidden city tickets.

Kirkman, Skiplagged's lawyer, told jurors that the American didn't make a dime. He mentioned warnings on the site, including one that said, “Airlines don't like it when you miss flights to save money, so don't do it often,” and a promotional message that said, “We'll show you flights, that the airlines don't do. “I want you to see it,” make it clear that Skiplagged is not and does not represent itself as an authorized business partner of American or any other airline.

Skiplagged charges a service fee to customers who book flights to hidden cities through its website, and those fees have generated millions of dollars in revenue for the small company.

At the same time, Kirkman said, American is selling tickets to these customers — although not at the price the airline would like — and has made “hundreds of millions” of dollars on tickets booked through Skiplagged. He told the jury the airline wanted to put the money Skiplagged saved its customers “in their pockets”.

The Texas Lawbook is an online news publication focused on business law in Texas. For more information on this and other legal news, please visit texaslawbook.net.

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