USA- In a recent legal development, American Airlines(AA) has taken legal action against airline ticket consolidator U.S.A. Gateway, operating under the name GTT Travel.
The airline alleges that GTT Travel misled travelers by creating an illusion of direct bookings with American Airlines. However, instead of providing the expected service, they subjected customers to inflated fares and excessive fees.
The intricacies of the ticket consolidator industry might not be widely familiar, even within the travel sector. This lawsuit offers valuable insights into this business model. GTT Travel’s deadline is September 22 to craft their response to the airline’s allegations.
Michael Hurst, a legal representative from the law firm Lynn Pinker Hurst & Schwegmann, who is acting on behalf of GTT, responded to the matter, stating:
“GTT firmly denies the claims made in this lawsuit. In this instance and other recent legal actions, American Airlines appears to be assigning the industry’s operational shortcomings to its business associates and external entities.
GTT highly values its extensive business relationship with American Airlines over the years.
Additionally, the company laments the swift initiation of litigation and expresses the desire for a harmonious and constructive collaboration to address any concerns. Should the parties be unable to resolve, GTT stands ready to uphold its position against these baseless accusations robustly.”
American Airlines Allegations Against GTT
According to GTT’s official website, the company proudly identifies itself as “the largest air ticketing consolidator in the U.S.” The ongoing lawsuit highlights that GTT asserts an annual “turnover” exceeding $2 billion.
Airlines often collaborate with consolidators as a strategic approach to fill vacant seats by offering substantial discounts, all while keeping the extent of fare reductions discreet from the public eye.
In the ongoing American Airlines lawsuit regarding hidden practices, American Airlines has alleged that GTT, which showcases affiliations with 50+ global airlines including American, United, Delta, Lufthansa, and Emirates on its website, engages in agreements with American to secure access to the airline’s fare code discounts.
These discounts are extended to both GTT and its travel agency affiliates. Moreover, these deals might involve net or wholesale rates.
The lawsuit further claims that GTT’s incentives are performance-based and hinge on the volume of tickets it manages to sell. GTT reportedly forms partnerships with various travel agencies to bolster these ticket sales.
Hidden Practices by GTT
American Airlines lawsuit uncovers hidden practices. The lawsuit highlights additional revenue streams utilized by GTT and similar airline ticket consolidators:
- Partner Travel Agency Fees: GTT obtains fees from partnered travel agencies, potentially including a $20 commission for each booking. Additionally, it might secure an extra 3% of the overall booking amount.
- Volume Incentive: GTT benefits from a volume-based incentive provided by American Airlines.
- Travel Agency Surcharge Share: If the partnered travel agencies or their sub-agencies impose supplementary charges on travelers, whether justified or not, GTT also takes a portion of these fees.
In the ongoing American Airlines lawsuit unveiling hidden practices, a significant contention arises over GTT’s alleged lack of oversight concerning its sub-agents actions. Furthermore, GTT purportedly declined to furnish their names to the airline, as stipulated in the agreement between the two parties.
The lawsuit claims that GTT occasionally inflates the actual fares in collaboration with its travel agency partners, pocketing the surplus amount.
As per the lawsuit, these contractors associated with GTT reportedly employ misleading phone numbers, websites, and social media posts, creating an impression of direct American Airlines bookings. In reality, these interactions are with GTT. This tactic leads to an elevation in GTT’s volumes, incentives, and commissions.
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