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US airline carrier JetBlue is facing a lawsuit from online travel agency Fareportal Holdings Inc. for allegedly scheming to block consumers from comparison shopping airfares with those of other airlines.
The online travel agency filing the lawsuit, Fareportal, maintains partnerships with over 600 airlines globally and is the operator of popular flight booking websites CheapOair and OneTravel.
Effective as of January 5th, JetBlue ordered the removal of its flight and pricing information from all Fareportal sites.
The lawsuit, filed under Federal antitrust laws, alleges JetBlue is seeking to block consumers from purchasing airfares from online travel agencies in which they can compare prices, as the bulk of the airfares will be available for purchase primarily through JetBlue’s website.
Accordingly, the lawsuit asserts that JetBlue will eventually raise their prices for fares on routes it dominates by making it difficult for consumers to compare prices.
JetBlue currently has a strong presence in markets such as New York, Fort Lauderdale, Orlando, Boston, Los Angeles and San Juan, Puerto Rico.
The lawsuit, filed on January 5th with the United States District Court for the Eastern District of New York states:
“Amidst the turbulence of the global pandemic, JetBlue is quietly pursuing a scheme to make it harder for American consumers to save money when they book air travel. JetBlue’s goal is simple: to make it difficult for consumers to comparison shop when they want to fly.”
Online Travel Agencies
Online Travel Agencies came to prominence in the 1990’s, providing a virtual travel agency for travelers which effectively increased competition and lowered fares, by allowing travelers to easily compare prices across airlines.
Airlines were initially in favor of online travel agencies as they offered lower distribution costs compared to industry standards at the time, however, carriers are now shifting to get consumers to book direct.
Subsequently, online travel agencies, such as Fareportal, believe the removal of offering prices on comparison sites will reduce transparency for consumers and enable carriers like JetBlue to raise prices for price-sensitive buyers.
In this regard, Fareportal’s Chief Legal and Compliance Officer Frederick Stein stated:
“JetBlue is trying to force customers to book tickets on its website where the lack of price comparison with fares from other airlines will allow JetBlue to raise ticket prices for price-sensitive travelers.”
Allegations of Misuse of COVID-19 Relief Funds
According to the lawsuit, Fareportal further alleges that JetBlue will be using its tax-funded COVID-19 relief funds to support their anti-competitive strategy.
The airline is expected to receive over $685 million, as well as up to $1.14 billion in loans from the CARES Act.
The complaint states:
“American taxpayers unwittingly fund its scheme to deprive them of the information they need to comparison shop. {…} JetBlue is also prepared to suffer short-term losses because it is using taxpayer dollars to defray them by taking handouts from American taxpayers in the form of COVID relief. JetBlue is already set to receive over $685 million in direct support from American taxpayers and up to $1.14 billion in loans from the U.S. Treasury under the CARES Act and is poised to receive even more.”
JetBlue Says Lawsuit is ‘Frivolous’
In a response to the lawsuit, JetBlue contended it to be “frivolous and wholly without merit”. They further added that “it is common industry practice for airlines to choose where to sell their products”.
JetBlue indicated that they are only one of several major airlines which are not selling their tickets on Fareportal’s websites.
In addition, the airlines noted that their fares can currently be found in comparison listings in over ten other aggregator websites, and they tend to reserve their lowest fares for their own website.
Generally, distribution costs are lower when airlines sell on their website opposed to online travel agencies.
Airlines also have the opportunity to generate additional revenue through direct booking, in the form of premium seating options, pre-purchasing checked bags, loyalty program opportunities, etc.
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WM
Monday 11th of January 2021
I am frequent flyer of Jet Blue. If you become dirty especially using taxpayers money to screw with your loyal clients you too will eventually go down.