Airline Suit Says Credits for Flights Were Stolen
American Airlines has filed suit against two San Fernando Valley travel agencies it said cheated the airline out of “millions of miles” and “millions of dollars” by doctoring computer records to steal frequent-flier credits that were then sold to customers.
The lawsuit, filed Tuesday in U.S. District Court in Los Angeles, is the latest in a series of suits filed by the airline against brokers nationwide who have traded in travel credits since 1986. The credits cannot legally be sold or traded, an airline spokesman said.
The lawsuit seeks $10 million in damages and asks the court to bar the two companies, North Ranch Travel Service in Woodland Hills and Stevens Read Monarch Travel in Northridge, from selling or trading the credits, which are intended to provide free travel to regular flyers.
The suit names two directors of North Ranch Travel Service: Robert Winkelman and Phil Rinker. Winkelman, the suit said, is also an owner of Stevens Read Monarch Travel.
The airline alleges that more than 500 times since 1986, the agencies illegally gained access to the American Airlines computer where mileage credits are stored and transferred “millions of miles of credits to hundreds of fictitious and fraudulent accounts” that were created and controlled by them.
The suit claims the two companies sold the credits at prices substantially less than prevailing air fares. An attorney for the airline would not say whether the allegations had been reported to federal prosecutors, and would not reveal the amount of revenue American thinks it lost to the two agencies.
Calls to the two agencies Wednesday were referred to attorney Phil Israels, who said he had not read the suit and declined to comment.
American has also filed lawsuits to stop another form of illegal trading in travel credits. Last week, the airline filed suits in federal courts in Texas, Utah and New York accusing three travel brokers of buying, selling and trading American travel credits.
Airline officials estimate there are 25 to 35 brokers nationwide who trade in travel credits on a full-time basis. Others do it part time.
Cost to Airline
“They undermine the economics of our business,” said Al Becker, an American Airlines spokesman. “They cost us substantial amounts of money. We cannot and will not tolerate these practices any longer.”
Many airlines have attempted to fight brokers, who say they see nothing wrong with their practice, by filing more suits against them and receiving favorable judgments in the last year, according to a Travel Management Newsletter.
Becker said the suit filed in Los Angeles will not be the last.
“We said last week when the others were filed that there would probably be more, and sure enough there are,” he said.