Skift Take
A 2015 Skift headline asked whether the Skiplagged founder was naive about the power of airlines or an innovator. Multiple lawsuits later, the business is still holding its own.
A federal jury in Texas decided American Airlines can recover $9.4 million in damages from “hidden city” ticket platform Skiplagged, which continues to offer the airline’s tickets at steep discounts.
On Wednesday, for example, Skiplagged was offering a one-way ticket on American from Washington, D.C. to Philadelphia for just $162 (including a $35 Skiplagged service fee). But the itinerary was actually part of a Washington-Philadelphia-Boston flight. Skiplaggers would simply get off in Philadelphia and “skip” the connection to Boston.
The cheapest fare on American for the same flight was $491. Skiplaggers would save $329.
Airlines hate â and bar â these hidden-city practices because they undercut their fares and disrupt operations.
Skiplagged Does $20 Million in Annual Revenue
More than a decade after its founding by a then-20-year-old Amazon software engineer, Akturer Zaman, Skiplagged has been hauled into court over the years by United, Southwest, and American â and it’s still standing. The United case was dismissed on jurisdictional grounds in 2014, and Skiplagged stopped selling Southwest flights in 2021 after reaching a settlement with the airline.
Testimony during the American litigation in Fort Worth revealed that Skiplagged does more than $20 million in annual revenue. The New York-based company has 20 employees.
Zaman is still the CEO, and the chief operating officer is Dan Gellert, the co-founder and former CEO of the GateGuru app, which was acquired by Tripadvisor in 2013.
A $9.4 Million Decision
The judge in the American lawsuit, Mark Pittman, disparaged Skiplagged’s business practices throughout his opinion [embedded below], and noted it has “made a killing” off hidden-city airline tickets.
At one point, he compared Skiplagged to a skunk.
“Abraham Lincoln observed ‘[w]hat kills a skunk is the publicity it gives itself…’ Here, American got wind of Skiplaggedâs stinky business practices, but it waited a little too long to extinguish the stench
via certain claims,” the judge wrote. “Fortunately for American, those are not the only tools at its disposal.”
The jury’s verdict on October 15 was that the airline could recover $9.4 million for copyright infringement, although the precise amount will be subject to the judge’s approval in coming weeks.
In late July, when the judge decided that Skiplagged was guilty of copyright infringement in using American’s flight symbol, he also decided that Skiplagged did not breach the airline’s user agreement, in part because the statute of limitations had run out for American to make that claim.
On the question of trademark infringement, the judge left that to the jury, which decided that Skiplagged’s use of American’s trademarks was covered as a nominative fair use. In the interim, Skiplagged dropped the use of the airline’s flight symbol, but continues to use “American Airlines” when offering its flights.
The case will likely be appealed and could drag on for years unless there is a settlement.
American did not return a request for comment.
Skiplagged Doesn’t Take Bookings on Its Own Website
The judge cited Skiplagged’s “somewhat dubious business model and practices” in exploiting the hidden-city “loophole.” Airlines tend to charge more for direct flights than for those that include a stop so bargain hunters can book a ticket that includes a desired layover, and skip the next destination.
Users fill out their payment information on Skiplagged to book a flight, but Skiplagged actually books the flights for them on airline websites such as AA.com.
“Skiplagged peddles these ‘hidden-city’ tickets, and its platform facilitates the process by booking directly on the websites of major airlines like American while disguised as the underlying consumer,” the judge wrote.
Travelers receive a confirmation number from the airline, and Skiplagged advises them to seek customer support from the airline, as needed.
You won’t find many business travelers using the hidden city strategy because airlines will kick them out of their frequent flyer programs for doing so, or worse, but Skiplagged has caught on with a loyal following of backpackers and bargain hunters.
As long as Skiplagged stays one step ahead airlines hoping to shut it down, that is.
See the judge’s Memorandum Opinion & Order below:
