Court confirms arbitration award in favor of “host agency”

Incentive Connection Travel, Inc. v. 1st-Air.Net Inc. (D. Ariz. Dec. 27, 2006).  The parties had entered into a contract in which ICT agreed to act as a “host agency” for 1st-Air.Net, an Internet-based travel broker.  According to ICT, 1st.Air-Net “is required to use host agencies because, among other reasons, United Airlines terminated its Sales Agreement . . . and the Airline [sic] Reporting Corporation terminated the ability of First Air . . . to purchase tickets.”

According to ICT, 1st-Air.Net “engaged in the use of ‘hidden cities’ and ‘throw away’ segments, and other prohibited ticketing practices,” thereby violating the contract between them.  ICT terminated the contract, which contained an arbitration provision.  1st-Air.Net filed a demand for arbitration; ICT filed a counterclaim, as well as a third party claim against 1st-Air.Net’s principals, Jackie DiBella and Robert Laney.

At the arbitration hearing, the parties settled all issues except for the issue of attorneys’ fees.  Finding that “[t]he issuance of hidden city tickets by Laney and DiBella was in breach of the contract with [ICT] because it was contrary to the ordinary custom of the airline industry and a breach of 1st-Air.Net’s duty under the contract,” the arbitrator awarded ICT fees and costs against 1st-Air.Net, DiBella and Laney in the amount of $126,400.  The court granted ICT’s application to confirm the award.


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