FlightSafety sued for alleged antitrust law violations

 - December 18, 2007, 6:10 AM

A small, minority-owned maintenance-training company has gone to court to battle the Goliath of pilot and maintenance training, FlightSafety International.

West Simsbury, Conn.-based Global Jet Services filed a lawsuit in September in U.S. District Court of New York, alleging Sherman Antitrust Act violations against FlightSafety.

Specifically, Global Jet Services says its business has been “injured” to the tune of “millions of dollars” because of FSI’s “unlawful” bundling of pilot and maintenance training, including “coercing” OEMs into “forced and unlawful” long-term exclusive contracts that combine both pilot and maintenance training. The lawsuit claims that FlightSafety’s alleged “monopoly power” prevents other companies, such as Global Jet Services, from competing.

FlightSafety’s “monopoly power,” the lawsuit contends, “forces” customers to purchase and accept FSI’s corporate jet maintenance training. “FSI’s unlawful contract, combination, conspiracy and agreement has consisted of forced contracts and agreements with consumers by refusing to sell the tying product (i.e. corporate jet pilot training) unless the tied product (i.e. corporate jet maintenance training) is purchased; and/or by making the two products separately available but charging an unreasonably high price for the tying product; and/or by offering package discounts for the purchase of the two products that make the purchase of [them] together the only viable economic option for the consumer.”

The ability of consumers to buy, accept and receive superior and/or less costly corporate jet maintenance training, the lawsuit further contends, “was and remains effectively and substantially reduced, limited and foreclosed as a result of FSI’s unlawful conduct.”

Manufacturers Dispute Coercion Claims
Global Jet Services named Bombardier, Cessna, Gulfstream, Falcon Jet and Raytheon Aircraft as some of the manufacturers “coerced” into long-term exclusive contracts for both pilot and maintenance training for corporate jets. “Cessna disagrees with Global Jet Services’ allegations that Cessna has been coerced into long-term agreements with FlightSafety,” said a Cessna spokesman.

Dassault Falcon Jet and Gulfstream also responded. “We work with several training providers,” said a spokesman for Dassault Falcon Jet. “In addition to an ongoing relationship with FlightSafety International, we recently named CAE the provider of entitlement training for pilots, maintenance personnel and cabin crew for the Falcon 7X.”

Although Gulfstream normally “does not comment on matters under litigation or potential litigation,” said a spokesman, it commented on these claims. The spokesman said, “We enjoy and have enjoyed a long-standing partnership with FSI, particularly here in Savannah where we do cooperative training programs for our own technicians as well as customer technicians, where we provide instructors and FSI provides facilities, and have input for the syllabus. So I’m not sure the word ‘coerced’ is applicable to us.”

Raytheon Aircraft declined to comment on this matter. None of the OEMs AIN talked with was aware it was mentioned in the complaint.

Global Jet Services’ on-site maintenance training company initially specialized in Challengers when it was launched in 1992. In 1998, according to the lawsuit, the company added Hawker, Beechjet and Gulfstream initial, refresher and electrical interface courses.

“As the demand continued, GJS grew to meet the industry’s needs by adding new employees and expanding its product line.” The company, which employs 12 full-time contract instructors based in such locations as Texas, Georgia, Indiana, Connecticut and Canada, has also added maintenance training for the Dassault Falcon, Cessna Citation and Embraer Legacy, among others. All instruction is done at the customer’s location, “saving valuable travel and expense costs and enabling access to the corporate jet(s) the technician needs to maintain.”

Deprived of Niche Market

The company claims in the lawsuit that it is “unable to effectively and lawfully” compete with FSI in the corporate jet maintenance training market, that FSI has “used its dominant position, leverage and power” in the corporate jet pilot training market to “coerce consumers,” as a condition of contracting for corporate jet pilot training, to also contract with FSI for corporate jet maintenance training.

“FSI has denied competitors (like GJS) free access to the corporate jet maintenance training market not because FSI has a better product or lower price but because FSI has exploited its dominant position, leverage and power in the corporate jet pilot training market. At the same time, consumers have been forced to forego their free choice between competing products.”

Global Jet Services also lists a number of corporate operators that it believes have entered into similar long-term and illegal pilot/maintenance training contracts, such as JM Family Enterprises, FedEx, Home Depot, TXI Aviation, Jet Aviation, Collins and Aikman, Georgia Pacific, Tyson Foods, Sun Air Jets and 3M. “These contracts/agreements have contributed to the substantial foreclosure of competition in the corporate jet maintenance training market and caused injury to GJS’s business and property,” according to the complaint.

Representatives of several of the corporate aircraft operators listed above–none of whom knew they were mentioned in the lawsuit– who spoke on the record said roughly the same thing as the airframers. Regardless of their contracts with FSI, they send pilots and mechanics elsewhere for training, including SimuFlite, especially when an FSI class is not conveniently scheduled or is full. Only one of the flight departments AIN talked with said it had heard of Global Jet Services.

Global Jet Services is asking the court to enjoin FSI from continuing the practice of tying sales of pilot training to the purchase of maintenance training, and to award Global Jet Services three times an as yet unspecified amount in damages, to be determined at a jury trial, for which a date had not been determined at press time.
Global Jet Services declined to comment on the responses made here by OEMs and also turned down a request seeking revenue and other financial data.

A FlightSafety spokesman said, “We do not comment on matters in litigation.”