American Sued Over In-Flight Credit Card Reader

Dec. 20--American Airlines has been sued by an Illinois company that it worked with for more than a year to develop a new hand-held credit-card-swiping device for in-flight use.

Abanco International, which says it is the first company to create the in-flight purchasing system for airlines more than four years ago, said in court filings that Fort Worth-based American "abruptly" ended their partnership and did not return all of Abanco's devices and other materials used for testing.

As a result, Abanco contends, American used that "proprietary" equipment and information to create its own "buy-on-board" credit-card gadget that is now being used by flight attendants, according to the suit filed Dec. 4 in State District Court in Fort Worth.

American has not filed a response to the petition.

Tim Smith, a spokesman for American, said the carrier has received the complaint.

"We don't believe there's any merit to it," he said. "We will defend it as necessary." He declined to elaborate.

The suit does not say how much Abanco is seeking in damages, and Drew Klonsky, a spokesman for Abanco, declined to give that amount.

American and Abanco, based in Rosemont, Ill., began working together in late 2004 on the new system, which would allow flight attendants to store credit-card information on the hand-held device and keep an inventory of how much liquor and other items are left on the aircraft.

Abanco first developed the technology with Song, a regional-jet affiliate of Delta Air Lines that was rolled back into the main airline after Delta filed for bankruptcy protection.

Abanco is still working for Delta and has since signed deals to offer similar services for Midwest Airlines, Hawaiian Airlines and ATA Airlines.

In 2005, American began testing the system by training flight attendants on it. They tested about 30 devices on "hundreds" of American flights, Klonsky said.

Meanwhile, a third company, Toronto-based GuestLogix, was also helping American and Abanco create the on-board purchasing system.

American told Abanco in an e-mail Jan. 27 that it would no longer be working with Abanco, according to the suit. Abanco replied with a letter the next month asking American to return all of the test devices and other supporting materials.

But Abanco says it didn't get everything back.

"As far as we can tell, based on the records that we have, there's still one device that's outstanding," Klonsky said.

Abanco contends that American and GuestLogix got together to create a different hand-held device based on Abanco's version, he said. Abanco has also filed suit against GuestLogix in Cook County, Ill.

American launched its own wireless-payment technology, made by GuestLogix, on May 1.

"I think Abanco is in some regards very blindsided by this action by American," Klonsky said. GuestLogix "essentially took our [information technology] and moved forward with American Airlines with almost a duplicate product."

David Wethe, 817-685-3803 [email protected]