Mainline Airways - Fallout After State Lawsuit

Fallout After State Lawsuit

Shortly after the suit was filed, Thompson declared that his company was suspending its plans to begin chartering flights due to "bad press created by the lawsuit" and cancelled all "pre-reservations" and issued refunds. The company had maintained the funds collected from customers so it was able to issue refunds quickly. Mainline Airways says it had planned to re-book passengers on Delta Air Lines, with whom the company had matching schedules and rebooking agreements in the event that the planned charter flights were cancelled or deferred. However most customers had already put stop-payment orders on their credit card transactions after hearing the press and the company did not have sufficient capital to pay for both refunding and re-booking customers, leading to the decision to purely refund customers.

Delta Air Lines had modified its schedules in April 2003 and added Delta flight 1852 and 1579 to presumably copy Mainline's proposed charter, with Delta flight 1852 matching Mainline's planned 8:55PM Honolulu departure exactly to the minute. Delta even made the departure time change by an hour during daylight saving changes to match Mainline's daylight saving departure time adjustment, rather than allowing the hour to affect its arrival time like all other Delta flights. Approximately a year after Mainline cancelled its plans, Delta replaced the flight with one at another time and no departure time adjustment and recycled the flight number.

Over a year after the suit and Mainline discontinued operations, on September 2, 2004, a settlement was reached and approved between Luke Thompson and the state, providing that no party admitted wrongdoing or liability, and for no fines or other penalties would be paid Thompson or Mainline; the state had originally sought $605,000 in fines. While Thompson was not fined anything, he agreed that he would be fined $5,000 in the event that other terms of the settlement are violated, including if refunds provided over a year earlier were somehow not completed or the company engages in the of pre-reservation charter sales in the future where the name of the airline operating the service is not revealed at the time of purchase. The settlement formally ordered Mainline to refund all customers, but refunds had actually been provided in June 2003, only the company was not under court order to issue refunds until their settlement was approved (just over a year later).

Prior to the settlement, Thompson and Mainline filed an answer indicating over 30 defences and over 10 counterclaims alleging improprieties and perjury in documents filed with the court to obtain a restraining order restricting sales as well as misrepresenting the terms of the order in the plaintiff Thomas Reilly's press releases, which incorrectly stated that Reilly had froze the company's assets and obtained an order to refund customers. The actual restraining order issued by the court did not order either of those actions and Thompson and Mainline demanded restitution for those errors. The settlement released all parties from liability and neither Mainline, Thompson, nor Reilly admitted wrongdoing of any kind.

The program was canceled in June 2003 shortly after Massachusetts Attorney General Thomas Reilly obtained a restraining order to temporarily halt ticket sales for charter flights that were to begin in July 2003 and filed a lawsuit. A settlement was reached in 2004, providing refunds to those who had paid money through the web site. The settlement also provides that no party admits wrongdoing or liability.

According to IRS tax records, Mainline Airways posted a substantial loss in 2003 including forfeiting a $20,000 deposit on an aircraft charter contract.