A Chicago-based company specializing in the sale of Amtrak vacation packages is suing its competitor and the rail company, claiming they have violated federal and state antitrust laws by conspiring in recent agreements to create a virtual monopoly over the U.S. rail leisure travel industry.
VBR Tours LLC, which operates under the name Vacations By Rail, filed suit Feb. 5 in Chicago's federal court against Yankee Leisure Group Inc., of Beverly, Mass., and Amtrak, formally known as the National Railroad Passenger Corporation.
The complaint centers on agreements brokered between Yankee and Amtrak, as well as other decisions made by the trail company, in 2012 and 2013, which VBR contends will effectively eliminate competition in the market for Amtrak vacation travel packages.
VBR asserts its business started as a two-man operation in Chicago and expanded year-by-year over the last decade, using a vast network of travel agents to sell travel packages in America and the United Kingdom that generated hundreds of thousands of dollars in ticket sales annually to Amtrak.
During that time, the company contends the workings of the market for Amtrak rail travel packages have changed relatively rapidly.
According to the complaint, prior to 2007, when VBR first entered the market, the barriers for entry enter into the market were relatively high.
For instance, VBR notes, travel agents and tour operators needed to register and participate with so-called Global Distribution Systems networks to have access to Amtrak’s inventory and be eligible for commission on Amtrak ticket sales.
VBR states in its suit that its competitor, Yankee, partnered with Amtrak in 2006 to manage the Amtrak Vacations brand, acting as rail company’s “national tour operator.”
But in late 2007, VBR asserts the rules changed.
While Yankee remained Amtrak’s official national tour operator, the rail service partnered with travel agent consortium, Vacation.com, to launch its new online booking tool, Rail Agent. Under this new system, agents and tour operators could book directly with Amtrak, via Rail Agent, and earn commissions of at least 8 percent.
VBR used this new system to greatly expand its business, eventually generating enough revenue for Amtrak to merit a higher commission structure, earning the company only slightly less than what VBR believes Yankee earned from the sale of Amtrak tickets.
However, VBR alleges that, as its business grew, it also became a target of Yankee, which proposed various deals in an effort to claim a share of VBR’s business or acquire the company outright. VBR asserts in its suit that rejected every such arrangement.
In 2012, VBR alleges that Amtrak, likely at the behest of Yankee and under the guise of “cost-cutting,” changed the commission rules, which cut its rate back to 8 percent.
Then, in 2013, in response to request for proposals from Amtrak for its national tour operator contract, VBR submitted a proposal it said would generate $3 million annual savings for Amtrak and would “level the playing field” for all agents and tour operators.
Amtrak, however, rejected its proposal, and awarded the contract again to Yankee, VBR claims, adding that it continued to push to “level the field.”
But in October 2013, the suit states that Amtrak moved to slash all commissions to zero, except for Yankee, which would continue to receive a 19 percent commission.
As Yankee continued to pay commission to agents and tour operators booking through them, VBR contends the deal effectively served to funnel all business through Yankee, and could “greatly reduce – if not eliminate – all railway tour operators, including VBR."
VBR alleges that this arrangement, in turn, will harm the public, by compelling taxpayers to pay more to Amtrak than otherwise necessary, and by effectively granting Yankee a monopoly, which will likely result in higher package prices.
In its complaint, VBR has asked the court to declare the agreement between Amtrak and Yankee illegal, and award it triple the amount of damage its business has suffered as a result of Amtrak’s actions.
The suit specifically cites claims that Yankee and Amtrak violated the federal Sherman Antitrust Act and the Illinois Antitrust Act.
VBR is being represented in the action by attorneys Paul J. Kozacky, Alastar S. McGrath and John N. Rapp of Kozacky & Weitzel P.C. in Chicago.