Posted on: Friday, June 13, 2003

Legal troubles deepen for Mainline Airways'

By Dan Nakaso
Advertiser Staff Writer

Perhaps hundreds of people looking for bargain flights in and out of Honolulu were drawn to the Hawai'i-themed Web site run by an 18-year-old freshman operating out of his Massachusetts business college, Massachusetts authorities said yesterday.

Luke R. Thompson's Mainline Airways advertised one-way, Honolulu-to-Los Angeles fares for as low as $89 beginning July 3. Thompson gave himself the title of CEO, but really was just a first-year student at Babson College, which calls itself one of the country's top-ranked schools for the study of entrepreneurship.

Now Thompson is being investigated by federal and state authorities in Honolulu and Massachusetts and by officials at Babson College in Wellesley, Mass.

Yesterday, the Massachusetts attorney general obtained a temporary restraining order that prohibits Thompson and Mainline Airways from using the company's accounts for any reason other than to give refunds. The office also sued Thompson and Mainline Airways, alleging they sold tickets for non-existent flights.

Last week, Hawai'i officials with the Office of Consumer Protection obtained a temporary restraining order against Mainline, prohibiting the company from selling tickets or collecting money before it complies with federal and state laws.

Both Massachusetts and Hawai'i officials plan to pursue permanent injunctions against Mainline.

Although Thompson had said earlier that all 120 customers who had "pre-reservations" would be reimbursed by today, Stephen Levins, an attorney with the state Office of Consumer Protection, said his office had "no evidence" that anyone had received refunds as of yesterday.

Thompson did not respond to requests for an interview with The Advertiser. He told the Associated Press from Trenton, N.J., yesterday that he ran the company alone but had a consultant and an investor.

Thompson said he got the idea of offering cut-rate flights after he discovered how expensive it was to charter a plane while arranging a trip for some students.

"Everything was to be subcontracted, from the operation of the aircraft to people checking the bags and loading the bags," he told AP. "We had bids from a number of carriers, and ground-handling bids at Honolulu and LAX."

His plan was to offer low fares for six months to a year to generate business before raising prices.

The business would have been successful, Thompson said, "if we made it more clear that we weren't operating our own aircraft and if we didn't get all this bad publicity."

Although officials said Thompson was claiming that his company was an airline, Thompson told AP that Mainline is only a tour provider.

"They said we're an airline, which is completely wrong," he said. "It's something they assumed."

Thompson said he anticipates that the Mainline operation will cost him the money he had earned from stock trading.

"I expect to lose $5,000 on credit card processing, the call center, reservation system, posting of the Web site, not to mention the many, many hours I put into it," he said.

"I would get three hours of sleep every day," he told AP. "For six months, I was working constantly on this, getting everything together, and it's been all for a waste, because there's no way I can operate profitably at this point."

According to Massachusetts documents, Mainline advertised a "fleet" of Boeing jets that came with leather chairs and personal televisions for every seat.

What Thompson didn't have, according to the documents, is anything resembling an airline.

"As of the filing of this complaint, less than four weeks before the first flights are set to take off on July 3, 2003," according to the documents, "the defendants have nothing in place — no leased planes, charters, ticket counters, flight crews, baggage claim, or permits and approvals to operate flights between Los Angeles and Honolulu."

Thompson's location was traced by investigators through Mainline's Web site.

The Web site included Hawaiian music and graphics, flight schedules, refund and cancellation policies and a description of the planes.

Last week an investigator from the Massachusetts attorney general's office used an undercover identity to book a July 3 flight from Los Angeles to Honolulu and received several confirmations, including an e-mail described as an "E-ticket," according to the Massachusetts complaint.

"They represent themselves as an airline," according to the documents, "yet have no terminal space rented, no federal or state approvals to provide airline or charter flight services, and no ability to provide such services in the near future, certainly not on July 3, 2003."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.