Island Air sues New Zealand-based airline software company for breach of contract

Hawaii interisland airline Island Air has filed a federal lawsuit against New Zealand-based airline software developer Merlot Aero Ltd. for breach of contract and misrepresentation.

The civil lawsuit was filed U.S. District Court of the District of Hawaii on Oct. 13.

According to the lawsuit, in 2013, Island Air began exploring alternatives to AirMax, its existing crew scheduling service, systems operations and flight control software package. Island Air entered into a written supply agreement with Merlot Aero on Dec. 17, 2013, with the intent to replace AirMax with Merlot Aero's system, merlot.aero.

The airline based its decision on Merlot Aero's advertising and representation. According to the lawsuit, Merlot Aero's website says the company has "a reputation as an innovator of high performance airline operations management tools" and "service unsurpassed in its field." It calls its merlot.aero system "the next revolution in airline operations management tools."

Island Air paid fees to Merlot Aero from December 2013 to June 2014. The airline experienced significant and repeated software issues and problems with the merlot.aero system, the suit alleges. Problems identified in the suit include payroll integration, Aircraft Communications Addressing and Reporting Systems (ACARS) compatibility, crew access to data from outside the Island Air network through the crew portal and inadequate customer service. Repeated conference calls, emails and other attempts did not resolve the problems.

"The problems were so extensive that the merlot.aero system had no value to [Island Air]," the lawsuit said. The airline decided not to complete the transition to merlot.aero and requested a refund from Merlot Aero in August and again in September. On Oct. 6, Merlot Aero "claimed to unilaterally terminate the supply agreement and demanded payments from [Island Air] for the remaining contract term," according to the lawsuit.

Jason Ubay covers tourism and finance for Pacific Business News.