A lawsuit claiming that in-flight Internet provider Gogo has struck illegal exclusive contracts with airlines in order to overcharge customers is moving forward after a judge's decision last week.

The class action complaint (PDF) was filed in US District Court in Northern California by James Stewart, Joel Milne, and Joseph Strazzullo, and it claims that "Gogo has unlawfully obtained and/or maintained monopoly market power in the United States market for inflight Internet connectivity on domestic commercial aircraft by resort to anti-competitive conduct that includes a series of long-term exclusive contracts with the major domestic airlines in the United States. These exclusive contracts have the purpose and effect of thwarting competition on the merits and on price, and [they] have permitted Gogo to charge consumers like Plaintiffs and the members of the class they seek to represent supra-competitive prices."

The lawsuit demands a jury trial, class action status, changes in Gogo's business practices, and financial damages.

Gogo asked the court to throw out the lawsuit, arguing that it hasn't forced competitors out of the market.

"Plaintiffs admit that during the period that Gogo allegedly foreclosed competition, several Gogo competitors entered the market and gained market share," Gogo wrote in a motion to dismiss. "These new entrants not only gained market share by executing agreements with airlines with which Gogo does not currently do business (e.g., Southwest Airlines and JetBlue Airways) but also took business that the [complaint] alleges was locked up by Gogo’s exclusive dealing contracts."

Since Gogo launched in August 2008, competitors Row 44, LiveTV, and Panasonic have entered the market, the company said.

Gogo's in-flight Wi-Fi offerings include all-day passes for $14 and monthly passes for $40 to $50.

Gogo's motion to dismiss the complaint was denied, but that doesn't mean the lawsuit is a sure winner. The plaintiffs claim that Gogo holds 85 percent of the relevant market share, but Gogo has argued that the plaintiffs are defining "relevant" too narrowly.

District Judge Edward Chen wrote (PDF) that there are problems with the plaintiffs' argument but that they are solid enough to be considered further. Chen wrote:

To be sure, the Court is cognizant that there may be problems with some of Plaintiffs' allegations. Gogo never had a contract with Southwest and its contract with United contained terms indicating that the entirety (or near entirety) of United's fleet was not locked up for a significant period of time (contrary to Plaintiffs' representation). The Court is also cognizant of the fact that Southwest and United are two of the biggest providers of commercial, domestic airline travel—a point that neither party disputes. These facts legitimately put into question Plaintiffs' assertion that "Gogo possesses at least an 85 percent market share of all commercial aircraft servicing flights within the continental United States." Nevertheless, even if the 85 percent figure is not correct, Plaintiffs allege with specificity other major airlines—including American, Delta, and US Air—whose fleets in their entirety or near entirety are or were locked up by Gogo's contract. Thus, it is plausible that even if not a 85 percent market share, Gogo has a substantial enough market share such that, together with the allegations in Plaintiffs' complaint that there are high barriers to entry, a substantial share of the market has been foreclosed.

Chen wrote that the court is also "not persuaded" by Gogo's argument that it's easy for airlines to get out of the contracts they have signed with Gogo.

This is just a preliminary ruling. The judge has decided that the alleged antitrust claims are "plausible" and that Gogo has 30 days to provide its next response.