There's Enron...nice bunch of guys.
And then there's American Airlines. I've always liked the spirit of free enterprise/markets that the conservatives so much like to tout, unless you're a big contributor.
American Airlines Requests Antitrust Immunity in Deal
By Thomas B. Edsall
Washington Post Staff Writer
Friday, December 14, 2001; Page E01
American Airlines Inc. is seeking antitrust immunity for a marketing alliance with British Airways PLC, provoking a pitched battle with three competitors who see the Dallas-based airline capitalizing on strong fundraising ties to the Bush administration to gain dominance in the lucrative transatlantic market.
The three competitors -- Delta Air Lines Inc., Continental Airlines Inc. and Northwest Airlines Inc. -- have, in turn, mobilized members of Congress and governors to try to block the alliance, which they argue would allow the American-British Airways combination to dominate travel between the United States and London's Heathrow Airport.
The dispute has become part of a larger fight for survival in the aftermath of the Sept. 11 terrorist attacks. "At a time when we may be witnessing a forced reduction in competition among airlines, it is madness to actually encourage even less competition by allowing dominant carriers to collude in setting prices," Richard Branson, chairman of Virgin Atlantic Airways, protested to the Senate Judiciary Committee last month.
Such marketing alliances allow each airline to offer customers a single ticketing process with "seamless" connections between the airlines. It also allows them to jointly determine routes and fares.
Heathrow has become a major battleground. Airlines serving the facility are able to boost profits by charging higher fares, especially to business travelers who pay a premium for the convenience of using Heathrow, compared with London's Gatwick and Stansted airports, which are farther out of town.
American Airlines, which is run by one of President Bush's top campaign fundraisers, Donald J. Carty, has had private White House meetings to make its case. The White House has ordered an inquiry into the progress of the antitrust exemption request currently pending at the Transportation Department.
American cleared a key hurdle last week when the Transportation Department rejected a request by Delta, Continental and Northwest for a judicial review of their claims that the alliance would be anti-competitive and anti-consumer.
In what would be a more significant development, the antitrust division of the Justice Department appears unlikely to intervene. Three years ago, a similar request by American was rejected in large part because of the strong objections raised by Justice.
The politics of wartime coalition-building also appears to be working to the advantage of American Airlines. Tony Blair, Britain's prime minister and a key Bush ally in the war on terrorism, has prodded the administration to make sure the Transportation Department moves swiftly on the application. In addition to helping American, the alliance would greatly strengthen the competitive position of British Airways at Heathrow.
Currently, 23 percent of the flights between the United States and Heathrow are on American Airlines and 37 percent are on British Airways. Critics say that means that together the two would make 60 percent of all U.S.-Heathrow departures. The other airlines with a substantial share are United with 23 percent and Virgin Atlantic with 12.9 percent.
If the alliance is approved, the Transportation Department is expected to insist on an "open skies" agreement with Britain, a bilateral accord that would open airports in both countries to more competition from the other's carriers.
Carty, in testimony before the Senate Judiciary Committee, noted that Northwest has an alliance with KLM and that Delta has requested permission to form an alliance with Air France. The formation of those international alliances, coupled with open-skies agreements widening access for all U.S. airlines to key foreign markets, has worked to increase competition and expand consumer choice, Carty argued.
But Larry Kellner, president of Continental, said that because American Airlines and British Airways are "the two largest carriers in the world's largest intercontinental market," the combination would crush competition. He said they "are asking for immunity from antitrust laws in order to fix prices, divide markets, allocate capacity and pool revenues in large and important markets where they currently compete."
In a bid to block an American-British Airways alliance, Delta, Continental and Northwest have mobilized at least two dozen senators from both parties, representatives, governors from such states as Alaska and South Dakota, and even the Teamsters Union to press their case.
Some 22 senators, ranging from Paul Wellstone (D-Minn.) on the left to Trent Lott (R-Miss.) on the right, have signed letters to Transportation Secretary Norman Y. Mineta and Secretary of State Colin L. Powell.
American Airlines and Carty were key financial supporters of George W. Bush's 2000 presidential campaign. Carty was described in newspaper stories as a "pioneer" -- a fundraiser of more than $100,000 -- although his public relations staff said he was not a pioneer. In addition, American Airlines gave $100,000 -- the maximum allowed -- to help defray costs of the Bush inauguration.
During this past summer, top officials of the Bush administration held private meetings with American Airlines lobbyists and executives to discuss American's international goals, including the alliance with British Airways. These meetings included a June 11 session with Lawrence B. Lindsey, President Bush's White House economic adviser, and an Aug. 3 meeting with Andrew H. Card Jr., chief of staff.
After learning of the Lindsey meeting, officials of Delta, Northwest and Continental requested, and received, a July meeting with the top economic adviser. They asked for a similar meeting with Card after learning of his session with American, but they were turned down.
On Nov. 7, according to a White House spokeswoman, President Bush told Card to inquire at the Department of Transportation about the status of American's application for antitrust immunity. Bush told Card to make the inquiry during a meeting with Blair, according to White House spokeswoman Claire Buchan, who said the inquiry was not an attempt to pressure the department.
Conservative columnist Robert Novak reported on Nov. 29 that Card contacted Deputy Transportation Secretary Michael P. Jackson to see how American's request for antitrust immunity was progressing. Jackson, in turn, called Deputy Attorney General Larry D. Thompson "and allegedly instructed the Justice Department not to intervene," according to Novak.
Jackson, the columnist wrote, denied pressing Justice to stay out of the case, but "he confirmed to me that Justice is not intervening." In a separate interview with The Washington Post, Jackson contended that Novak misinterpreted his comments.
"They [Justice] have not given us any formal indication that they will do that [decline to publicly intervene]," Jackson said, and such intervention "remains an option if they decide to do that."
Asked if American Airlines received favorable treatment because of political support given the Bush 2000 campaign, Buchan said, "We meet with people to listen to their concerns."
She added, "The White House has not had any substantive communication on this issue with the Department of Transportation."
Staff Writer Frank Swoboda contributed to this report. |
