Ted Reed writes, “Why Dump Smisek?” considering that United is hardly the first airline to fly a route at the behest of a politician, or more broadly to bestow favors and favored treatments on politicians.
Here of course he refers to United’s “Chairman’s flight” between Newark and Columbia, South Carolina requested by and operated for the benefit of the Chairman of the Port Authority of New York/New Jersey which oversees Newark airport where United operates a hub.
While the incident is embarrassing for United, and distancing themselves from their former Chief Executive helps distance themselves from a federal criminal investigation, it serves at least as pretext for ridding themselves of a CEO of an airline that hasn’t managed to complete merger integration after 5 years. has reliability and major IT issues, and has lost many corporate customers in recent years. Ridding themselves of ‘the Smisek problem’ would have been nearly impossible in an environment with such low fuel prices that the airline cannot help but generate record profits (albeit with lower margins than competitors).
Nonetheless, Reed’s point is well taken: airlines frequently cozy up to politicians in exchange for favors.
- Despite nominal ‘deregulation’ the only regulation that’s really been eliminating in the airline industry is the government dictating which carriers can fly where and at what price.
- Airlines remain one of the nation’s most heavily regulated industries. Airports are largely government owned, making leases and pricing political decisions. The skies are managed by the FAA. Mechanical work is regulated and signed off by government agencies. Flight delay compensation, and even when airlines are required to provide snacks and water to passengers, are dictated by the Department of Transportation. There is virtually nothing that an airline can do without at least the tacit approval of an agency. Leaving aside the advisability of value of given regulations, the airlines absolutely operate at the please of government agencies.
- So it’s no surprise that they want to stay on the good side of those agencies, and their leadership — although they do not usually cross the lines that United and Smisek apparently did in the case of the Columbia flight.
Reed points out that US Airways has operated flights for politicians before:
According to a former US Airways executive, who asked not to be named, routes that were started or expanded in the 1990s and 2000s in order to benefit politicians included National/Charleston, S.C., home of South Carolina Sen. Ernest Hollings, who was ranking member on the Commerce, Science and Transportation Committee; National/Portland, Maine, accommodating Sen. Olympia Snow; and National/Rochester, N.Y., home of U.S. Rep Louise Slaughter.
He further points out an old arrangement US Airways had to offer flight discounts to a single Senator.
In 2002, The Charlotte Observer reported that US Airways had a special arrangement with Sen. Hollings and his wife: If they complained about high fares, they could get lower ones.
I’d add that it’s not surprising the Chairman of the Port Authority would feel empowered to ask for special treatment, considering the special airport treatment that members of the commission received as well.
Don’t forget Delta’s elite status comps to all the top politicians in Georgia. (“You know you’re unimportant when you just get Delta Platinum.”)
There are, of course, dedicated desks operated by the major airlines to handle Congressional travel.
Staff schedulers often times make reservations for members of Congress via dedicated phone lines that Delta and other major airlines have reportedly set up for Capitol Hill customers. Airlines also permit members to reserve seats on multiple flights but only pay for the trips they take.
American’s explanation for this special service: “These are only made available due to the unique challenges of unpredictable travel schedules faced by members of Congress.” Hey, American, my travel schedule is pretty unpredictable…
Ted Kennedy once ‘saved two jobs’ — the jobs of the special services reps at US Airways who took care of him during his travels, when the airline was looking to make significant cutbacks after 9/11.
And Members of Congress and Supreme Court Justices have long had their own free parking at National Airport:
It’s not just airlines providing things to politicians directly. Through the airlines’ major trade association the Chair of the House Transportation Committee got a girlfriend (and his chief of staff got a bride).
And what do airlines want from these politicians? They want legislation to permit airfares to be advertised without including taxes and fees. They want to shut down competition and low prices from Middle East airlines. They want to keep limits on airport facilities charges.
Delta wants the perimeter rule at LaGuardia lifted and they’re promising $4 billion on construction at the airport (so that the rest of the airport project costs ‘only’ $4 billion) in exchange.
United wanted the PATH train extended to Newark. (Don’t forget, that’s also why United ran Atlantic City service.) They wanted lower fees and more capital spending on their Newark terminal.
Governments influence the fortunes of the airlines, and airlines attempt to gain favors from governments. It should come as no surprise that airlines have the ear of regulators, and regulations favor incumbent airlines. Model that whenever you think of a regulation you’d like to see passed governing the industry, and ask yourself the likelihood that it will be written and enforced in a way that benefits ‘people in general’ or ‘the airlines’ you want to regulate.