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 The Brancatelli File

joe AIRLINE OLIGARCHY
AND REGULATORY WONDERLAND


BY JOE BRANCATELLI

January 25, 2001 -- There's so much news to disseminate this week, so much outrage to voice, and so many snarky remarks to make, I think we need to get right to it. So fasten your seat belts low and tight across your lap, set your incredulity meter to overdrive and let's have at it.

BILL CLINTON, FREQUENT FLYER Life on the road is now so bad that the recently departed President, who spent eight years jetting around on Air Force One, is loathe to become one of us. "I anticipate that my Christian bearing will be tested by a return to commercial air travel," Clinton told worshippers at a Washington church last week. "I will reap the rewards of not having succeeded in one of the things I tried very hard to do, which was to end all those backlogs." Needless to say, Bill, we frequent flyers feel your pain. And don't forget to check in with us when you blow your first $150,000 speaking gig thanks to the delays at LaGuardia or a missed connection at O'Hare.

BLUEPRINT FOR OLIGARCHY The published details of the American-United scheme to buy up and divide US Airways and TWA are appalling enough. After all, what part of United and American controlling half the aviation market doesn't say oligarchy to you? But you haven't even heard the other half. The 20-year deal that envisions United and American sharing what is now the US Airways Shuttle is supplemented by a "memorandum of understanding" filed with the Securities and Exchange Commission. It is literally a blueprint for oligarchy. American and United not only agree to remain at essentially the same size relative to each other for at least four years, but American is also penalized if it attempts to grow. Should American buy Northwest, Continental, Delta, Southwest "or any domestic airlines of equivalent or larger size," then the Shuttle deal is terminated. If American even enters a code-share deal with another major carrier, then the Shuttle deal is terminated. And whenever American chief executive Don Carty and United chairman Jim Goodwin play Monopoly, Carty can only buy Boardwalk if Goodwin already owns Park Place and the Water Works.

ANYBODY HOME? Who can put the brakes on this heinous attempt to divide up the nation's air-transportation system? The Attorney General. But President Bush's nominee, John Ashcroft, is hung up for at least another week in the Senate Judiciary Committee. And he didn't exactly dazzle anyone with ringing rhetoric about airline competition during his confirmation hearings. His most encouraging statement was this cryptic observation: "We've all seen what happens when there is only one way out of town."

CRACKS, QUIPS AND CHAOS Meanwhile, Continental claimed it was happy to go it alone in the face of the potential United-American oligarchy. "We haven't talked to anyone," Continental chief executive Gordon Bethune told Reuters on Monday. "I don't have any plans other than running a good airline and that might be kind of a novel experiment," he cracked. Bethune also knows what everyone else knows: Millions of travelers will be inconvenienced if and when United and American try to absorb the TWA and US Airways systems. Bethune figures Continental could cash in on the resulting chaos. "In the near term," he quipped a few days ago, "Continental ought to make a heck of a lot of money taking disappointed customers from the big airlines who are transitioning."

NEVER MIND Forget what Bethune said Monday about not having plans. He changed his mind. On Tuesday, Continental filed documents with the Delaware court overseeing TWA's bankruptcy. Continental claimed it would be willing to pay upwards of $400 million for some TWA assets and would also be interested in a ticketing deal and a frequent-flyer arrangement with an independent TWA. Continental didn't actually make an official bid, you understand. But, hey, at least there will be options on the table when the court takes up TWA's case this weekend. And here's a fearless forecast: If TWA doesn't fly into American's waiting arms, then it'll take American about 30 seconds to cancel its deal with United to carve up US Airways. Thirty seconds after that, American will once again be lobbying against a United-US Airways merger.

NORMAN IN WONDERLAND The Senate voted 100-0 yesterday to confirm Norman Mineta as the new Secretary of Transportation. In fact, the full Senate voted to approve Mineta while his confirmation hearing was still in progress before the Senate Commerce Committee. This rush to judgment wasn't even slowed by Stormin' Norman's astonishing admission that he could do nothing about the nation's deteriorating air-traffic system. "I need to be very candid with you on this point," Mineta was telling the Commerce Committee while the Senate was in the process of confirming him. "We are very likely to have very similar or worse delay problems this year." Elsewhere in the Senate yesterday, Alice went through the looking glass with bi-partisan support.

This column originally appeared at biztravel.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.