TRUST THE AIRLINES?

January 10. 2001

Remember back a few weeks to the holiday season, when you and millions of other Americans shared the joy of digging deep to pay for airline tickets to visit family? Consumer groups warn that if the U.S. Justice Department approves the proposed merger between American Airlines and TWA announced this week, you can expect airline ticket prices to climb even higher.
Under the deal, according to media reports, American would buy out financially troubled TWA. American would also get half of the US Airways Shuttle, which flies between Boston, New York, and Washington, as well as acquire a 49 percent stake in DC Air, a Washington-based start-up airline. Announcement of the proposed deal follows another proposed transaction announced last May between mega-airline United and U.S. Airways, marking a general implosion of the industry.

"Unless the Department acts to block both this merger and the pending merger of United and U.S. Airways — which have now become intertwined, the airline industry will become an even more tightly coordinated cartel." warned Consumers Union and the Consumer Federation of America in a January 8 letter to Douglas Melamed, the Acting Assistant Attorney General for the Justice Department’s Antitrust Division.

But American Airlines has potent political clout with the new administration. The airline company is based in Fort Worth, Texas. Donald J. Carty, CEO of the airline’s parent company, AMR Corporation, has helped raise money for George W. Bush and other Republicans, according to The New York Times. The airline provided the members of Bush’s presidential transition team with a Boeing 737-800 for a post-election trip from Austin, Texas to Washington, DC. Carty also contributed $5,000 to help pay for the Bush campaign’s legal expenses in Florida, reported the paper.

The airline has also been generous to Attorney General nominee John Ashcroft, who, as head of the Justice Department, would have influence on a decision about the mergers. Last May, American Airlines contributed $5,000 in soft money to the Ashcroft Victory Committee, a joint fundraising committee of Ashcroft’s Senate campaign and the National Republican Senatorial Committee, according to reports filed with the Federal Election Commission. Ashcroft’s campaign also got $4,000 from the airline’s Political Action Committee (PAC).

Overall, American Airlines was the top donor among airlines to federal candidates and parties in the 2000 elections, distributing $1.3 million, two-thirds of it to Republicans. That’s more than one out of every five dollars contributed by the airline industry, the source of $6.3 million. When airline money piles up in the campaign coffers of the very officials charged with making decisions, how can we trust that decisions will be made in the interest of the consumer?

Information from Public Campaign. For more on this topic visit www.publicampaign.org