The New York Times -- October 10, 2001

THE AIRLINES

Bailout Showed the Weight of a Mighty, and Fast-Acting, Lobby

By LESLIE WAYNE and MICHAEL MOSS

Just one day after terrorists hijacked and crashed four commercial jets,
lobbyists for the airline industry were already at work, laying the
groundwork for a multibillion-dollar plan to rescue the industry.

With the airlines grounded and passengers fearful of flying, platoons of
well-connected and highly experienced lobbyists — among them Linda Hall
Daschle, wife of the Senate majority leader — began sorting through their
options, perhaps a ticket tax, perhaps something else. But, as Mrs. Daschle,
an American Airlines lobbyist, explained, the group quickly settled on the
simplest plan: a cash payment and loan guarantees.

That was the start of a campaign to convince Congress that the industry
needed government support to survive. The speed with which Congress agreed
to $15 billion in aid and loan guarantees just 11 days after the terrorist
attack is not just a testament to the importance of air travel to the
nation's economy. It is also an example of the power of the airline lobby,
and the skill with which it marshaled its resources.

"It was masterful," said Senator Peter G. Fitzgerald, an Illinois Republican
who cast the lone vote in the Senate against the airline rescue package.
"The airline industry made a full-court press to convince Congress that
giving them billions in taxpayer cash was the only way to save the
republic."

For an industry that is hardly the most popular in Congress — or with the
flying public — it often manages to get what it wants in Washington. In what
one federal regulator called "a wonderful piece of special pleading," the
airline lobby in the aftermath of the 1988 Pan Am 103 bombing succeeded in
weakening measures to toughen airport security.

More recently, the airlines helped head off a passengers' bill of rights.
And this spring, the airlines scored big when President Bush invoked rarely
used powers to block a threatened strike by airline employees.

This time, a mere 24 hours after the Sept. 11 terrorist attack, with the
nation still shocked and grieving, the airlines moved quickly on the ground,
if not in the air. By the evening of Sept. 12, the carriers had joined in a
unified effort to persuade Congress they needed federal aid.

The airlines had plenty of resources to draw on: 27 in-house lobbyists,
augmented by lobbyists from 42 Washington firms. The lineup included former
White House aides and transportation secretaries, retired members of the
House and Senate, and a former Republican National Committee chairman, Haley
Barbour. The airlines also had at their disposal a Continental Airlines
(news/quote) lobbyist, Rebecca Cox, who is a former Reagan administration
official and the wife of Representative Christopher Cox, a California
Republican.

And in the front lines were the airlines' own chief executives, well known
in the halls of Congress, and corporate board members — many of whom were
Bush campaign contributors. Among them were Donald J. Carty, the chief
executive of AMR, the parent of American Airlines, and Gordon Bethune, chief
executive of Continental, both of whom are based in Texas and have known Mr.
Bush well for years, and Leo F. Mullin, chief executive of Delta Air Lines
(news/quote).

"It was the most high-level surgical strike that I have ever seen," said
Jeff Munk, a partner at the Washington law firm of Hogan & Hartson and a
lobbyist for General Electric (news/quote), which makes jet engines and
leases aircraft. "And the people who made it happen were the C.E.O.'s."

The airlines had some strong arguments to make. The government had grounded
their planes for security reasons, hurting the nation's fragile economy,
while costing the airlines millions of dollars in lost revenues. Besides, in
practically every district, industries related to the airlines — travel and
tourism — were suffering, too, making it easier for the airline lobbyists to
make their case.

In Congress, "everybody was stunned by what happened," Mrs. Daschle said.
"Everybody wanted to help." Mrs. Daschle, who advised both American and
Northwest Airlines (news/quote), said she was careful not to lobby her
husband or his Senate colleagues. But House members said she held
face-to-face meetings with House Democrats.

Not everyone approved of the industry's aggressive tactics in seeking more
money than it lost in the three-day shutdown while excluding its own
employees from the bailout.

"The big dog got the bone," said Representative George Miller, a California
Democrat. "After Sept. 11, the mood was one of shared sacrifice. People had
lost their jobs and their lives. And the first thing that happened was the
airline industry came in while everyone else is waiting to see if they can
make their mortgage payments."

To get what they wanted quickly, the airlines concentrated their efforts on
a few crucial Congressional leaders, including the House Democratic leader,
Richard A. Gephardt, and top administration officials, including the
transportation secretary, Norman Y. Mineta, and Andrew H. Card Jr., the
president's chief of staff.

"All the lobbying was focused on a handful of people at the top," said
Representative Lloyd Doggett, a Texas Democrat. "Even the members of the
Transportation Committee didn't know what was going on."

As a result, on the night of Sept. 14, at a time when House members had been
told to go home for the day, a two-page bill that would have authorized
Congress to give the industry $12.5 billion almost passed by unanimous
consent in a nearly empty House chamber around midnight.

Only through the lone objection of Mr. Doggett, who happened to be on the
floor that night, was the measure stopped.

For that, Mr. Doggett faced the wrath of an airline lobby willing to play
tough and get personal. Continental Airlines, based in his home state, began
an automated telephone campaign with Mr. Doggett as its target after Mr.
Bethune, Continental's chief executive, said Mr. Doggett was to blame for
any layoffs.

Pressure on Congress to pass a rescue package increased, meanwhile, as
Continental and other airlines began to furlough tens of thousands of
employees.

Any industry that can put that many people on the street "is going to get
attention of people at the highest levels," said one staff member of the
House Aviation Subcommittee. "Their tactic was to bring all their top guys
to meet with top people in government and to say the sky is falling."

To bolster their case, board members of the six major airlines began calling
leading members of Congress and the administration. A Continental director
and Houston pastor, Kirbyjon Caldwell, who phoned three senators on Sept.
19, said the airline bailout was needed to help convert "a moment of fear to
a moment of faith." An American Airlines director, John W. Bachmann, a
Missouri financier, called two members of his state's delegation — Mr.
Gephardt and Representative Roy Blunt, the Republican who helped write the
bill — to say the airlines' losses were "breathtaking."

Many of these board members were also big campaign contributors. American's
board members alone gave $148,200 to Republicans in the last presidential
election, while the boards of four airlines — Delta, United Airlines,
Continental and American — gave a total of $712,569 in soft- money donations
to both parties. And, American gave another $100,000 to the Bush
inauguration.

A United board member, Richard McCormick, gave Republicans $98,000, A
Continental board member, Richard W. Pogue, gave Republicans $40,000 and
David Bonderman, also on the Continental board, gave $110,000 to the
Democrats, according to the Center for Responsive Politics, a Washington
research group.

The airlines also benefited from the push for the bailout bill provided by
airline executives, like Mr. Carty of American and Mr. Mullin of Delta, who
routinely work the halls of Congress themselves and made personal visits
throughout Washington. One reason they were well received: since 1998, the
industry over all has given $7.4 million to Republican candidates and
committees, and $4.6 million to Democrats.

In what some lobbyists called a master stroke, the airline industry was able
to double the amount of direct aid it had initially sought by agreeing to
forgo loan guarantees, which they ultimately got anyhow.

Meanwhile, even in a Democratic- controlled Senate, the pleas of organized
labor to protect airline employees were pretty much ignored. "We are upset
that the crisis with the airline workers was not addressed along with the
crisis with the airlines," said William Samuel, a lobbyist for the
A.F.L.-C.I.O.

Copyright 2001 The New York Times Company
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