Playing Politics with Airlines

Pan Am screams foul at Braniffs rich, new route gains

One area in Which the imperial presidency is as regal as ever is the matter of international airline routes: by law the President can bestow on any airline of his choice the right to fly between any American city and any foreign one, and he need not bother to state a reason. Just before Christmas, Jimmy Carter exercised that prerogative in a fashion that caused his own chairman of the Civil Aeronautics Board briefly to consider resigning, and that is now leading Pan American World Airways to scream about undue political influence. Reason: it lost a juicy route to Dallas-based Braniff Airways.

Carter's order had other, less controversial effects. The President gave permission for new direct transatlantic flights to Europe starting from eleven U.S. cities, most in the Midwest or South; only ten cities had previously served as gateways to Europe (see map). He granted TWA the right to fly nonstop to Europe from Pittsburgh, Denver, St. Louis, Cleveland, Minneapolis-St. Paul and Kansas City, Mo. Northwest Airlines, which had no flights to Europe, picked up unused Pan Am rights to fly to Scandinavia from several cities across the nation. Delta Air Lines, which until now has been primarily a domestic carrier with no European routes, got the right to fly from Atlanta, its head quarters, to London; Miami-based National Airlines can add service from New Orleans and Tampa to its existing Miami-London route. Pan Am was told it could start flying nonstop Houston-London in about three years. In all these matters, Carter followed CAB recommendations.

But the President made two key alterations in the CAB proposal. The board had recommended that National be allowed to fly only to Paris; the President added Amsterdam and Frankfurt. More important, the CAB had decided by a 4-to-1 vote that Pan Am be chosen to open service on the potentially lucrative route from Dallas-Fort Worth to London. Its reason: Pan Am, which only in the past two years has begun to earn a profit after years of heavy losses that at one point drove it to the brink of bankruptcy, could not stand any more competition. Carter gave the route instead to Braniff, which has been prospering mightily; the President cited "foreign policy considerations" that, as is his privilege, he did not bother to explain.

When CAB Chairman Alfred Kahn heard the news by phone in a doctor's office, he considered quitting on the spot, but thought it over for 24 hours and decided to stay. Pan Am was less charitable. Stormed William Seawell, the airline's chairman and chief executive: "We are outraged." The White House order, he said, "appears to have been dictated by the kind of political manipulation the President promised would not characterize his Administration."

Some consumer groups immediately charged that Carter had violated the spirit, if not the letter, of a directive by President Ford aimed at stopping back-room White House lobbying on airline awards. Ford had ordered that no "interested parties" be allowed to talk to the President on international airline cases. The consumerists noted that George Busbee, Carter's successor as Governor of Georgia, had visited the White House to press home-state Delta's claim for generous treatment. Carter spokesmen contended that there was no "impropriety" because Ford's order did not apply to elected officials.

The Braniff award brought matters to a real boil. The airline had been fined for making illegal contributions to Richard Nixon's re-election campaign. Now the political wind has shifted from San Clemente to the South--and Braniff has influence there too. Virtually the entire Texas congressional delegation lobbied Carter. Says one airline lawyer: "They hit the White House like dive bombers from the Confederate air force."

Pan Am flight engineers charged last week that Carter had been subjected to pressure from Texas Governor Dolph Briscoe, "and possibly even from one high-ranking member of the Administration who is a former Braniff director." The reference was to Robert Strauss, who was Democratic National Chairman when Carter was nominated for President and is now Carter's chief trade negotiator. Pan Am asked the CAB either to stay the new route awards for 90 days or grant the routes only on a temporary basis. To no avail; last week the CAB staff was readying a final order for Carter's signature when he returned from his foreign trip.

Carter's decisions pleased people in the new gateway cities. In Atlanta, John Wilson, president of Multimart, an import-export company, declared that the order "puts the small and medium-sized business directly on the line to Europe." Officials in Tampa, New Orleans and Kansas City predict a big increase in tourism by foreigners.

None of that helps Pan Am, which has let its once enormous political power decline while Braniff has developed potency with Carter's Sunbelt constituents. The loss of any international route hurts Pan Am especially because it has no domestic service to supplement its foreign business. The airline pointed out that no department of the Government found any foreign policy reason for denying it the run from Dallas-Fort Worth to London. But the only opinion that counts is the President's, and according to several reports, he traded the award to Braniff for the votes of the Texas Congressmen on energy matters.

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