Reported last week, the recent contretemps that resulted in the resignation of United Continental CEO Jeff Smisek raises a question often debated in the sordid aftermath of shameless crony capitalism: Was it a bribe or blackmail?
Back in 2011, United Continental, the largest airline by passenger volume (70% of traffic) at Port Authority-controlled Newark International Airport, sought to renegotiate its lease agreement there (and get approval for a wide-body maintenance hangar) as well as obtain funding from the PA for a $600 million extension of the PATH commuter train from downtown Manhattan to the airport. At a fat-cat dinner in September of that year, PA Chairman David Samson, who was appointed PA potentate by Chris Christie but resigned in March 2014 as US Attorney Paul Fishman’s “Bridgegate” investigation widened (to include topics like United’s dealings with the PA), did what any self-respecting New Jersey autocrat would do:
Halfway through dinner at Novita, an Italian restaurant in Manhattan, Port Authority Chairman David Samson surprised the group with a request of his own. He complained that he and his wife had grown weary of the trip to their weekend home in Aiken, South Carolina, because the best flight out of Newark was to Charlotte, North Carolina, 150 miles away. Until 2009, Continental had run direct service from Newark to Columbia, South Carolina, 100 miles closer. In a tone described by one observer as “playful, but not joking,” Samson asked: Could United revive that route? An awkward silence fell over the table.
About a month later, United decided against reviving the requested route, which must have displeased the PA boss because in early November of that year he informed the airline, through a United lobbyist, that “he’d removed one of the airline’s requests from the agenda of that month’s Port Authority board meeting.”
At the December 8 PA meeting, United’s new hangar was approved. A few weeks later, United had a change of heart and decided to revive the Newark-Columbia route, which resumed operating on September 6, 2012 and was christened the “Chairman’s Flight” at United for obvious reasons, ie, offered twice weekly (one flight to Columbia on Thursday afternoons, one to Newark on Monday mornings), it was just perfect for the PA honcho. And just as one hand washes the other with Mafia-like efficiency, before September had ended, the PA had approved a study to extend the PATH train to Newark Airport.
But corporate bribery isn’t just what is used to be. These days, it’s lazy and entitled, so Samson didn’t exactly get the royal treatment. A source at United told Bud Fox News:
Despite the special route, Samson got treated like any other United customer. By that I mean, even though his flight was almost always empty, his request for an aisle seat was always ignored, and he was usually jammed in between the two fattest people on the flight. He stopped checking his luggage because it got lost on his first two trips. The worst was when Alec Baldwin was on one Columbia-bound flight, I think going to a movie location. He got into it with the male flight attendant, and told him, and I quote, “There’s nothing more pathetic than an aging queen who’s bitter about losing his looks. Go back to reading that bio on Barry Manilow.” After that, the guy was in no mood for Samson and his usual diva demands- Samson used to call for help by yelling, “Waitress!” So when Samson started complaining about the food, the flight attendant said, “I’ll tell you what, I’ll get you something else when you finish construction on Ground Zero.” From what I’m told, Samson went ballistic and almost had to be restrained.
According to a nice article on NJ.com, United couldn’t even get Samson to his destination on time:
Data from the transportation statistics bureau for 2013 indicate the Thursday night flight from Newark to Columbia Metropolitan, United 4410, had a dismal 26 percent on-time record, and was only 40 percent on-time record on the return trip to Newark, compared to a 72.8 percent on-time performance record for the airline overall that year.
There must have been an ulterior motive for the route because it was probably a money-loser; from the same NJ.com article:
An analysis of data from the federal Bureau of Transportation Statistics found there were a total of 286 non-stop flights between Newark Liberty and Columbia by ExpressJet [BFN: ExpressJet partners with United], carrying a total of 7,149 passengers. That means each flight averaged just under 25 passengers, or a 50 percent booking rate, well below the rate of 85 percent or higher common among carriers.
Whether it was Samson’s blackmail or United’s illegal payola, it’s pretty obvious who did better on the deal: Smisek by a mile:
Samson resigned as PA head in March 2014 (the Feds have been sizing him up for prison stripes ever since). Four days after his departure, United ended the Chairman’s flight. On Samson’s last day, he was certainly told not to shred any documents.
On Smisek’s last day at United, the former CEO probably didn’t need to be told that he’d receive at least $21 million in cash and stock, fly free for the rest of his life and keep his company car.