That special relationship

Posted: Nov 29, 2001 12:00 AM
WASHINGTON -- On his Concorde dash to Washington early this month, British Prime Minister Tony Blair did more than plot anti-terrorism strategy with George W. Bush. He made a pitch behind closed doors for the becalmed alliance between American Airlines and British Airways. All signs are that he succeeded. President Bush and his chief of staff, Andrew Card, made clear that priority for the war against terrorism will not stall the AA-BA deal. What's really important is that the fix is in to override normal regulatory procedures, keeping the Justice Department's Antitrust Division from intervening in the Transportation Department's approval process. American Airlines' hard-pressed U.S. competitors complain they would be shut out of London's close-in Heathrow Airport -- a devastating economic blow. At this writing, those airlines cannot even get a hearing with Andy Card, much less the president. So, the U.S.-U.K. special relationship is more special for some people than others. Blair did not spring the airline deal by surprise. Weeks earlier, Card received a transatlantic telephone call from Jonathan Powell, his counterpart in London. He wanted assurance that the AA-BA deal did not get trapped by the Transportation Department's post-Sept. 11 preoccupation with security. The two airlines want Transportation to grant American and British Air immunity from U.S. antitrust prosecution so they can operate as a single merged airline. The prime minister raised the issue in his private session with the president, and the response pleased him mightily. The word passed to London and bounced back to Washington. According to this account, when Bush turned to Card and ordered: "Look into it," his chief of staff responded: "It's something we have to do." "I think that's an overstatement," Card told me when I related the British account. But not really much of an overstatement. "I said," Card went on, "that this would not be a problem." As a former secretary of Transportation, Card knows the airline business inside out. Card told me he then telephoned Deputy Secretary of Transportation Michael Jackson to inform him "we should be able to solve this as well as the security problem." A sub-Cabinet member does not ignore word from the White House chief of staff, especially since Jackson was Card's chief of staff at Transportation during the first Bush administration. A reliable aviation industry source said Jackson then contacted Deputy Attorney General Larry Thompson and allegedly instructed the Justice Department not to intervene in proceedings brought by Continental, Delta and Northwest seeking to block the AA-BA deal. Jackson told me that he had conversations with Thompson but did not ask Justice to stay out of the case. Nevertheless, he confirmed to me that Justice is not intervening. Thompson told me he had no such conversations at all with Jackson. Blair might have rejoiced that the special relationship paid off with such U.S. support, but the prime minister should be aware that the congressional system is a lot different than the parliamentary system. Competing airlines are mobilizing their allies to pressure the Bush administration. That includes governors of states served by airlines who see their ruin in the Anglo-American agreement. Bush's longtime ally, Michigan Gov. John Engler, wrote Transportation Secretary Norman Mineta, saying his state "cannot afford" this deal. Twenty-two senators sent the same message to Mineta and Secretary of State Colin Powell. Teamsters President James P. Hoffa ("on behalf of the 50,000 Teamsters employees in the airline industry"), asked that consideration be suspended "until a more appropriate time." Last week, the Democratic chairman and senior Republican on the Senate Antitrust subcommittee asked the Justice Department not to abandon its normal oversight. Michael E. Levine, a Harvard law professor and pioneer in airline deregulation, submitted a paper at his own initiative urging that "as agreements that create quasi-firms, alliances ought to be subjected to antitrust standards." The AA-BA arrangement in conjunction with the United Airlines-British Midland alliance "will dramatically reduce actual and potential competition in most markets between London Heathrow and the United States." Andy Card told me he assured the British that the AA-BA deal "will not fall through the cracks." That suggests a quid pro quo for Prime Minister Blair's war effort, as it surely circumvents the federal regulatory process.