Q&A: What might have led to the ouster of United's CEO

AP News
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Posted: Sep 09, 2015 6:02 PM
Q&A: What might have led to the ouster of United's CEO

NEW YORK (AP) — How is the closing of some lanes leading to a bridge in New Jersey related to the CEO of the world's second-largest airline losing his job?

You probably aren't alone in asking that. So here is a quick primer to help you connect the dots.

Allies of New Jersey Gov. Chris Christie allegedly closed an access point to the George Washington Bridge as retribution against a local mayor who wouldn't support the governor's re-election campaign. The bridge is owned and operated by the Port Authority of New York and New Jersey, which also operates the airports in and around New York City.

A federal investigation of the affair known as "Bridgegate" eventually pointed to the Port Authority's chairman, David Samson, a Christie appointee. Questions were raised about Samson's interactions with United Airlines, which is the top airline in the New York City area. United is the dominant airline at Newark Liberty International Airport in New Jersey, with 68 percent of all passengers.

With the federal probe underway, United conducted its own investigation. On Tuesday, it announced — without providing any details — that as a result of that investigation, CEO Jeff Smisek and two government relations executives were leaving the airline. Nobody has been charged with any criminal wrongdoing.

Here's a closer look at the issues:

Q: What did United want from the Port Authority?

A: United sought a number of concessions from the Newark airport. First was a new maintenance hangar for its jets. In December 2011, the Port Authority approved the new hangar and put $10 million of its own money toward the $35 million cost of the facility. United also sought lower fees for the rental of gates and terminal space.

After Samson stepped down in March 2014, United went on the offensive. At the end of last year, it filed a complaint with the Federal Aviation Administration accusing the Port Authority of "exorbitant and unreasonable rates" at Newark. United alleged that since 2004, the Port Authority has diverted more than $2 billion from the New York area airports to non-airport uses such as fixing local highways and bridges. United said landing fees at Newark are $11.77 per 1,000 pounds of aircraft weight, compared to $7.42 at Chicago O'Hare, $4.50 in San Francisco, $3.52 in Philadelphia and 82 cents in Atlanta.

Q: Was there anything else?

A: Newark Airport lacks a direct connection from Wall Street. The PATH, a train line owned and operated by the Port Authority, already runs from the World Trade Center to downtown Newark, New Jersey. United wants the agency to expand the PATH by almost two additional miles so that the lawyers and bankers working in lower Manhattan — the same folks who buy expensive last-minute tickets — would have a direct and quick route to the airport. Just 7 percent of passengers arrive at Newark Airport by train and United would like to see that increase. The project is expected to cost $1.5 billion and the Port Authority is still studying it.

Q: What did the Port Authority want from United?

A: Samson allegedly wanted an easier way to his weekend home in Aiken, South Carolina. There used to be a nonstop flight to Columbia Metropolitan Airport in South Carolina, about 50 miles from the vacation home, but it was canceled. United resumed the flights, leaving Newark on Thursday nights and returning on Monday mornings. The flight was nicknamed "the chairman's flight," according to reports. Apparently few others hopped onboard. On average, just 26 of the 50 seats were full, according to the Bureau of Transportation Statistics. And things were even bleaker in February when the flight averaged just 16 passengers.

Q: What else did the Port Authority seek?

A: New flights to Atlantic City. New Jersey has struggled to revitalize the seaside city and stop the massive drop in gambling revenue. The Port Authority agreed to manage and market the nearly-unused airport but hasn't been able to attract new flights — the airport is too close to major air hubs in Philadelphia and Newark.

In November 2013, Smisek joined Christie and Samson to announce that United would start in April 2014 daily flights from Atlantic City to its hubs in Houston and Chicago. Smisek said two flights — on tiny 50-seat jets — would help drive economic development in the region. Fliers weren't racing to Atlantic City. The flights were typically half full, according to government statistics. United canceled the service Dec. 3, 2014.

Q: What are the legal implications?

A: If charges are brought against Samson, Smisek or others, they would be likely to fall under a federal statute governing theft of honest services, a broad law used frequently in corruption cases, said Bradley Simon, a white-collar defense attorney and former federal prosecutor.

"I don't think extortion applies," Simon said. "They would have to prove that Samson said, 'You're not going to get these deals unless you provide me with a special flight to South Carolina.' I don't think it would be that overt."

Q: How will this affect Christie's presidential campaign?

A: Voters will be the ultimate judge, starting with the Iowa caucuses next February. But at the moment, Christie's campaign has nowhere to go but up. In polling both nationally and in New Hampshire, the early-voting state where Christie is focusing most of his efforts, his support has slid into the low single digits.

His struggles may have begun with "Bridgegate," but were exacerbated by the rise of New York billionaire Donald Trump, who has taken over Christie's place in the race as the brash truth-teller.

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With reports from U.S. Political Editor David Scott in Washington and reporter David Porter in Newark, New Jersey.

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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott


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