James Clay Fuller

Things We're Not Supposed to Say

Saturday, January 15, 2005

Northwest Airline feasts in Land of Pawlenty

In the piece directly below this one, a couple of readers have told me, I made it appear as though Tim Pawlenty, who calls himself governor of Minnesota, really works solely for the Taxdodgers League of Minnesota.

If that is the impression I gave, I apologize.

Tim also works for Northwest Airlines.

In fact, he works for Northwest – widely known in the Twin Cities as Northworst – with such zeal and focus that it is impossible not to speculate on what he’s getting from the airline, or what he expects, and when. Large campaign contributions are assured, obviously, but is there something more?

I am not suggesting anything remotely so crude as bribes.

The governor is much too smart and much too ambitious to get mired in gross criminality. It’s also probable that he’s more motivated by power than money. And Tim and his wife, a judge, have made it clear to the public that they pray a lot.

(She prays over decisions from the bench, she says. Don’t know about you, but I prefer that judges base their decisions on the law. But that’s a topic for another day.)

Anyway, it is indeed fortunate for the governor for all wealthy Minnesotans that the interests of the Taxdodgers League and the airline, which has been screwing over Minnesota’s residents since Tim was a pup, almost always coincide. It’s a very safe bet that many of the Taxdodgers own substantial blocks of Northwest stock.

After he was elected in 2002, but even before his inauguration, Dapper Tim dashed to the Northwest executive offices, wherein he got on his knees and promised the airline bosses in unmistakably plain language that he would do whatever he could to see that they get whatever they want from the state. Anything, anything at all. He wanted a "partnership" with the airline, he said.

Well, OK. The bit about his being on his knees may be a slight exaggeration. The rest of the statement is true; it’s on record.

Note that he did not make similar public visits to other major employers in Minnesota – not to 3M, nor General Mills, nor Hormel, not even to Ford Motor Co., which has held a threat of plant closing and job loss over the heads of its St. Paul assembly plant employees for decades now.

The Northwest visit was a clear statement to all – airline employees, legislators and especially members of the Metropolitan Airports Commission (MAC, about which more shortly) that Tim was handing the keys of the state, including the treasury if needed, to the airline big shots.

Jump to September 2004:

Pawlenty holds a press conference to announce that Northwest has drawn a detailed plan for the expansion and reordering of Twin Cities International Airport and that, he, Tim the Gov, endorsed every single line of that plan without reservation. The plan lays out exactly what goes where and who gets what at the airport for the next 15 years.

Airports in the Twin Cities, of which the international airport is by a huge amount the largest, supposedly are governed by the MAC, an appointed body that is charged with acting in the public interest. In fact, the commission, with the exception of two or three members, has behaved so subserviently in relation to Northwest over the past decade or two that many people routinely refer to it as "Northwest’s most important subsidiary."

The international airport is the seventh busiest in the world, in terms of takeoffs and landings.

Despite their fawning ways, members of the MAC, with the likely exception of its chair, Vicki Tigwell, a long-time pal of the gov’s and appointed by him, had no information on what the Northwest plan entailed until the gov’s press conference.



In fact, all they had heard was rumors to the effect that the airline had a plan. Tigwell’s reaction to the gov’s act as spokesman for the airline in the unveiling of that plan – one could say plot -- was to say how wonderful it was that the airline had saved the state the cost of designing airport expansion and remodeling.

Withholding information from MAC members was done despite the fact that the governor appointed ten of the 15 commissioners. (He’ll get to appoint at least two more this year.)

Tim’s press conference was organized by Northwest Airlines personnel, not the governor’s staff. It is likely that the gov’s talk was written by airline employees, though I have no evidence of that. His staff didn’t know squat about the airline’s plan, and it’s a 1,000 to 1 shot against Tim having written his own little speech.

Fortunately, and uncharacteristically of late, the Star Tribune has done an excellent job of reporting on the situation in recent days. (In fact, it’s the second or third good job of original reporting done by my old newspaper in the past month, after many months of looking like the Businessman’s Promotion Sheet. Hoodamnray!)

Because of that, we know what Northworst wants. Or, rather, expects.

With Timmy’s blessing, it is insisting that all airlines other than itself and three other companies with which it has "alliances" – KLM, Delta and Continental, which get gates only insofar as they are cooperating with Northworst – be booted out of the airport’s main terminal.

Northwest already controls 80 percent of the gates at the main (Lindbergh) terminal – 101 of 117 gates. Under the plan, that terminal would be expanded to 153 gates and Northwest would have them all.

All other airlines are to be relegated to the Hubert H. Humphrey terminal, which is somewhat awkwardly located and still is basically set up for charter airlines, although it underwent an expansion and remodeling a few years ago. One combination charter/scheduled airline, which has only a few daily scheduled flights, operates out that terminal.

The Northwest plan ever so generously allows further expansion of the Humphrey terminal, from 10 to 20 gates.

(Got that? Total 153 gates at the main terminal for Northwest, 20 gates in the substandard Humphrey terminal for all competitors.)

Of course, there is, and would be, very little in the way of amenities at the smaller terminal. There are only two or three shops, for example, and the place has only one or two fast food restaurants, no better restaurants. No good coffee shops, no book/magazine store. Not much of anything.

Do you see a certain – shall we say – imbalance here?

We’re just getting started.

The 15-year plan supposedly would (will) cost an estimated $862 million. There is absolutely no doubt that the actual cost would/will be higher. Travelers will pay about half the cost through ticket surcharges. Northwest generously agreed to pay just $92 million of that $862 million, apparently on the grounds that it needn’t pay more for what amounts to total control of the airport because what’s good for Northwest is good for Minnesota. But (you knew there was a "but" didn’t you?) it plans to borrow the entire $92 million from the MAC.

A brief pause for a little history here, things not reported by the newspapers in recent coverage:

Northwest has borrowed from the people of Minnesota before, and been subsidized in various ways by the public. And – you’ll be shocked, no doubt – it hasn’t always (or usually) lived up to its end of the bargains.

In 1992, Northwest was in some financial difficulty, the seriousness of which it exaggerated greatly. The state provided the airline with $761 million in financing and the airline borrowed an additional $270 million from the MAC. That was the same year Northwest’s employees made huge concessions, giving back about $900 million in pay and benefits.

Part of the deal for the public financing was that Northwest was to build an aircraft maintenance center at the Duluth airport that would have a minimum of 350 employees. It also was to open a reservations center in the Iron Range region of the state and build an engine overhaul facility in Hibbing, another Iron Range town.

By 1995, Northwest, having slashed the pay of its employees, was reporting record profits. In 1996, a reservations center was opened in the little city of Chisholm and the Duluth maintenance base also opened. Neither had anything like the number of employees they were eventually supposed to have, although the Duluth base did get up to snuff later, for a brief period.

In 1996, the airline again hit new highs in profits. The following year, still rolling in dough, the company paid off what remained of the MAC loan. It also announced that it would send its jet engines to France for overhaul, thus arrogantly refusing to honor the financing agreement with the state that called for an engine plant in Hibbing. It suffered no consequences for that action.

I haven’t yet found numbers on employment at the Chisholm reservations center, although some reports indicate employment never has reached promised levels. Just last June, Duluth Mayor Herb Bergson pretty well told the story of what has happened at the maintenance base in his city.

Bergson sent a letter to the airline’s chief executive officer, Richard Anderson, saying that only 217 mechanics – not the promised 350-plus – worked at the base and demanding that the other jobs be provided. He also noted that Duluth still is paying out $875,000 a year on $46 million in government bonds sold to build the base. He said Duluth is looking at a budget gap of "at least" $3 million this year.

So much for history.

Gov. Tim knows all that, of course. Bergson copied him on his letter to Anderson, for one thing.

But Tim is unreserved in his support for whatever Northwest wants.

Obviously, it’s because Northwest provides and will continue to provide so many (roughly 6,000) jobs in the Twin Cities, right?

Well, the second phase of the new plan, to be acted on three or four years from now, calls for tearing down maintenance hangers on the west side of the airport, as well as the building of a new passenger concourse.

There is nothing – not one word – that suggests the hangers would be replaced.

Since Northwest has shown a considerable enthusiasm for shifting major maintenance to Asia, where mechanics come much cheaper than in Minnesota, the mechanics' union rationally suggests that up to 2,000 jobs will disappear from the Twin Cities if Northwest gets all it wants.

Given Pawlenty’s behavior and a lot of nudging by the mechanics union, the State Senate decided hastily, shortly after the 2005 session opened, that it needed to look at the Northwest plan. A hearing before the Senates Transportation Committee was quickly scheduled.

Airline execs declined to testify.

Yup. Refused to show up.

The excuse for their arrogance was that Northwest is in contract negotiations with the mechanics' union – it instigated the negotiations to push for major contract cutbacks – and the union was going to have spokesmen at the Senate hearing and probably wanted to talk about possible pay cuts and job losses right there in front of the Senators and even – ohmahgawd – reporters.

Given all the other problems, as suggested above, one would have to assume that for the gov to be so eager to give Northwest the moon and the stars, the airline must do other wonderful things for the state.

Well, there are some advantages to being a hub for a major airline. Lots of direct flights to other cities and the like.

However, Minnesota has been paying through the nose for that dubious advantage for decades.

Two new studies, one commissioned by the Star Tribune, show that people flying in and out of the Twin Cities pay an average of $60 more per round trip than the national average for comparable trips, and if they fly Northwest, they pay $92 more than the average price at other airports. Passengers on trips that began or ended at the Twin Cities paid a total of $456 million more than the national average for comparable flights in 2003, the Strib reported. According to that same study, the newspaper said, the cumulative extra cost to Twin Cities travelers since 1995 – their penalty for flying in and out of Northwest’s home base – totals $4.4 billion. In the first half of last year, the Strib reported, fares at the Twin Cities airport were 21 percent above the national average.

There are many more numbers, but they all come to the same thing: If you have to fly from/to the Twin Cities, you’re getting screwed.

The new studies, incidentally, are just the latest. At least four others were done over the past couple of decades by different research organizations. All of the previous research came up with the same basic results.

Northwest responded this time as it has to every study in the past: The reports are wrong, the research is flawed, prices in the Twin Cities are "competitive" with those elsewhere, the researchers were biased. It offers few facts to back its claims, and those it does offer are tainted. Like the Bush administration, it just keeps shouting the lie.

At this point there appears to be almost no chance that Northwest will be thwarted in any significant way. It’s even likely that the stinking mess that should be piling up all over and around our charming governor actually will leave him untouched, clean and smiling. Teflon Timmy, some folks are starting to call him.

Only two things could make a difference, and both are less likely than our seeing Paris Hilton settle into a mature and serene for-life marriage within the next six months.

One is that the public gets angry enough to demand and keep demanding, a new deal at the airport. The other is that state legislators – make that Senators, since right wingers still control the House – find the guts to stand up to Tim and Northworst.

One step in the right direction would be to make the MAC an elected body, but it ain’t gonna happen.

Oh. About how important it is to have a hub airport?

With the amount of traffic in and out of the Twin Cities, how likely is it that Northwest would walk away from its hub here if it doesn’t get all or even most of its wish list?

If the execs did get insanely huffy and take a hike, how long do you think the airline industry would leave a vacuum at busy Twin Cities International? Ten minutes? Sixteen seconds?