It turns out that crime does pay. At least that seems to be the lesson that United Airlines is learning this week. Some two years after axing the “Chairman’s Route” between Newark and Columbia, South Carolina – a route operated twice weekly so that the Chairman of the Port Authority of New York and New Jersey could more easily fly to his vacation home – the company signed an agreement this week with federal prosecutors, agreeing to stop bribing people and pay $2.25mm in exchange for no criminal charges being filed against the company.
The route was placed in the schedule specifically to gain approval from the PANYNJ to lease land and build a new wide-body maintenance hangar at the airport. Progress on the negotiations stalled as the PANYNJ refused to consider the request at its board meetings until the route was added. Once that happened the topic made it on to the meeting agenda and was quickly approved. And so long as the route was operating it seems that United continued to be able to have topics it saw as important discussed and resolved. Once the route was terminated in March 2014 the relationship soured again. Later that same year a public fight over landing fees and funding priorities cropped up, a topic that had been “mysteriously” avoided for the prior three years. Funny coincidence, that.
Of course, I’m not entirely sure how you send a company to jail so I don’t know what criminal charges would really accomplish, but I have to think that the $2.25mm fine is FAR less than the value, both in real money and in kind favors, the company realized during the three years that the route operated. Yeah, there is a small PR hit for being known as the company that bribes people to get what you want, but the business got done and the company profited from it, even with the fine. That’s shitty.
The route authorization and associated fallout eventually led to the sacking of former CEO Jeff Smisek. He walked away with a princely sum of cash though also the likelihood that he’ll never work in the industry again. Though keeping that golden parachute depends on him not being convicted of a crime “involving moral turpitude.” At least the agreement does not preclude that from happening, best I can tell:
This Agreement does not include potential criminal tax charges, as to which this Office can make no agreement, and it does not provide any protection against prosecution for any other crimes except as set forth above. This Agreement also applies only to United and its present or former parents, subsidiaries, and affiliates as of the date of this Agreement, and not to any other entities or to any individuals.
Oh, and United is not allowed to take a tax deduction on the fine paid. I guess that’s something.
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