Who's Got The Clout To Win An Air Route To China?

Marco Polo never had it so tough. As the Clinton Administration prepares to dole out new routes to China, a sharp-elbowed battle is breaking out in Washington between the biggest names in air transport. Lining up in the various camps are advantage-seeking candidates, former officials with political juice, and big-money lobbyists.

Under current international treaties, Northwest, United, and FedEx are permitted a total of 44 flights a week to China. But a pact signed last year allows the U.S. to name a fourth carrier--and divvy up a total of 10 new weekly flights. The value of this latter-day Silk Road? Hundreds of millions of dollars, and a foot in the door of the world's largest emerging market. With the Administration scheduled to announce the winners by summer, the quest for the prize "is the most intense I have ever seen," says D. Scott Yohe, a top lobbyist for Delta Air Lines Inc.

Certainly, the contest is creating some strange bedfellows. FedEx, for example, is unlikely to get any new flights. So to fight United Parcel Service's bid, it is flooding Transportation with letters from clients such as Honda Motor and Sara Lee praising FedEx service. The tacit message: A new entrant like UPS isn't needed. UPS has responded with calls for competition from clients such as Intel and Wal-Mart. Meanwhile, Delta and American Airlines have leapt to the aid of FedEx to help eliminate a mutual rival.

COINCIDENCE? United has pulled the boldest stunt. Currently, it flies nonstop to China from San Francisco. In a move that undercuts American's argument that the U.S. needs direct service from Chicago--which American proposes to offer if it wins the route--United said it would begin its own Chicago-to-Shanghai flights on Apr. 1, 2001. That's the same day that American would launch its identical service. United denies any Machiavellian intent. "As far as we're concerned, American isn't even a player in this marketplace," says Shelly Longmuir, chief lobbyist for United. Retorts Will Ris, Longmuir's counterpart at American: "Oh, right. It's an incredible coincidence."

American's approach is more subtle. In March, it flew 150 employees to Washington to lobby for permanent normal trade relations with China in hopes of currying favor with the Clintonites. It has launched a massive grassroots e-mail and letter-writing effort by employees and frequent fliers. It has hired top lobbyists such as former Senator Dale Bumpers (D-Ark.). And it has won the endorsement of Chicago Mayor Richard Daley, brother of Commerce Secretary William M. Daley. American has even enlisted Alfred Kahn, former chairman of the Civil Aeronautics Board and the father of deregulation, to endorse its bid. Kahn and industry critic Kevin P. Mitchell argue that passenger flights would bring bigger bucks to the U.S. economy than freight service.

Not to be outdone, UPS has won the support of Teamsters President James P. Hoffa with the promise of 1,200 union jobs. It has retained former Commerce Secretary Mickey Kantor and has gotten letters of support from 340 House and Senate members and 37 governors. Its economic claim: Awarding flights to UPS will stimulate demand enough to boost U.S. exports to China by $1.3 billion in the first year. "In the new economy, trade trumps tourism," says UPS spokesman Tad Segal.

Delta is lobbying pols on the East Coast, where business travelers stand to benefit from nonstop flights out of New York. The airline says direct China service from the Northeast could cut seven hours off a 22-hour U.S.-China flight. It has wooed both New York Mayor Rudolph Giuliani and his rival for a Senate seat, Hillary Rodham Clinton. Giuliani has written to Transportation on Delta's behalf, and Clinton may follow suit. Delta and American both are trying to persuade James R. Sasser, former U.S. Ambassador to China and a political ally of Vice-President Al Gore, to endorse a passenger carrier over UPS. With Washington picking the winners, to the connected will belong the spoils.

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