By Chuck Strouse
By Scott Fishman
By Terrence McCoy
By Ryan Yousefi
By Ciara LaVelle, Kat Bein, Carolina Del Busto, and Liz Tracy
By Pepe Billete
By Ryan Yousefi
By Kyle Swenson
A week before Christmas, as Peter Dolara, a senior vice president for American Airlines, was hosting a party for friends and business associates at his Coral Gables home, a parking valet pulled him aside. There was a man outside asking a lot of questions and offering money for information about who was at the party, the valet reported, adding that the man was especially interested in whether any politicians or county commissioners were in attendance.
Shocked, Dolara strode outside. Who was spying on his private party? Lurking nearby he found Michael Benages, a lobbyist who works for American's major competitors at Miami International Airport: United Airlines, USAir, TWA, Delta, and Air Canada.
"It was amazing," recalls Ted Tedesco, the corporate affairs counsel for American Airlines (Dolara himself refused to be interviewed for this story). "He was out there trying to take down license plates and offering the valets money for information." Not only that, says Tedesco, "[Benages] told the valets he was collecting that information on behalf of the Miami Herald."
Since October, when county commissioners approved a billion-dollar concourse expansion and renovation at MIA exclusively for American Airlines, a virtual state of war has existed between American and its competitors here. Before commissioners gave the project the final go-ahead, United and the other airlines filed suit against the county, arguing that commissioners were unfairly giving American a tremendous marketing advantage by agreeing to build for the airline what they describe as the "Taj Mahal" of terminals.
The competition has also, through Benages, quietly been attacking the propriety of the commission's decision, raising ethical questions about a purportedly cozy relationship between various commissioners and American Airlines. For months the Miami Herald has been investigating those claims. Its first report appeared February 7, under a front-page banner headline: "Dade commissioners took airline freebies." Added a subheadline: "The first-class seats and bonus frequent-flier miles were bestowed at a time when American Airlines was seeking the county's approval of a $950 million super hub at MIA."
Writers Sydney P. Freedberg and Karen Branch stated that news of the alleged indescretions "broke into the open" during a commission meeting the day before as commissioners discussed how to address the Herald's request that they "disclose their exclusive travel benefits."
The next day, February 8, the Herald published an editorial critical of the commission. Its title: "Metro's high fliers."
For Tedesco and other American Airlines officials, and for the commissioners who were singled out, the Herald's front-page story triggered a major case of dej… vu. "It was like I was in that movie Groundhog Day," says Commissioner Katy Sorenson, referring to the Bill Murray film in which the protagonist relives the same day over and over.
In fact, the matter of commissioners receiving airline upgrades had been explored in the New Times cover story "First Class All the Way" in April 1995, more than nine months earlier. But commissioners and American Airlines officials alike feel that the Herald story was more than repetitious. It was, they assert, deliberately slanted against American.
The Herald story made it seem as though American Airlines had only just now repudiated the practice of giving upgrades to commissioners. The effect was to imply that the airline was seeking to ground Metro's high-flying politicos only after its expansion plans at MIA had been approved. Though the Herald story never stated outright that American Airlines had doled out upgrades in hopes of influencing politicians, the verbiage left little room for doubt: American issued Gold and Platinum cards, and was generous in bestowing its perks.
By contrast, the previous year's New Times story had examined a culture of arrogance fostered by some commissioners and county staffers, who continually demanded special treatment A not just from American, but from every major airline that serves Miami. The story laid out a history that went back to the days of Joe Gersten, who once reduced an American Airlines ticket agent to tears in Los Angeles while demanding an upgrade. Commission Chairman Art Teele admitted to New Times that he had received upgrades, as did airport director Gary Dellapa and Amaury Zuriarrain, Dellapa's second in command. Commissioners Maurice Ferre, Alex Penelas, and Pedro Reboredo (who chairs the commission's aviation committee) also acknowledged asking for upgrades and getting them. "I have requested them and I have gotten them," Ferre told New Times almost a year ago. "There's no conflict because I don't take them from just one particular airline. It isn't just American. It's also United and USAir. The best of the bunch is United, they are a dream."
New Times further reported that according to sources within the aviation department and others familiar with the subject, Commissioner Natacha Millan, former commissioner Larry Hawkins, former county manager Joaquin Avino, and several assistant county managers repeatedly asked for free upgrades from airline companies that do business at MIA.
So pervasive was the the practice of arranging upgrades for commissioners, the New Times story pointed out, that Katy Sorenson had not demanded an upgrade, nor was she offered one: An eager-to-please county employee at the airport had friends at American Airlines, and had seen to it that the newly elected commissioner and her family were bumped up to first class when they returned to Miami from a vacation in Hawaii.
The story also noted that it was American's Ted Tedesco who was the commission's harshest critic. Based at the time at the company's headquarters in Dallas (he has since transferred to California), Tedesco told New Times that American executives had been confounded for more than a year by the seemingly endless stream of upgrade requests from commissioners and other county bureaucrats. Six months before the commission held a vote on the new terminal, New Times quoted Tedesco as saying, "What in the hell are people doing down there? It seemed like every day we were hearing about something new. More commissioners. More staff people. Every time someone flew, they expected to be upgraded. And when it spread to their staffs, that was too much. We felt we had to do something."
American's answer was to issue memos to its top executives in Miami, instructing them to cease granting upgrades willy-nilly. To wean commissioners of the habit of trying to arrange upgrades through all sorts of back- door channels, Tedesco explained to New Times, the airline had already begun issuing the officials VIP cards and special stickers that would allow them to buy upgrades at reduced prices.
The Herald article correctly pointed out that the Gold and Platinum card programs amount to perks; the programs are normally reserved for people who fly at least 25,000 miles annually, and most commissioners would not have qualified. Still, in implying impropriety on the part of American Airlines, the writers provided little of the background that had led American to issue the cards and had spurred the original New Times story.
Writers Freedberg and Branch also were unable to confirm whether every commissioner received the cards, issued through the county's travel agent. As a result, commissioners such as Dennis Moss and Betty Ferguson, both of whom are known not to have abused their positions to receive upgrades, were singled out. "I take particular offense at the implications of the article and the editorial," Moss says. "It implies I went out and sought this card, when I didn't. It implies I used this card, when I didn't. I've never used that card. I've never asked for an upgrade. I've never gotten an upgrade. I fly coach."
The Herald writers were similarly selective in identifying which provisions of the county's ethics code the upgrade-grabbing commissioners may have violated. As last year's New Times story explained, the officials may have run afoul of three separate provisions: "Disclosure," "Exploitation of Official Position Prohibited," and "Gifts."
The Herald article did make clear -- as had New Times the year before -- that some commissioners seemingly violated the "Disclosure" regulations, which require that commissioners and high-ranking county employees annually report to the Florida Secretary of State any gifts valued in excess of $25. But although the Herald writers noted that the code defines gift as the "transfer of anything of economic value whether in the form of money, service, loan, travel, entertainment, [or] hospitality" without adequate payment for that item or service, they failed to reveal that the "Gifts" section also states that county employees, including commissioners, "shall neither solicit nor demand any gift."
Nor did the Herald story mention the section on "Exploitation," which states, "No person . . . shall use or attempt to use his official position to secure special privileges or exemptions for himself or others. . . . " Under that provision, too, American might have been viewed as the victim, not the perpetrator of any impropriety, airline spokesmen argue. Which is why, they feel, the section was not explained in the article; viewing the airline as a possible victim wouldn't fit into the Herald's goal of portraying American as a corporate villain.
Ted Tedesco traces the source of the negative coverage back to American's competitors -- via lobbyist Michael Benages. "My judgment is that it is almost 100 percent coming from United Airlines and their lobbyist, Mike Benages," says Tedesco. "[Freedberg] takes his stuff as fact and asks us to disprove it."
In the past couple of weeks, Benages has come under increasing fire. During the same February 6 commission meeting at which commissioners discussed the Herald's request for information about travel benefits, Commission Chairman Art Teele publicly labeled Benages the culprit behind a smear campaign being waged against the commission and American Airlines.
Katy Sorenson says, too, that in meetings with her, Benages has boasted about his connections with the Herald. "He was going around bragging that his friend Sydney was writing this expose on commissioners and American Airlines," Sorenson says. "He did it in a meeting with me."
Agrees Tedesco: "He's a loose cannon. I'd venture to say I don't think United Airlines knows about everything he's been doing. What we are concerned about, though, is how easy it was for a competitor of ours to hire a hit man like Benages, and for that person to find an outlet so easily to get their information into what is supposed to be one of this country's major daily newspapers. That is what is extraordinary to me."
Freedberg rejects the notion that the Herald's interest in American Airlines is being driven by its rivals or by Benages. "I'm sorry if American feels I've been unfair to them," she says. "I've tried to be very fair to them. I just want to get to the bottom of things." Noting that the county's planned expansion for American is "the biggest deal in Dade history," she adds, "I feel as a newspaper we have an obligation to audit that transaction."
Regarding the complaints that her front-page story lacked context, Freedberg points out that it was written under deadline pressure: "We had to go with what we had."
For his part, Benages feels that if anyone is the victim of a smear campaign, it's him. He denies spying on the home of Peter Dolara. He lives less than two blocks away from the American exec, he explains, and was walking his dog along an adjacent golf course when he noticed the party and stopped to take a look. He adds that he never offered the valets any money to reveal who was inside.
"That is absolute bullshit," echoes Barry Davidson, the attorney for the five airlines Benages represents. "He was out there walking his dog. He wasn't out there for any other purpose. I can't believe American would even raise this as an issue."
Benages says American Airlines and some of the commissioners are trying to cast him as the villain in order to deflect attention from the commission's decision to hand American $950 million worth of renovations. He has hired an attorney, Benages adds, and is contemplating a lawsuit.
He's not alone. Sources say that several commissioners, incuding Teele and Ferre, have also retained counsel. And one of American's attorneys in Miami, Richard Weiss, is threatening legal action owing to rumors being circulated about him. "I take this very seriously," says Weiss, regarding a rumor that while he was representing American Airlines in front of the commission, Weiss was also representing Joaquin Avino, who was negotiating a job change from county manager to the engineering firm Wolfberg Alvarez. Weiss says he received a call about that subject from the Herald's Freedberg.
Another rumor involves descriptions of lavish parties thrown by American Airlines in the late Eighties, at which free airline tickets were handed out to every guest, including several local politicians. While not admitting or denying that such events took place, American officials privately say it is not uncommon for American to throw such parties in a city where they are building a new hub A as was the case in Miami in 1989 -- and that it is done as a marketing tool to introduce civic and business leaders to American.
The common thread through all the rumors and reports is the notion that American Airlines gains its clout through subterfuge or bribery. And while such suspicions are certainly not out of the realm of possibility in Dade County, absent from the Herald's recent reporting has been an explanation of the role American Airlines has played in Miami during the past six years, and the power the company wields through its sheer size and community presence.
In 1989 American had only a token operation at MIA -- fewer than 300 employees and only a handful of flights. But as Eastern Airlines headed toward financial ruin and Pan Am trod equally shaky ground, community leaders began courting American Airlines chairman Robert Crandall. Knight-Ridder, the Miami Herald's parent company, was active in the wooing process. The Herald even flew Crandall to town to deliver the keynote address at the Florida Company of the Year luncheon, a Herald-sponsored event. Throughout 1989 the Herald's business pages were filled with glowing stories about American, with headlines such as "American reaches for the world," "American spreads its wings," and "America's strongest airline." (American officials theorize that their competitors have succeeded in bullying the Herald into writing more critical stories by accusating the paper of being too closely aligned with American in the past.)
Tabbed as the area's economic savior, American purchased more than twenty Eastern Airlines routes within a span of a few months and announced its intention to turn Miami into one of its domestic hubs and the center of a planned expansion into Latin America.
"What we have done in Miami over the last six years is one of the most remarkable stories in the history of the airline industry," boasts American Airlines spokesman Alan Becker.
American now operates half of all passenger flights at MIA -- more flights serving more destinations than the combined efforts of Pan Am and Eastern in their prime, according to Becker. American employees in Miami now number 10,000, with an annual payroll of $345 million, Becker adds. That, he says, is the source of the airline's Miami muscle.
In 1993, when the commission first gave approval to the expansion project (at the time it carried a price tag of only $500 million), the county's aviation director, Rick Elder, strongly opposed the action. Several days later, after American officials publicly stated they could no longer work with him, Elder was forced to resign his post.
American's profound influence was also evident this past October, when Metro commissioners approved the airline's revised expansion plans. Commission chambers were filled with hundreds of American employees; the company also hired a dozen of the county's most powerful and influential lobbyists, including Phil Hamersmith, Julio Rebull, Eston "Dusty" Melton, Bobbie Mumford, and Sergio Pereira. The plan passed by a vote of nine to three.
Using fees paid by all of the airlines, Dade County will spend $950 million over the next seven years to build a new concourse, known as the "Super A" terminal, that will be used almost exclusively by American Airlines planes and passengers. It will feature a train system, a moving walkway, and a high-speed baggage sorter.
United Airlines, USAir, TWA, Delta, and Air Canada jointly filed suit against the county last year, contending that they shouldn't have to pay for the expansion because it exclusively benefits one airline. "American ought to bear the lion's share of the expense," argues attorney Barry Davidson.
The airlines' lawyer also deems the county's plan dangerous; Dade has no long-term lease with American Airlines and thus cannot prevent it from suddenly pulling out of the airport, as it has in Nashville, Raleigh-Durham, and San Juan, Puerto Rico. (Like all carriers at MIA, American operates under a 30-day lease.)
The suit is slated to go to trial in July.
"It just continues to get very bizarre," Ted Tedesco says of American's experiences in Miami. "We really don't run into these sorts of problems anywhere else in the country. The characters down there are amazing.