By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
That was the name of the mythical airline vice-president of finance skewered in a series of limited-edition cartoons last spring in Alaska. In faxes sent to that state's legislators, reporters and the governor's office, yuksters poked fun at "ColoradoAir" and its attempts to extort $40 million from Alaska.
The prank found its mark: MarkAir. The airline's widdle feelings were so bruised that it immediately sued thirteen competitors for the "derogatory and defamatory" ridicule.
The truth hurts. Ben Dover, Denver.
Because in fact, those cartoons were no more twisted than the tortured positions Denver officials have taken on behalf of the eternally bankrupt, now perhaps permanently grounded, airline.
Just a year ago, Denver was so impressed with MarkAir--and so desperate to get a few more planes into the still-unopened Denver International Airport--that it made a serious attempt to get the airline to move all its operations to this city. As part of the sweet deal, MarkAir president Neil Bergt--who'd already stiffed the FDIC for $6 million, the State of Alaska for millions more, and assorted creditors, including the caterer who provided his airline meals--would stash his headquarters in the soon-to-be-deserted Stapleton and bring forty flights a day to DIA. In exchange, the City of Denver would take $30 million in fuel-tax money and shift it to MarkAir in loan form (not that MarkAir had any kind of on-time record for paying back loans).
But the city's largess didn't end there. In addition to the $30 million from fuel-tax receipts, MarkAir wanted enterprise-zone tax credits, personal-property tax breaks, state and local sales-tax exemptions for its aircraft parts, and state job-training money. It wanted to operate rent-free out of Stapleton. And oh, yes, it wanted the city to set it all up with the appropriate state agencies.
The city seemed inclined to do so. A risk analysis of the deal done for Denver indicated that even if MarkAir went under (a not unlikely scenario, since the airline had just gotten out of Chapter 11 bankruptcy filing in March 1994 and owed approximately $130 million), it would likely die a "slow and painful death" that would at least prolong cheap fares.
The barest hints of this deal (no mention of any drawn-out demises) were outlined in the city's August 15, 1994, bond-sale proposals--one of those documents now giving SEC investigators fits. In a DIA memo penned two weeks later, the city again chirped about Bergt's eagerness to move to DIA and offered one broker's reason for the successful sale of those bonds: "the fact that Denver officials have been in frequent communication with investors, explaining the facts behind the failed openings and faulty baggage system."
And if the SEC buys that, I've got a MarkAir ticket I'd like to sell.
For all the woo Denver was pitching at MarkAir, the city was forced to go slow in consummating the deal. (But then, it still had an airport to open.) By this past March, though, Denver and Bergt were hot and heavy all over again. One reason for MarkAir's ardor, of course, could have been Alaska's snub: It had just turned down Bergt's request for $40 million in loan guarantees (presumably to ensure that MarkAir stayed put in Alaska). At the time, MarkAir still owed that state $18 million.
In explaining the resumption of the romance, Diane Koller, Denver deputy director of aviation, offered this: "We never perceived the MarkAir deal to be completely dead...We just put it on the back burner till we got up and running."
The courtship continued through the summer. As recently as September, Denver hoped to move three airlines based at Concourse C to Concourse A--the better to alleviate train traffic and, not incidentally, come up with some way to pay for that pesky automated baggage system still slated to link A to the terminal. When the three (MarkAir, Sun Country and Midwest Express) balked at being made to pay more, DIA officials came up with the concept of paying their way by using $4.5 million in concession revenues to cover the move. And when other airlines--which are all supposed to share in surplus concession revenues--balked at that, in October DIA came up with a "revenue-neutral" way to make the switch. As it turns out, that will be by not making the switch at all.
Last Tuesday afternoon--one day after the control-tower roof fell in, one day after snowbound traffic backed up for miles on Pena Boulevard, one day after a Chevy Suburban took a wrong turn onto a runway--MarkAir came crashing down. And this time, it looks like it could be grounded for good. Terry Hallcom, owner of US Air Shuttle, was closing in on a deal to buy MarkAir, but when creditors came to grab two planes, Bergt simply shut down, stranding hundreds of would-be passengers in the most cynical way possible.
All day long, departure times for MarkAir flights had been mysteriously rescheduled to just around 6 p.m. By 5:30 there were hundreds of people milling around Concourse C; MarkAir had already taken their luggage and, of course, their money. But instead of calling out one of the five flights now scheduled to leave within minutes of each other, the MarkAir ticket agents themselves left. Quietly. At a few minutes before six, half a dozen Denver cops came swaggering to the MarkAir counters. One frustrated traveler heard a cop muttering into his walkie-talkie: "Do I give these people the news, or what?"
The "news": "Ladies and gentlemen, give me your attention. Hey! I said I need you to listen up for a minute. MarkAir has gone bankrupt again, so this airplane isn't going anywhere. You can claim your luggage back at the terminal."
That was it. Anyone with questions was treated like he might be in possession of heroin--instead of a worthless MarkAir ticket.
"Why are you here?" the traveler asked the cop.
"To protect the MarkAir people."
A nice notion, although by now there were no MarkAir people to protect. But at least Denver officials were consistent. In all the deals at DIA, the city has always protected the wrong people--the wrong airlines, the wrong lawyers. And never the people of Denver, those condemned to use this airport.
Sure, those people took a chance buying MarkAir tickets on the cheap, but Denver has made its share of dumb deals. And with United dominating the market and driving up fares, flyers don't have much choice.