Flights of Fancy

Denver pays a consultant big money to get overseas flights for DIA--and goes nowhere.

But despite DIA's high costs, Denver presses on, continuing to focus on its old friends at British Airways and Lufthansa as primary targets for new transoceanic service. It is a battle plan--and a use of funds--that DIA critics find incredible. "If we could support more international service, we would have it today," says Mike Boyd, a longtime DIA detractor who runs his own aviation consulting firm in Golden. "Running off to British Airways--which has already dumped its Denver authority--and trying to convince them to fly into this overpriced landing field is a waste."

According to Boyd, city officials are desperate to land overseas flights because they feel compelled to make good on the lofty promises they made during the selling of DIA. "They said DIA will attract nonstop air service from Europe, the Far East and South America," says Boyd. "Federico Pena said that. It was a lie. So now they're trying to blame the rest of the world."

Madsen denies that the aviation department is under the gun. "I don't feel any political pressure at all," she says. "I feel a deep obligation knowing what [overseas service] has done for other communities, and I know that this city absolutely deserves it. We deserve it, we support it and we're going to have it."

And officials are convinced that--one of these days, anyway--SH&E is going to help them get it.

The city's contract with SH&E sparked controversy soon after it went into effect on February 15, 1987. One person who objected to the deal was then-city auditor Mike Licht, who sent a withering letter of protest to then-aviation director George Doughty that April.

"You have done it again!" Licht's letter began, referring to the aviation czar's decision to hire SH&E without conducting what Licht considered to be a true competitive bidding process. "As I understand this procedure, you have asked for RFQs [Requests for Qualifications] and then told the top companies, 'Tell us what you can do for $100,000.' I can't understand why this study could not have been done by using qualified companies and asking them to give their best price for the services required."

Licht went ahead and signed the contract, however, noting that he had no choice because Doughty had complied with all the pertinent regulations. And SH&E began what would become a long and lucrative relationship with Denver's aviation department.

Although it was hired for its technical expertise, from the beginning there was little doubt that SH&E's job had as much to do with boosterism as it did with crunching numbers. The head of the Colorado Tourism Board had served on a review panel that selected SH&E, and one of the first things the firm did was conduct a $6,000 "kick-off" meeting to "verify objectives" with members of the local business community.

It didn't take long for SH&E to lend its imprimatur to those objectives. In December 1987, the firm released a set of traffic forecasts that looked too good to be true--and were.

That study backed its conclusions with references to things like "load factors" and "threshold traffic levels," but in hindsight, its view of the future seems almost surreally optimistic. Among other things, the report declared that by 1988, Denver would be able to support thirteen weekly flights to London and six to Frankfurt, along with five flights to the "Caribbean gateway" of San Juan, Puerto Rico. It also raised the prospect of flights to Tokyo, Seoul, Hong Kong and even Sydney, Australia, a destination so distant that reaching it without a refueling stop would have required the longest regularly scheduled airline flight in the world.

Doughty, now executive director of a regional airport in Pennsylvania, says he doesn't remember the 1987 study but adds that in such situations "there is a Chamber of Commerce factor you have to deal with. That is that everybody wants to go nonstop from Denver to every destination in the world."

And SH&E's crystal ball grew still fuzzier the further into the future it peered. Assuming a preternaturally healthy growth rate of 11 percent for overseas traffic, the firm predicted that by 1993 Denver would be able to support nine weekly flights to the Far East and speculated on additional service to exotic points such as Switzerland and the Bahamas.

Perhaps giddy with the thought of wide-bodies soaring from the Rockies to the Alps, city officials wasted little time extending the SH&E contract. In 1988 an amendment raised the upper limit Denver would pay the firm to $200,000. And a review of invoices on file at the aviation department shows that the consultants had no trouble finding work to do. In 1989 the firm billed for studying the feasibility of Denver-Amsterdam service by KLM and even devoted several hours of research to the possibility of USAir opening up a hub operation in Denver (the Pittsburgh-based airline now has just six daily departures from DIA).

A Washington, D.C., attorney working as a subcontractor on the SH&E contract, Michael Goldman, billed the city at $160 per hour and by August 1989 had racked up more than $50,000 in legal fees--for, among other things, talking to Mayor Pena and reviewing SH&E documents. Goldman also jetted to meetings in Japan and Europe, including a stopover at the Golden Tulip hotel in the Netherlands ("unpretentious elegance in the heart of Amsterdam").

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