Is Lorenzo victim of a 'vendetta'?


December 10, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

With a string of failed airlines behind him, Frank Lorenzo's record as an airline executive is hardly exemplary.

But his application to start a discount carrier has been caught up in a bizarre Ping-Pong game that raises serious questions about the regulatory process.

Last March, the Houston-based Savoy Capital Inc. investment firm, headed by Mr. Lorenzo, filed an application with the U.S. Department of Transportation to operate a no-frills carrier, to be called ATX Airlines, from Baltimore-Washington International Airport to Orlando, Fla., and Boston.

In trying to make a comeback in the industry, Mr. Lorenzo, who once headed an empire that at various times included Continental, Eastern, New York Air, People's Express and Frontier airlines, became a lightning rod for legions who argued that he symbolized the greed and mismanagement that weakened airlines in the 1980s.

Amid intense political and labor opposition, the Transportation Department took the highly unusual step of asking an administrative law judge to conduct a public hearing. Out of hundreds of applications by airlines seeking certification, the agency had ordered such a hearing in only one or two other instances involving questions of foreign ownership.

What followed was a perplexing and lengthy process.

"From the outside, it has sometimes looked like a vendetta," says Chris Fotos, a consultant with Avmark Inc., an Arlington, Va., aviation consulting business.

"There are real reasons to attack this guy. Very few people have been as involved in the airline industry the way Frank Lorenzo has," he said. "Still, denying a person the right to do business is a serious matter."

Shortly after hearings began last summer, Judge Robert L. Barton Jr. suspended them indefinitely, contending ATX had not produced requested evidence, including documents on safety violations at Eastern.

On July 30, DOT ordered Judge Barton to resume the hearings, saying much of the evidence he wanted had only "peripheral relevance." Three weeks later, with hearing dates still not set, ATX asked DOT to order Judge Barton to do so.

On Sept. 7, Judge Barton scheduled hearings, only to recommend a day later that the application be denied.

At that time, Judge Barton acknowledged that ATX "had made a sufficient showing with respect to financial fitness and management competence." But, citing again the company's failure to produce documents, he said ATX couldn't be trusted to comply with federal laws regulating airlines.

He also criticized the courtroom demeanor of Mr. Lorenzo, his witnesses and his lawyers.

Once again, however, DOT in October ordered Judge Barton to proceed. After another week of testimony last month -- highlighted by bitter memories from labor witnesses -- the hearing ended.

The judge will make a final recommendation by Dec. 28. The agency then has 104 days to render a decision.

"It's dragged on so long," says Mr. Fotos, "you wonder what the final outcome will be -- and what will be the rationale."

In the final analysis, was the public interest served by the public hearing?

"I don't think we want to comment on that," said Bill Mosely, a department spokesman.

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