Symbol vs. Substance

On the surface the proposed United Airlines (UAL)- U.S. Air Merger would simply be a major business story. But when it was revealed that BET Founder Robert Johnson might obtain an airline out of the deal, more than a few heads turned in the business community as well as in Black America.

Johnson's face and picture were splashed throughout television and over the Internet as a result of the proposed arrangement which would have Johnson obtaining a spin off of U.S. Airways operations out of Reagan National Airport in Washington D.C.

If the deal can be finalized and approved by shareholders and federal regulators indeed Johnson would have made history in becoming the first Black in America to own and operate an airline in the U.S. For that alone Johnson should be commended. But there are questions that need to be raised regarding the motivation for Johnson's inclusion in the deal.

Many have wondered aloud whether Johnson's inclusion in the deal is little more than a public relations device. There are major anti-trust concerns involving the deal and the thought being discussed in business circles is that Johnson's involvement and the subsequent symbolism that it provides for Blacks would make the merger that much harder for the Justice Department to reject. Some say that U.S. Air and UAL executives, who orchestrated the deal, think that the Justice Department will think twice about rejecting the merger if they fear a backlash from the Black Community – a community that Johnson and other opinion leaders like Rev. Jesse Jackson would have little trouble rallying to the merger's cause. The strategy that U.S. Air and UAL may be executing is nothing new. It is a technique that has been successful in proposed bank mergers where banks are obligated to conduct a certain percentage of their business in low-income areas populated by Blacks. By guaranteeing a level of business in Black neighborhoods or the inclusion of Black community groups during merger discussions, banks have successfully addressed key concerns of Federal regulators and mergers have been subsequently approved.

There are also questions surrounding the profitability of the proposed route especially in an airport that is underutilized. But on this count Johnson's business savvy is apparent. Johnson may have scored a coup by getting the route in an airport, though underutilized is extremely convenient to get to and which is only 5 minutes from the heart of Washington D.C. Currently, travelers from the metro D.C. area have to travel anywhere from 30 – 45 minutes away to catch flights in Dulles Airport in Va. and from BWI airport near Baltimore. It can be very inconvenient to do so. Johnson's airline would fill a tremendous void in this area if its flights were relatively affordable.

So the structure of the deal and the process of its approval should be watched with great interest. It offers the Black Community another opportunity to view its advancement under the dual lens of symbol and substance. And for even raising this paradoxical dynamic, Johnson deserves a great measure of credit. We'll see how it all turns out.

Cedric Muhammad

Tuesday, May 30, 2000

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