Continental Airlines is looking to cash in on pilots who cashed in on a divorce scam. The pilots used sham divorces to divert more than $10 million to their ex-spouses. Post-divorce, the exes cashed in on retirement benefits, and the fliers could stay in the sky – and keep earning.
It’s really pretty simple. A couple divorces. The pilot assigns all pension benefits to the ex-spouse. Then, the recipient goes to a state court and gets an order for a lump sum. After the divorce was final long enough for the money to start rolling in, these couples “reconciled.” Yep, they remarried once the scam was complete.
So far, eight of the nine pilots are gone (either by quitting or being fired). One was rehired, because he promised to repay the cash. Apparently, he didn’t do so fast enough and has been named as a defendant. The spouses are being pursued, as well. Seven of the alleged scammers are men, and two are women.
If you don’t want to believe that greed is responsible for the situation, you can call what these pilots did a Darwinian play to protect their cash. The average pilot on Continental is eligible for a lump sum of up to $900,000 upon retirement. But, some airlines are terminating their pension programs and turning them over to the Pension Benefit Guaranty Corp., which backstops pension plans up to an amount that’s not even close to $900,000. Faced with the prospect of losing their pensions, therefore some are turning to (alleged) fraud.
In addition to the nine who got nailed, other pilots have tried and failed.
Think that’s bad? Click the pictures to read about other women causing problems in the sky:
So, there are two visions of the near future: one immediate, the other a bit further out. For Memorial Day, expect to see plenty of traffic, thanks to a drop in gas prices, according to AAA. More than 10 percent of the country’s population – north of 32 million people – is expected to ht the road (though some will take planes). This stands in stark contrast to last year, when it cost $4 to put a gallon of gas in your car.
But, the fun will end when the summer starts.
An estimated 20 million fewer trips will be taken this summer compared to last year – which translates to $43 billion less in travel spending. According to a recent poll by AP-GfK, a third of Americans have already canceled at least one trip this year as a result of the ongoing financial calamity. Only 42 percent of us are going to take a leisure trip this year, down from 49 percent in a similar poll conducted in May 2005.
Apparently … brace yourself … income is a factor. Two-thirds of people making more than $100,000 a year are expected to take some kind of recreational trip this summer. If you make $50,000 to $100,000, the chances are around 50-50. Only a third of people making less than $50,000 a year are likely to hit the road (all incomes based on family, rather than individual).
Grim? It gets worse.
Twelve percent of those traveling are staying in their home states, with 67 percent venturing across state lines and only 19 percent leaving the country. Twenty percent are staying close to home for financial reasons, and 23 percent will save a few bucks by staying with friends or family.
Passenger traffic is still falling. That’s not going to change for a while. But, the decline slowed in April, signaling that the prolonged sharp dips may be behind us. Some optimists even believe that the worst is over – though I maintain a healthy skepticism.
Note the metric being used: passenger traffic. There’s a lot of mileage between asses in seats and money in the bank. On a positive note, increased passenger traffic means that more people are spending money on travel. Of course, deep discounts are responsible in large part for the increasing traffic. The value of these passengers in dollar terms, therefore, is quite low.
United Airlines reported a traffic drop of 10.5 percent in April 2009 relative to the same month in 2008. Delta and American sustained smaller declines. Southwest, meanwhile, showed a 4.1 percent increase.
And, fares fell.
The average one-way domestic fare paid in the first quarter of 2008 was $213 – compared to $246 for full-year 2008.
For now, however, the airlines believe it’s better to sell seats at any price, especially if they have to put a plane in the air anyway.
It’s rare that you get a guided tour through still unfolding carnage. Imagine walking through Aceh right after the tsunami or New Orleans while the rains from Katrina still fell. Lower Manhattan‘s financial crisis tour doesn’t involve as much bad weather or physical danger, but it does give you the chance to learn about the most profound financial disaster in decades in the place where it all started.
This is “The Wall Street Experience.”
Guided by a former Wall Street insider, you’ll spend the 90 minute tour learning how some traders raked in billions in profits while entire banks came to an end. Also, you’ll be introduced to a “shadow banking system” that the government ignored until it was too late.
It’s not all mayhem down on the Street, though.
The tour will give you an overview of the history, architecture and trivia for this part of the city. The culture of the trader is wrapped up in these walls and streets – and you’ll hear all about it. But, did you know that this was once the political center of the United States? A statue of George Washington stands in front of the building from which he governed the country, staring across the street at a world of financial engineering he’d probably never be able to understand.
The tour guide, Andrew Luan, is a former Deutsche Bank vice president and traded what are now called “toxic assets.” He charges $40 a person, though children are free. Part of the proceeds goes to increasing financial literacy. Financial illiteracy is at crisis levels right now, so I applaud Luan for this. If you have become a victim of the financial crisis, The Wall Street Experience does offer weekly tours for those who can’t afford to pay.
Meetings and conventions aren’t just falling … they’re actively being canceled. While it’s easy to write this off as the erosion of a wasteful corporate perk, it translates to genuine financial crisis for the travel industry.
Over the past six months, 402 conventions and meetings have been canceled in Las Vegas alone. According to the Las Vegas Convention & Visitors Authority, this translates into a loss of $166 million for the city … and that doesn’t include lost gambling revenue. It’s no wonder that the city has to be inches from paying guests to visit.
Cancellations at Orlando haven’t been as bad, but the problem is merely one of degree. This year, the city has sustained an economic impact of $26 million from the canceling of 114 meetings scheduled for 2009. Because of all this, 146,000 rooms are expected to be vacant this year … rooms that were supposed to be occupied.
It’s been tough in other cities, too.
All in, this has translated to more than $1 billion of lost revenue in the first two months of the year from meeting cancellations, according to the U.S. Travel Association. The number is even worse when you factor in spending on rental cars, catering and local attractions.
So, for anyone who doubted the potential for more than 200,000 jobs to be lost in the travel industry this year … just do the damned math.