Airline passenger advocate's credibility under fire

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When American Airlines stranded 121 Dallas-bound flights and thousands of passengers on Dec. 29, 2006 — some for more than nine hours with fouled toilets, little food or water and no way to deplane — it triggered a national outcry in the news media, on blogs and on Capitol Hill.

It also motivated one angry passenger, Napa, Calif., real estate agent Kate Hanni, to act. Within weeks, Hanni had donned the mantle of passenger-rights advocate and was calling for an Airline Passenger Bill of Rights to limit the amount of time airlines could hold passengers on a tarmac.

For three years, Hanni and the group she founded, known today as FlyersRights.org, have lobbied for passenger-rights legislation and demanded transparency in the federal government's reporting of tarmac delays, pointing to inaccuracies in — and questioning the integrity of — government and industry reporting such delays.

Today, just weeks after new Department of Transportation rules went into effect limiting tarmac delays to three hours, FlyersRights.org should be celebrating a hard-won victory. Instead, in a series of interviews with Travel Weekly, current and former members of the group's inner circle have criticized Hanni's leadership, questioned her motives and impugned her credibility.

Among other complaints, as detailed below, they say Hanni has:

  • Misled Congress.
  • Manipulated her group's "report card" data in a vendetta against Delta, an airline she is suing for allegedly hacking her computers.
  • Inflated her membership numbers.
  • Leveraged her group's influence to encourage lawmakers to award contracts to a financial supporter.
  • Publicly maligned people she considers threats to her own influence in the travel industry and on Capitol Hill.

Moreover, they point out, more than three years after founding her passenger-rights advocacy group, Hanni has yet to file a federally mandated Form 990 nonprofit tax document with the Internal Revenue Service.

Hanni last week denied each of those allegations except for her failure to file a Form 990, which she said she planned to do next month.

She told Travel Weekly she has always been upfront with Congress and has accurately represented the size of her group. Further, she insists she never received money from any company she has recommended for government contracts.

Hanni said she has been unable to file a Form 990 because of money problems and corrupted computer files.

"We didn't have the money to pay an accountant at the time, and we didn't have a bookkeeper who was handling our books in a method that would have allowed us to [file a Form 990 for 2007 or 2008]," she said. "It was my understanding, from a major consumer-advocacy group in the U.S., that most grassroots groups don't file for at least two years because many of them fail before that."

In interviews with the news media, Hanni portrays herself as a passenger-rights advocate under constant siege by the airlines. But in interviews with Travel Weekly, two organization insiders recently offered a very different picture of Hanni's behavior and the inner workings of the group.

The first source is a current member and a longtime Hanni confidant, one of a handful of people who has been part of Hanni's inner sanctum and core group of supporters from the beginning.

This source has long enjoyed privileged access to Hanni, has detailed knowledge of the organization's workings and has had access to the group's financial records. The source spoke to Travel Weekly on condition of anonymity.

Hanni and MogelThe second source is Mark Mogel, FlyersRights.org's former volunteer research director, who joined in 2007 to head volunteer efforts in Pennsylvania and several other states.

Mogel no longer is associated with the group. He left in the summer of 2009 because of what he described as personal differences with Hanni. Hanni's explanations for his departure have been inconsistent over the last two years and occasionally appear to conflict factually.

According to the first source, growing doubts about Hanni's leadership of the group erupted last fall into what appeared to be a full-blown schism between Hanni and her most loyal supporters as a result of a mock hearing the group organized in Washington.

Some of the complaints were not-atypical insider squabbling about expense reimbursements, but the biggest complaint was that the event was poorly organized and turned into something of a fiasco that destroyed a key alliance and demeaned the organization.

Hanni attributes that response to unrealistic expectations. Though she herself had trumpeted the "stakeholder hearing" for weeks before it took place, she later stated, "I never thought of it as a real hearing, only a way to elevate the conversation."

She also boasted about "the 416 articles that erupted" as a result of the event, adding "the TV coverage, it was impressive."

Dealings with the media

In interviews with news media, Hanni touts her ability to generate coverage and to be taken seriously by journalists and politicians. In one email to a reporter after the mock hearing, she referred to herself as "the poster child for strandings."

In a mass emailing to her group, she wrote, "I communicate directly with members of Congress as well as with Department of Transportation Secretary Ray LaHood."

But in other email or website postings, Hanni complained about the Washington Beltway crowd treating her "like some blond Barbie doll that doesn't know what she's talking about. ... But are they ever wrong. I've proved that I've mastered operational issues and understand the airline issues better than any of the pundits who purport to knowing this industry."

Hanni has said she gave up a $400,000-a-year real estate career to become the Ralph Nader of the airline industry.

"My intention is to be THE consumer advocate for airline passengers issues that aren't addressed by anyone else in any meaningful way," she once wrote to Travel Weekly. "I hope to be a consumer advocate for the rest of my life."

Last fall, as she was about to file a lawsuit accusing Delta of hacking into her personal computers, she told a reporter, "The story will have legs if we do this right." In journalism parlance, "have legs" generally describes an event with enough momentum to produce a series of reports over time and thus maximize the subject's exposure.

Hanni relishes the spotlight, associates say, though they also say her rhetoric leans toward the dramatic.

"I understand there will always be people who will try to destroy us," Hanni wrote in an email to Travel Weekly last fall. "I have some folks in the background that ABOLUSTELY [sic] don't want the airlines to know they are helping us. Very high-profile people. Sorry I'm so emotional. I'm just living in a lot of fear right now."

Moreover, she frequently personalizes her battles with the airlines. "No one can possibly know what it's like to commit yourself every day to a process that pays no money, provides little in terms of rewards, only to see if our benevolent government has the will to do what's actually right for us," she told Travel Weekly.

Those kinds of comments have struck a sour chord with some of the organization's leaders, according to Mogel and the first source, because they see the focus being too much on Hanni at the expense of the organization's mission.

On the other hand, at least one member of Hanni's inner circle says Hanni's publicity has served the coalition well. "She has charisma," said Burt Rubin, a Washington-based travel industry lawyer who advises the group.

A moneyless mission

The stated mission of Hanni's group — first chartered as the Coalition for an Airline Passengers' Bill of Rights, later as FlyersRights.org — is "to educate and inform the American public with respect to laws and policies affecting passengers on commercial airlines in the United States, to advocate for laws, regulations and policies protecting and promoting the interests and rights of such passengers including but not limited to the adoption of federal legislation securing new consumer legal rights and remedies for airline passengers; and for related purposes."

The group's charter prohibits allocating any "part of the net earnings to the benefit of, or be distributable to, its officers, directors or any other private person."

Thus, Hanni collects no salary.

In recent pleas for contributions, she wrote: "The Coalition's current operating budget requires expenditures of a minimum of $5,000 per month to maintain our website and conduct necessary office and field operations."

There is no way to independently confirm that assertion because the group has never filed an IRS Form 990. Nor has it filed a lobbyist disclosure statement, despite the extensive lobbying efforts that Hanni and the group have undertaken in Washington.

Joe Sandler, Hanni's attorney, acknowledged that any nonprofit group that attracts the level of contributions Hanni has claimed must file a Form 990, but he said that as the organization pays no employees or consultants to lobby, it is not required to file lobbyist disclosure forms.

Lacking access to any public accountability, members say they've been left in the dark about the organization's spending.

"Where is all the money coming from, and where is it all going?" the first source wondered. "We have really no idea."

The only accounting that members have seen to date is a profit-loss ledger for the years 2007, 2008 and 2009 that Hanni put together to qualify the group for a tax-exempt nonprofit status, and that document has not inspired confidence.

"When I first saw that profit-loss statement, I was amazed," the first source said. "It was laughable. Thousands of dollars for 'other travel.' It looked like she had spent all of this money and had to find a way to account for it."

A copy of the ledger obtained by Travel Weekly shows that Hanni listed $13,579 for "travel reimbursement" and $7,901.56 for "other travel."

In all, the ledger showed, the group collected $188,596.64 in contributions and showed a net income of $338.79.

Hanni has expressed outrage over questions about her expenses.

"My family is nearly bankrupt due to my persistence on this issue and believing that good will win over evil," Hanni said.

At first, she described the existence of the ledger as "pure fiction" but later acknowledged it and admitted that the contributions and many of the expenses were essentially correct. She sent Travel Weekly an updated statement but cautioned that it, too, was unaudited and still unofficial.

Kate HanniHanni said the original ledger "was submitted to my attorneys originally to show only the amount of income the organization had with very specific caveats that none of the rest of the information was correct or finalized."

Of particular concern to Hanni, as they were to current and former coalition members, were more than $10,440 in expenses over three years for medicine, vitamins and supplements.

Hanni attributed those expense items to a bookkeeping error, aggravated by the fact that she used personal credit cards to pay for organization expenses as well as for her personal needs.

"FlyersRights doesn't have its own credit card," she said. "The credit cards I use for FlyersRights are in my name. ... My bookkeeper didn't understand that. There are no medical expenses ever charged to FlyersRights. Nothing was ever charged [to the group] that was personal."

The updated ledger provided by Hanni last week includes none of the original expenses for medicine or supplements. It reports higher travel costs but also includes total advances from Hanni to the group of $48,949.08. It reports a net income of $8,174.46 for 2009 and total contributions of $191,396.64 for the past three years.

Hanni was at a loss to explain why she would advance more money than was needed for the organization to break even but said that this most recent statement, too, would likely be adjusted.

"There's still $7,600 we have to account for that are donations that went into our checking account, for which we had no data," she said.

She said she lost that data when her computers were hacked.

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