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Bob Crandall, Et Al. On The Industry  
User currently offlineRockyRacoon From United States of America, joined Oct 2003, 984 posts, RR: 0
Posted (2 years 9 months 2 weeks 1 day 18 hours ago) and read 4975 times:

http://www.charlierose.com/view/content/12228


All but a few on the Forums will enjoy watching this insightful conversation that echoes many of the sentiments and topics discussed here daily. Do you think Crandall's ideas on deregulation (and the resulting long-term repercussions forcing consolidation) are correct? What about the comments on LH, and international code share agreements (13:10)? How about the ideas posed on frequent flyer programs/credit cards (6:30)? Good stuff, any further comments would be appreciated.

30 replies: All unread, showing first 25:
 
User currently offline0NEWAIR0 From United States of America, joined May 2007, 939 posts, RR: 0
Reply 1, posted (2 years 9 months 2 weeks 1 day 18 hours ago) and read 4953 times:

I stopped listening to Crandall when he tried to start POGO and began whining about the airlines not charging "proper" air fares for a flight. He was saying that, for example, if a Flight from NYC to ORD is $300 and a flight from ORD to DFW is $300 that a person flying NYC to DFW via ORD should pay $600 and not a special fare of, say.... $300.

...he was the one that started this practice while at AMR, if memory serves me.



"The future belongs to those who believe in the beauty of their dreams."
User currently offlineplanemaker From Tuvalu, joined Aug 2003, 6441 posts, RR: 34
Reply 2, posted (2 years 9 months 2 weeks 1 day 16 hours ago) and read 4755 times:

A lot of revisionist history by Crandall but entertaining hearing his spin anyway.


Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
User currently offlineBMI727 From United States of America, joined Feb 2009, 15834 posts, RR: 27
Reply 3, posted (2 years 9 months 2 weeks 1 day 16 hours ago) and read 4703 times:

Wow, Crandall screwed that up from the first question. "Depends on how you define good"!? The beauty of deregulation is that it allowed the public to define good and they, we really, have decided that "good" is cheaper fares. Airlines either offer that to passengers, or they struggle to stay in the market.

And then proceeding to extol the virtues of price controls in a market with many players, good Lord it's almost amazing AA made it this far before declaring bankruptcy.

[Edited 2012-03-14 16:58:09]

And then his rationale for not allowing foreign ownership having to do with foreign entities not caring about domestic flights? Am I the only American that travels around the country by air? Do foreigners not like making money? And for that matter, if the big bad foreign investors did gut the domestic route system, how long would it be before some other airline pops up to pick up the slack?


[Edited 2012-03-14 17:00:51]


Why do Aerospace Engineering students have to turn things in on time?
User currently offlinedirtyfrankd From United States of America, joined Apr 2011, 196 posts, RR: 0
Reply 4, posted (2 years 9 months 2 weeks 1 day 15 hours ago) and read 4504 times:

I'm a little surprised to see all the negativity on here, I found that what he had to say was very insightful and that he made a lot of great and extremely valid points. Did I agree with everything, not necessarily, but he definitely made a lot of extremely valid points.

Especially the point towards the end of only having high speed rail between boston, new york, and DC and not allowing any flights on those routes. It would be fantastic if that could be done.


User currently offlineSquid From , joined Dec 1969, posts, RR:
Reply 5, posted (2 years 9 months 2 weeks 1 day 15 hours ago) and read 4446 times:

Well, it's important to remember he was not a proponent on deregulation in the first place, but because it happened, he launched many revolutionary idea's that are more of a burden than a boon today, i.e. the frequent flier program, yield management, fortress hubs, and more frequencies throughout the day rather than a handful of flights on large planes. When Crandall was at the helm, leading the pack, it was great, but the other airlines in effect took his ideas and are using them against American today.

User currently offlinePPVRA From Brazil, joined Nov 2004, 8977 posts, RR: 39
Reply 6, posted (2 years 9 months 2 weeks 1 day 14 hours ago) and read 4348 times:

Quoting dirtyfrankd (Reply 4):
Especially the point towards the end of only having high speed rail between boston, new york, and DC and not allowing any flights on those routes. It would be fantastic if that could be done.

Explains why you liked him.

Not only would this require a draconian rule banning all flights, it means basically no competition for Amtrak or whoever the rail operator would be. Bad on both accounts.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlinedirtyfrankd From United States of America, joined Apr 2011, 196 posts, RR: 0
Reply 7, posted (2 years 9 months 2 weeks 1 day 13 hours ago) and read 4206 times:

Quoting PPVRA (Reply 6):
Not only would this require a draconian rule banning all flights, it means basically no competition for Amtrak or whoever the rail operator would be. Bad on both accounts.

Ever heard of the bolt bus/chinatown bus/washington deluxe and on and on and on? I assure you there would be more than enough competition with whoever the rail provider is. You wouldn't even need a "draconian rule" passed...the second that high speed rail is put in place and is operational, tens of thousands more people will elect to go the train route rather than flying and therefore you would not need as many shuttle flights between the Boston-New York-DC market taking up space.

I'm curious to see if you've ever actually experienced flying from the east coast. If you have, high speed rail should be a no brainer...


User currently offlinePPVRA From Brazil, joined Nov 2004, 8977 posts, RR: 39
Reply 8, posted (2 years 9 months 2 weeks 1 day 13 hours ago) and read 4172 times:

Quoting dirtyfrankd (Reply 7):

Busses are slow and get stuck in traffic. It's competition alright, but not very good one.

Quoting dirtyfrankd (Reply 7):
I'm curious to see if you've ever actually experienced flying from the east coast. If you have, high speed rail should be a no brainer...

Yes I have. HSR has its place, but it should exist on its own merits, not because of some ban on alternatives to it.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineAAL791 From United States of America, joined Nov 2011, 1 posts, RR: 0
Reply 9, posted (2 years 9 months 2 weeks 1 day ago) and read 3722 times:
Support Airliners.net - become a First Class Member!

All I can say, as a 33 year employee of American Airlines, is: I miss you Bob Crandall!

User currently offlinedirtyfrankd From United States of America, joined Apr 2011, 196 posts, RR: 0
Reply 10, posted (2 years 9 months 2 weeks 23 hours ago) and read 3605 times:

Quoting PPVRA (Reply 8):
Yes I have. HSR has its place, but it should exist on its own merits, not because of some ban on alternatives to it.

I could agree that a ban in itself would be going too far. But I think if a serious investment is made in HSR linking cities up and down the eastern seaboard, we would automatically see a big reduction in demand for air travel between those cities and could automatically reduce capacity...thereby reducing congestion.


User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 11, posted (2 years 9 months 2 weeks 23 hours ago) and read 3602 times:

Thank you for posting....I found it quite interesting. Yea, there was some Robert McNamara-esque revisionism going on...but he was poignant. The talking point I completely agree with is the USA's (shameful) lack of a coherent and comprehensive aviation policy. I believe that ad hoc policies that changes from administration to administration, and are heavily influenced by political and lobbying interests, only exaggerate the cyclical nature of the industry.

User currently offlinejfklganyc From United States of America, joined Jan 2004, 3627 posts, RR: 6
Reply 12, posted (2 years 9 months 2 weeks 23 hours ago) and read 3570 times:

"Not only would this require a draconian rule banning all flights, it means basically no competition for Amtrak or whoever the rail operator would be. Bad on both accounts."

No need for rules restricting flights. The market has taken care of this.

Smaller planes then ever on the shuttle...and throughout most of the day, they're empty.

People feel Amtrak is just quicker and they vote with their feet.


User currently offlineLOWS From Austria, joined Oct 2011, 1192 posts, RR: 1
Reply 13, posted (2 years 9 months 2 weeks 23 hours ago) and read 3557 times:

I enjoyed it. But not having much knowledge of AA or his record, I have little to judge it against.

Quoting ItalianFlyer (Reply 11):
Robert McNamara-esque revisionism

I LOVED the Fog of War


User currently offlineBMI727 From United States of America, joined Feb 2009, 15834 posts, RR: 27
Reply 14, posted (2 years 9 months 2 weeks 18 hours ago) and read 3328 times:

Quoting PPVRA (Reply 8):
Yes I have. HSR has its place,

It's a great way to get to the airport. It would be nice to have gleaming new airports located outside of cities and easy rail links to them.

But here's the big thing Crandall never touched on: yes HSR could reduce congestion at airports, but for the incredibly high cost of HSR how many lines of security could be added at airports? How many runways? How many ATC improvements? How many new terminals? And unlike HSR which is only useful for a few destinations, airport improvements do just as much good for passengers headed to Tokyo as they do for passengers headed for Boston.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineexFWAOONW From United States of America, joined Nov 2009, 415 posts, RR: 0
Reply 15, posted (2 years 9 months 2 weeks 15 hours ago) and read 3139 times:

Why stop at the airport? If you're already travelling on high speed rail, keep going. No need to "get naked" and a lot more room to get up and stretch your legs.


Is just me, or is flying not as much fun anymore?
User currently offlineTan Flyr From United States of America, joined Aug 2000, 1920 posts, RR: 0
Reply 16, posted (2 years 9 months 2 weeks 13 hours ago) and read 3012 times:

One thing that I don't think Bob Crandall touched on was the fact that the "regulated" industry had little incentive to really watch costs. Labor agreements were generous at some carriers thus inflating their "cost". The CAB routinely approved fare increases usually, but not always, in the form (amount) requested.

Fuel was 10-15 cents per gallon until 1973/74 then crept up to close 50 cents by 79. At such levels there wasn't quite the incentive to right size aircraft to flights and markets. Go back and look at average load factors..many were just in the hi 50% to maybe 62% range. Not the best use of shareholders money.

De-regulation brought AFFORDABLE air transport to millions that otherwise would not have been able to take teh kids to see Mickey for example.


User currently offline0NEWAIR0 From United States of America, joined May 2007, 939 posts, RR: 0
Reply 17, posted (2 years 9 months 2 weeks 4 hours ago) and read 2864 times:

Quoting Tan Flyr (Reply 16):
Go back and look at average load factors..many were just in the hi 50% to maybe 62% range. Not the best use of shareholders money.

Back then the airlines actually wanted low load factors. There's a quote somewhere, possibly even from Crandall, that says something to the effect of "when the load factor goes above 60% our level of customer service begins to decline".

...No joke. It's a quote. Maybe someone else will know where to find it.



"The future belongs to those who believe in the beauty of their dreams."
User currently offlineAAIL86 From Finland, joined Feb 2011, 428 posts, RR: 3
Reply 18, posted (2 years 9 months 2 weeks 3 hours ago) and read 2820 times:

Many don't like Crandall, but the man intuitively knows the business as few others do. Thanks for posting the link.

Quoting BMI727 (Reply 14):
But here's the big thing Crandall never touched on: yes HSR could reduce congestion at airports, but for the incredibly high cost of HSR how many lines of security could be added at airports? How many runways? How many ATC improvements? How many new terminals?

True- a viable high-speed rail system does require a large capital expenditure. But the US taxpayers along with private investors have already spent trillions on air improvement and almost nothing on rail. Continuing that policy in an era where energy prices are probably only going to rise and airport space grows ever tighter is flawed. As pointed out in the video- an ERJ takes up the same amount of gate/radar space as an A380.

Quoting BMI727 (Reply 14):
And unlike HSR which is only useful for a few destinations, airport improvements do just as much good for passengers headed to Tokyo as they do for passengers headed for Boston.

As far as your last point- transportation centers that utilize both air and rail jointly should be the standard going forward for all major US cities.



Next
User currently offlineTOMMY767 From United States of America, joined Aug 2003, 6936 posts, RR: 9
Reply 19, posted (2 years 9 months 2 weeks 1 hour ago) and read 2733 times:

Watching it now. Great interview thus far. Bob was one of my favorite airline CEOs. He makes Smisek, Parker, and Horton look like clowns.


"KEEP CLIMBING" -- DELTA
User currently offlineBMI727 From United States of America, joined Feb 2009, 15834 posts, RR: 27
Reply 20, posted (2 years 9 months 2 weeks 1 hour ago) and read 2722 times:

Quoting AAIL86 (Reply 18):
Many don't like Crandall, but the man intuitively knows the business as few others do.

He disingenuously paints deregulation as bad for consumers, but in reality, fares have dropped and safety has improved. He looks at it from the legacy airlines' perspective, and they would love nothing more than to have regulation and go back to the days of limited competition and the ability to make money without really trying. Of course he hates the way it is now when airlines have to work for it.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineAAIL86 From Finland, joined Feb 2011, 428 posts, RR: 3
Reply 21, posted (2 years 9 months 1 week 6 days 22 hours ago) and read 2582 times:

Quoting BMI727 (Reply 20):
He disingenuously paints deregulation as bad for consumers, but in reality, fares have dropped and safety has improved. He looks at it from the legacy airlines' perspective, and they would love nothing more than to have regulation and go back to the days of limited competition and the ability to make money without really trying.

There's nothing disingenuous about his remarks- he's retired and is giving his rather informed opinion! He even stated it directly- your view of deregulation depends how you define "good". Certainly fares have come down - but overall service has declined - as have the number of airline jobs that pay healthy wages. And the improvements in safety are not linked to deregulation-rather to better incident analysis and an effective regulation partnership between the FAA and the airlines.

Quoting TOMMY767 (Reply 19):
Watching it now. Great interview thus far. Bob was one of my favorite airline CEOs. He makes Smisek, Parker, and Horton look like clowns.

Agreed. None of them hold a candle to Crandall.... so far!



Next
User currently offlineBMI727 From United States of America, joined Feb 2009, 15834 posts, RR: 27
Reply 22, posted (2 years 9 months 1 week 6 days 22 hours ago) and read 2549 times:

Quoting AAIL86 (Reply 21):
Certainly fares have come down - but overall service has declined

...at the behest of customers! That is what they wanted and that is what they (we really) got. Legacy carriers spent some time having their lunch money taken by low fare carriers until they adapted and American's More Room Throughout Coach failed. Customers got what they want, which is a good thing unless you are an old guard airline exec who is busy pining for the days before they had real competition.

Quoting AAIL86 (Reply 21):
as have the number of airline jobs that pay healthy wages.

That tends to happen when your industry becomes a real business instead of a price controlled gravy train.

Quoting AAIL86 (Reply 21):
And the improvements in safety are not linked to deregulation-rather to better incident analysis and an effective regulation partnership between the FAA and the airlines.

But the notion that low fares lead to cutting corners and decreased safety has been totally debunked.

The fact remains that the fares dropped and safety increased in the intervening years. If an airline cannot make money in what is now a competitive environment then they are in a race to fix themselves before they run out of money and ideas. In short, airline deregulation is unquestionably successful.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineAAIL86 From Finland, joined Feb 2011, 428 posts, RR: 3
Reply 23, posted (2 years 9 months 1 week 6 days 19 hours ago) and read 2465 times:

Quoting BMI727 (Reply 22):
...at the behest of customers! That is what they wanted and that is what they (we really) got.

Well I wasn't debating the pros and cons of deregulation per se - just responding to what you said about Crandall.

Quoting BMI727 (Reply 22):
The fact remains that the fares dropped and safety increased in the intervening years. If an airline cannot make money in what is now a competitive environment then they are in a race to fix themselves before they run out of money and ideas. In short, airline deregulation is unquestionably successful.

Well just remember there is a way to spin every position- and that's why the philosophical principle of charity is important.
For example- I can argue that since the balance of all the capital spent on aviation since its the Wright brothers has produced a loss- does that mean all this air travel has been a waste of this time and money and has not been a success? And the increase in safety the last 15 years is not directly linked to airlines obtaining network and pricing freedom, but to the other factors including those mentioned before.



Next
User currently offlineIrishAyes From United States of America, joined Jan 2008, 2242 posts, RR: 15
Reply 24, posted (2 years 9 months 1 week 6 days 17 hours ago) and read 2353 times:

There are some very rich talking points from this interview. Thank you for posting. Some things I found interesting:

1). How airlines have harnessed the credit card programs, a la Delta Gold card with AMEX and UA MileagePlus Explorers card. No wonder they throw in the free checked bag, bonus miles, priority boarding and club passes (which is essentially what UA Premier/Silver is give or take a few items).

Personally, I have never really had issues with UA in terms of having difficulty redeeming miles for award travel, but I can see why it might be tough in general with LFs in the 80s. Fascinating how over 50% of mileage accrual has come from spending on non-flying.

2. The advent of code sharing by way of LH and UA. I never knew about that.

3. The B6 piece is also fascinating.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
25 planemaker : Not aviation but airlines. And, for the most part, it is due to regulation that the airline industry, overall, has not earned back the cost of capita
26 PPVRA : You can pay for better service if you'd like. The only thing this proves is that before deregulation, there was a huge misallocation of capital that
27 bobloblaw : bingo......even then CAB didnt price like that. He was so transparently self serving.
28 frmrCapCadet : I am not familiar with America's "more room" inintiative, but people on line here have said it was a poorly done program. And people regularly pay mo
29 BMI727 : Anybody who buys premium economy, I'm not saying the option shouldn't be there. But customers like low prices and they're willing to pay for it. Coac
30 airbazar : And terrible for anyone who doesn't live in Boston itself or NYC, not to mention the economy. The cost of parking near S.Station alone is ridiculous.
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