rockyracoon
Posts: 1008
Joined: Tue Oct 14, 2003 3:58 am

Bob Crandall, Et Al. On The Industry

Wed Mar 14, 2012 10:21 pm

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.
 
0newair0
Posts: 314
Joined: Fri Jun 01, 2007 12:21 am

RE: Bob Crandall, Et Al. On The Industry

Wed Mar 14, 2012 10:27 pm

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."
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Bob Crandall, Et Al. On The Industry

Wed Mar 14, 2012 11:45 pm

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
 
BMI727
Posts: 11090
Joined: Mon Feb 02, 2009 9:29 pm

RE: Bob Crandall, Et Al. On The Industry

Wed Mar 14, 2012 11:57 pm

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?
 
dirtyfrankd
Posts: 182
Joined: Tue Apr 26, 2011 3:10 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 12:56 am

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.
 
Squid
Posts: 192
Joined: Sat Jul 02, 2005 4:21 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 1:12 am

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.
 
PPVRA
Posts: 7864
Joined: Fri Nov 12, 2004 7:48 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 1:50 am

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
 
dirtyfrankd
Posts: 182
Joined: Tue Apr 26, 2011 3:10 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 2:35 am

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...
 
PPVRA
Posts: 7864
Joined: Fri Nov 12, 2004 7:48 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 2:47 am

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
 
AAL791
Posts: 1
Joined: Mon Nov 28, 2011 8:38 pm

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 3:49 pm

All I can say, as a 33 year employee of American Airlines, is: I miss you Bob Crandall!
 
dirtyfrankd
Posts: 182
Joined: Tue Apr 26, 2011 3:10 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 4:43 pm

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.
 
Italianflyer
Posts: 511
Joined: Sun Nov 11, 2007 3:06 pm

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 4:45 pm

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 avatar
jfklganyc
Posts: 3930
Joined: Mon Jan 05, 2004 2:31 pm

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 4:50 pm

"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.
 
LOWS
Posts: 1194
Joined: Sun Oct 23, 2011 5:37 am

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 4:55 pm

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
 
BMI727
Posts: 11090
Joined: Mon Feb 02, 2009 9:29 pm

RE: Bob Crandall, Et Al. On The Industry

Thu Mar 15, 2012 9:31 pm

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 avatar
exFWAOONW
Posts: 362
Joined: Wed Nov 25, 2009 10:32 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 12:39 am

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?
 
Tan Flyr
Posts: 1558
Joined: Sat Aug 19, 2000 11:07 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 2:54 am

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.
 
0newair0
Posts: 314
Joined: Fri Jun 01, 2007 12:21 am

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 12:19 pm

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."
 
AAIL86
Posts: 420
Joined: Wed Feb 09, 2011 6:00 am

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 12:46 pm

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
 
tommy767
Posts: 4658
Joined: Sat Aug 09, 2003 12:18 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 3:12 pm

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
 
BMI727
Posts: 11090
Joined: Mon Feb 02, 2009 9:29 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 3:17 pm

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?
 
AAIL86
Posts: 420
Joined: Wed Feb 09, 2011 6:00 am

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 6:13 pm

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
 
BMI727
Posts: 11090
Joined: Mon Feb 02, 2009 9:29 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 6:26 pm

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?
 
AAIL86
Posts: 420
Joined: Wed Feb 09, 2011 6:00 am

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 8:30 pm

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 avatar
IrishAyes
Posts: 2144
Joined: Sat Jan 26, 2008 6:04 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 11:07 pm

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.
confidence is silent. insecurities are loud.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Bob Crandall, Et Al. On The Industry

Fri Mar 16, 2012 11:20 pm

Quoting AAIL86 (Reply 23):
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

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 capital.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
PPVRA
Posts: 7864
Joined: Fri Nov 12, 2004 7:48 am

RE: Bob Crandall, Et Al. On The Industry

Sat Mar 17, 2012 12:22 am

Quoting AAIL86 (Reply 21):
Certainly fares have come down - but overall service has declined - as have the number of airline jobs that pay healthy wages.

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 kept large portions of the public grounded. Pricing freedom fixed this problem and made flying much more accessible.

And wages may be down - down to where you'd expect them to be, not the fantasy wages of pre-deregulation - but employment is also up. And don't forget, part of the reason wages are down is because health care costs are up, and also due to globalization.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Bobloblaw
Posts: 1680
Joined: Fri Jan 13, 2012 1:15 pm

RE: Bob Crandall, Et Al. On The Industry

Sat Mar 17, 2012 12:45 am

Quoting 0NEWAIR0 (Reply 1):
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.

bingo......even then CAB didnt price like that. He was so transparently self serving.
 
frmrCapCadet
Posts: 994
Joined: Thu May 29, 2008 8:24 pm

RE: Bob Crandall, Et Al. On The Industry

Sat Mar 17, 2012 1:09 am

Quoting BMI727 (Reply 22):
...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.

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 more than bottom fares for more service (AS, WN, B6)

Quoting planemaker (Reply 25):
And, for the most part, it is due to regulation that the airline industry, overall, has not earned back the cost of capital.

I have not seen any discussions that would support this. Can you supply links or reverences?
Buffet: the airline business...has eaten up capital...like..no other (business)
 
BMI727
Posts: 11090
Joined: Mon Feb 02, 2009 9:29 pm

RE: Bob Crandall, Et Al. On The Industry

Sat Mar 17, 2012 9:11 am

Quoting frmrCapCadet (Reply 28):
And people regularly pay more than bottom fares for more service (AS, WN, B6)

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. Coach air travel is a commodity these days.

Quoting bobloblaw (Reply 27):
He was so transparently self serving.

He came off as a shameless industry shill. He might fool some people, but it doesn't take a lot of digging to realize how ass-backwards his perspective is.
Why do Aerospace Engineering students have to turn things in on time?
 
airbazar
Posts: 6799
Joined: Wed Sep 10, 2003 11:12 pm

RE: Bob Crandall, Et Al. On The Industry

Sat Mar 17, 2012 12:40 pm

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.

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. There would be no B6 at BOS if flights between NYC and BOS were not allowed, and since BOS is not a hub, it would mean fewer, less convenient, and more expensive connection possiblities from BOS since NYC is the closest major hub we have from BOS.

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...

I have many times taken the plane, bus, and train. They are all great and they each have their place. The plane is still the most efficient way of moving a lot of people at peak periods between 2 points and the market between BOS and NYC is huge. Train and Bus alone couldn't support this market.

Quoting dirtyfrankd (Reply 10):
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.

Airports are not in the cities. Train stations are. HSR, Bus, and Air should complement eachother not exclude eachother.
The Acela in the Northeast corridor has taken a huge amount of people off the the air and it is one of Amtrak's few profitable routes, evident proof that if you offer people a viable alternative they will use it. However, the train is not for everyone. Some people live closer to the airport than to the train station and vice versa.

Who is online

Users browsing this forum: Baidu [Spider], Bing [Bot], blooBirdie, BreninTW, deltal1011man, Google Adsense [Bot], KarelXWB, LAX772LR, meecrob, Phen, RalXWB, readytotaxi, samzkvh, sassiciai, scbriml, sirtoby, Yahoo [Bot] and 316 guests