Crandal's Input on DOT Panel
 

http://www.aviationweek.com/aw/gener.../REG111709.xml

I actually agree with this article. Hmmm.

Good article, now lets see what happens.

Crandal isn't my favorite airline exec but he did run a successful airline which is more than 99% of the current bunch can claim. Worth the time to read his input.

Kudos to Crandall.

Now let's see how serious our government is about this.

As usual, big, far reaching platitudes like this sound good... but the devil is in the details.

If men were angels, we might be able to trust them to come up with a plan that would benefit all of us (pubilc, corp, workforce). But as history should have taught us, politicians will use their power to help specific groups (or themselves).

That speaks to man's motives... but not to his abbilities. And man is not God, he is not omniscient (sp?).

Even if government did come up with a plan that seemed palatable to everyone (public, corp, workforce), there is no reason to believe that it would be the best or most profitable plan. Again, history should inform us that it most probably would not be.

I would much more trust Adam Smith's "Invisible hand" of economics to fix the problems with the industry rather than Robert Crandle's very visible hand of government.

? We do the best within our abilities and knowledge. Of course any solution man is going to find will be imperfect. No harm in trying though.

Prior to working in this industry, I trusted market forces to work things out and find the best solutions. However, market forces only work if a few things are present:
1) Those in charge actually have motivation to see the company have long term success. Current money-chasers in charge are only seeking the next metric in their bonus scheme.
2) The government is either all in or all out. The government has and will continue to muddle around in airlines too much for the market to correct inefficiencies and problems.

Easy for him to say--now
 

Yes, and this one:

is also ironic, coming from the architect of the draconian B-scale at AMR (50% pay cut from the existing rate, never merging to A-scale), which he obtained by threatening to outsource flying. Crandall was a major player in the "race for the bottom", and I doubt that he has repented.

3) The first requirement of capitalism is that the parties are ethical. Many of our problems across all areas and especially Wall street is the completely failure of ethics in those in position of leadership. Truth is definitely stranger than fiction when you have some idiot on Wall street claiming to do the work of god. There are many things that I can do with an aircraft that are perfectly legal but extremely stupid. It appears that these leaders never learn the difference.

Tom,

You beat me to it. It's funny that some would be happy that Bob Crandall is putting in his two cents. Is it that the industry has gone that far or are we not teaching airline history at the Delta Connection Academy? I think that we should have Frank weigh in on the discussion too. :rolleyes:

Well, the cow's outta the barn on this one. Here is a couple of Q&A's with Jeff Shane, who is negotiating Open Skies for the Dept. of State. To read the full story, go to Agenda For Freedom

8. Rather than liberalizing the industry, would it not just be better to re-
regulate?

• The de-regulation process started three decades ago. Consumers have
benefited from the resulting competition with lower fares and greater access to
travel than ever before.
• The policy of deregulation was left half-finished. International aviation is still
regulated by outdated restrictions on ownership and access to capital and
markets that no other industry faces.
• The result of these restrictions is a fragmented industry that cannot recover its
cost of capital. Re-regulating the industry would reverse the positive impact of
greater accessibility to consumers and will still leave airlines without the tools
needed to build global businesses that are financially sustainable.

9. What will the impact of liberalization be on jobs?

• Agenda for Freedom is about moving away from a regulatory system in which
flags and government agreements determine the scope of an airline’s business.
To be financially sustainable, the airline industry must be free to run on the basis
of good global business. Anything that helps the financially sustainability of a
company also helps to ensure stable employment. The current model
(insufficiently liberalized) obviously does not.

10. What will be the impact of the Principles on consumers?

• Consumers benefit from liberal markets. Look at what has happened in the
wireless telecoms industry. Global businesses have developed around global
brands. The industry is intensely competitive and access to wireless
communications is greater than ever. Building an industry on the principles of
liberalized access to capital and markets without ownership restrictions is good
policy serving equally the interest of consumers and businesses.

Crandall has been stating this for a few years now. Wish I could remember where, but he had an op-ed piece in one of the major newspapers (I am thinking WSJ) about three or four years back stating almost the same thing. So this is not a sudden change for him.

One thing to remember as well that when Bob Crandall was running American, he had to do what was best for the shareholders - ie. minimize costs/maximize profits. So while the "B" scale was terrible, I do not view Bob Crandall as evil in the same way as Lorenzo was. Someone pointed it out earlier, Crandall actually ran a successful airline, Lorenzo killed Eastern and tried to kill Continental.

Hopefully we will see some good things come from this.

Crandalls strong point is he actually wanted to make money running an airline. He was no angel then and he isn't now but he wanted to run a business and not gut it. Many companies, not just airlines, have had the gut and run management a return to management that wants to and has the ability to make a profit running a successful company is past due.

Heyas,

While a fearsome negotiating opponent, Crandal was a brilliant manager and thinker. Three colossal innovations that are directly attributable to him are computer reservations systems, frequent flyer programs and yield management.

With a few ISOLATED exceptions, he had, and still has no peer in the business. He forsaw the trainwreck of de-regulation, and tried to warn everyone of its consequences.

De-regulation was started by a kid in the CAB almost as a joke, and mistakenly taken up by Kennedy as "quick hit" to show that all democrats weren't for Big Government.

You simply cannot have low margin, high captial expenditure businesses completely de-regulated. They self-destruct because of loose money and destructive competition by entities with no responsibilty to serve "the public good". All one needs to see are the attempts to de-regulate other utilities like power (the CA power fiasco of a few years ago) and telephone (RIP ATT/MCI/Worldcom, etc, etc).

Nu

Yeah, but like it or not we're stuck with it. They're never even going to consider re-regulation. And if the government even so much as offers one red penny to the airlines right now you'll have a tea party breaking down the doors to congress.

I am not sure that I have ever seen that written in a rule-book. I think what you might be getting at is that each party live up to what they have promised. That means that they are not fraudulent in their dealings. If they lie/steal/cheat then they have broken their end of the deal and been involved in fraud. But there is no "requirement" that capitalists be "ethical."

There are many moral deficiencies that I find repugnant (GREED is one of them). But greed is not anti-capitalist. Again, fraud is a legal issue; greed is a moral one.

"Exactly my point; it will be imperfect. Even if you assume that "they" (government) will not be self-serving then you are still counting on government cronies to set up the entire top-down controlled system that takes years to make any changes to new market forces. It is always inefficient. The market can more quickly adapt to the changes than can the government "smart guys." Again, that is if you trust the government to be benevolent... and I don't.

Which begs the question... why is this industry any different? I will grant you that the safety/seniority issues is difficult to tackle. But as an industry, why do we (good "conservative", flag waiving, Constitution swearing pilots) not trust the free market to handle the difficulties? Why do we, like Crandle, look to the government to fix it?

And I do agree with you... the government will continue to "muddle" in the airlines and not allow the market to fix the problems. The problem is that we identify the current "de-regulated" system with the free market... which it is not. Thus we throw the failings of the airline system at the foot of the free market and ask for the government to step in and fix the issues. Yet the free market would tell you it has not been able to work... the government has been in some state of control from the very beginning of the whole industry.

Sooooo, let me get this straight.............

The government wants LESS regulation with airlines,

but MORE regulation with healthcare ?

:confused: