Robert Crandall

[FWAAA]

No he did not. It only would have been a crime if the CEO of Braniff had agreed and they had implemented the price increases. It was nothing more than Bob Crandall putting his foot in his mouth.

Not exactly. Antitrust lawyer here. The district court agreed with you but the appeals court reversed that decision. The 5th Circuit Court of Appeals disagreed with your assessment and held that AA and Crandall could be prosecuted for attempted monopolization even without agreement by Putnam, who secretly recorded Crandall's call. Crandall wasn't liable for attempted price fixing, but could be prosecuted for the attempted monopolization. Read all about it here:

http://ftp.resource.org/courts.gov/c/F2/743/743.F2d.1114.83-1831.html

Crandall could have been sent to prison had the government filed a criminal complaint (and DOJ wanted Crandall banned from the airline biz for two years), but the DOJ eventually settled for a promise to never do it again in the civil suit, along with some unusual procedures applicable to Crandall and AA for a number of years.

http://articles.latimes.com/1985-07-13/business/fi-9008_1_american-airlines

 

[eolesen]

DOJ eventually settled for a promise to never do it again in the civil suit, along with some unusual procedures applicable to Crandall and AA for a number of years.

http://articles.latimes.com/1985-07-13/business/fi-9008_1_american-airlines

Yep. Crandall and others had to keep phone call logs, a fancy laminated "Crandall Card" with instructions of what could/couldn't be discussed was given to all managers who met with other airlines, and anyone who attended IATA/ATA meetings got a face to face briefing with a lawyer.

I still have my Crandall Card, and remember the AA lawyer telling me to make a big exit and demand it be included in the meeting minutes if a "bad" issue came up at IATA. The ATA meeting facilitators were smart enough to send a lawyer to those meetings to keep everyone honest...

 

[JFK Fleet Service]

I think we need to bring NHBB out of retirement as CEO and dispense with the foolery once and for all.

Seconded.

 

[ULM148]

Not exactly. Antitrust lawyer here. The district court agreed with you but the appeals court reversed that decision. The 5th Circuit Court of Appeals disagreed with your assessment and held that AA and Crandall could be prosecuted for attempted monopolization even without agreement by Putnam, who secretly recorded Crandall's call. Crandall wasn't liable for attempted price fixing, but could be prosecuted for the attempted monopolization. Read all about it here:

http://ftp.resource.org/courts.gov/c/F2/743/743.F2d.1114.83-1831.html

Crandall could have been sent to prison had the government filed a criminal complaint (and DOJ wanted Crandall banned from the airline biz for two years), but the DOJ eventually settled for a promise to never do it again in the civil suit, along with some unusual procedures applicable to Crandall and AA for a number of years.

http://articles.latimes.com/1985-07-13/business/fi-9008_1_american-airlines

It's been a long time since reading those transcripts. I can almost hear him speaking when I read the conversations part. There are theories suggesting that this is why AA has had such a hard struggle with Antitrust/alliances while all the others already had it. Some people say that American and Bob basically got a slap on the hand, but the sting from the slap stayed for a long time. Thanks for the links!

 

[WorldTraveler]

It's been a long time since reading those transcripts. I can almost hear him speaking when I read the conversations part. There are theories suggesting that this is why AA has had such a hard struggle with Antitrust/alliances while all the others already had it. Some people say that American and Bob basically got a slap on the hand, but the sting from the slap stayed for a long time. Thanks for the links!

AA has not difficulty developing alliances because of the alleged price fixing event and its implications.
AA has had difficulty developing alliances because it has not had the network breadth to be attractive to other carriers to the same degree as other US carriers.
AA tried for years to develop an alliance with BA where both were the largest airlines from the US and UK... and there were significant market access issues that slowed the process.
In Asia, AA converted JL to an ATI/JV partner - previously just a codeshare partner - by arguing that a combined DL/JL would have had enormous antitrust issues - and they were probably right. Still, AA/JL is the smallest of the 3 alliances in the TPAC market.
AA's greatest success w/ alliances has come in Latin America where it is the region's largest US carrier - if not overall. The largest carrier in a region usually seeks the largest partners it can to strengthen its own position w/o running afoul of antitrust laws.
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The LATAM alliance decision will test whether AA's size combined w/ LATAM's size push the combined entity to a size which is beyond the levels regulators are willing to accept.
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I think you also have to factor in that AA has had a scrappy independence in its culture which has made it harder for them to work w/ other carriers - remember that TAM was a AA's partner at one time and they left, supposedly because they were tired of being pushed around by AA. Will be interesting if AA-JJ start working together on an alliance basis.
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Crandall's mindset was always for AA to win on its own; I'm not sure how well he would work in a world of alliances that requires giving up something of your own identity for the greater/larger good.

 

[ULM148]

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Crandall's mindset was always for AA to win on its own; I'm not sure how well he would work in a world of alliances that requires giving up something of your own identity for the greater/larger good.

I agree with your position that Crandall would want to win on his own. Reason I believe, is that he's not a sharing person, not when it comes to profits and viability. It's a dominance issue that he would not succumb to without insight and explanation. As far as his "fit" in today's airline business, we might all be surprised. I'm sure he would have a problem with alliances, but have a certain level of respect for the product and the market to do what's right for profits. Due some research on what he's been up to. Still sharp as a whip and very active on boards. My opinion is that AA needs Bob's kind of vigilance throughout it's hierarchy to promote success and profitability. Just my opinion....

 

[Buck]

I agree with your position that Crandall would want to win on his own. Reason I believe, is that he's not a sharing person, not when it comes to profits and viability. It's a dominance issue that he would not succumb to. As far as his "fit" in today's airline business, we might all be surprised. I'm sure he would have a problem with alliances, but have a certain level of respect for the product and the market to do what's right for profits. Due some research on what he's been up to. Still sharp as a whip and very active on boards. My opinion is that AA needs Bob's kind of vigilance throughout it's hierarchy to promote success and profitability. Just my opinion....

I have 27 years with American Airlines. The best unexpected gift I received was from Bob Crandall. I believe it was somewhere around 1985-1987, every employee was given two American Express checks for $25.00 a piece. When you actually totaled that up it was a very large sum. It may not have been a big deal to everyone, but my family was young and then it made a difference.

Another thing Bob Crandall had a knack for, was the ability to remember names.

 

[ULM148]

I have 27 years with American Airlines. The best unexpected gift I received was from Bob Crandall. I believe it was somewhere around 1985-1987, every employee was given two American Express checks for $25.00 a piece. When you actually totaled that up it was a very large sum. It may not have been a big deal to everyone, but my family was young and then it made a difference.

Another thing Bob Crandall had a knack for, was the ability to remember names.

Buck, that was pre my employment but I did remember people talking about the "amex gift card's". Let me clarify when I spoke of him not sharing, I was speaking more to the point of markets and revenue, not people or his employee's. I have deep respect for Mr. Crandall, the good, the bad and the ugly. He did the job he was hired for, period!

 

[Frank Szabo]

Buck, that was pre my employment but I did remember people talking about the "amex gift card's". Let me clarify when I spoke of him not sharing, I was speaking more to the point of markets and revenue, not people or his employee's. I have deep respect for Mr. Crandall, the good, the bad and the ugly. He did the job he was hired for, period!

As I've said many times, Crandall was our personal SOB - one we all loved, regardless of the whining.

 

[eolesen]

WT's assertion that it was AA's network standing in the way of meaningful JV's or alliances is downright laughable.

What ultimately stood in the way of both the JL and BA ventures was the lack of an open skies agreement with Japan and the UK.

Once open skies was in place, the JV applications went in as soon as there was enough data to show that competition had increased beyond a level where concessions were necessary.

 

[WorldTraveler]

Nearly all of us learned in elementary school that one of the unwritten rules of life is that the scrawny kid always gets picked last on the playground.

...which explains in part why years ago as alliances were being formed AA was unattactive to any continental European carrier as an alliance partner given that AA's transatlantic network years ago and now is predominantly concentrated at LHR - to the exclusion of the rest of Europe. (of course the other alternative is to be believe that AA and BA chose each other as partners in hopes of being able to dominate the market).

Either way, AA and BA are the largest airlines at LHR, but LHR constitutes about 15% of the entire European market. In contrast, AA is
not the largest airline in the UK as a whole or in Spain. Among US carriers, AA carries just 23% of the revenue to/from LHR on its own metal.

In Asia, after the DL-NW merger, AA was faced with the very real prospect that it could be shut out of Asia if it lost JL as its partner. It ended up with JL as a partner, but AA+JL together are smaller across the Pacific than either DL or UA.

In Europe, AA waited years to obtain ATI with BA in the one market where AA had value to an alliance partner. When open skies came, other carriers rushed in allowing DL and CO (which still reports on its own) to carry 1/3 of US carrier revenue to/from LHR.
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In Asia, AA's lack of size in Asia has left it largely shut out of the alliance game in China, it doesn't operate into HKG w/ its own metal, and AA carries about 10% of all revenue carried by US carriers between the US and East Asia.
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The network a carrier can offer an alliance absolutely matters in determining one's alliance partners.
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Yes, Mr. Crandall would accept that alliances are necessary but I don't think he would have ever allowed AA to get to the point where it is the #3 carrier in the #3 alliance across both the Atlantic and Pacific.
Problem is now that the ship has sailed and there is virtually no chance to change those reality.

 

[eolesen]

And again, leaving out all the facts, the primary reason that DL & UA have their dominant positions in Asia is the post-war rights they had at NRT.

And let's also not re-write history too much, please. Crandall had plenty of opportunity to try and buy up the Pan Am & Northwest authorities at NRT. And Crandall is the reason that LH partnered with UA, and KL partnered with NW. It's fact. LH was partnered with AA in the early 90's, and they switched over to UA. KL had been talking to both NW and AA before they made the decision to go with NW. In both cases, the Euro carrier chose a weaker partner intentionally, so that they woudn't have to worry about who was really in charge. Had they gone with AA, it's pretty clear who would have been driving the bus. It wasn't until after Bob retired that Ayling and Carty started the BA/AA talks which eventually lead to oneworld's creation.

 

[WorldTraveler]

I'm not implying that Bob Crandall set up the alliance strategy... if he had and had carried it thru to the conclusion, it might have looked a whole lot differently.
Yes, we do remember all those routes that AA once had to continental Europe including Germany - and AA's SOLE frlight to the country - one of the largest economies in the world - is a single 763 from DFW to FRA and AA is nowhere close to being able to increase its presence in Germany or elsewhere in continental Europe.
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Strategic thinking - of which Crandall was a master - is the art of seeing not only the present but a long ways into the future.
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If Crandall was still running the show there is no way that AA's network position would be what it is...
and I also am not so sure that he would jump back into the game at this point - because the options available to him are so limited at this point.
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Like everything in life, if you stand still, others WILL keep moving and pass you.
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AA has been managed for nearly 10 years as a parked car at the Indy 500.
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Crandall would have never allowed AA to fall into the state it is in at this point.

 

[eolesen]

More nonstops on AA metal to Germany would be nice, but where's the metal supposed to come from, and what's the point when the second largest flag carrier in Germany (and fifth largest European carrier) is set to join oneworld within six months?

Contrary to popular myth, FRA isn't the largest market in Germany. It's fifth largest. Berlin is by far the largest, but Tegal has been a limiting factor. When everything moves to Brandenburg, the dynamics change for everyone. I seem to remember AA's nonstops being restricted to a 762ER, and that also being weight restricted at times.

Once AB is in oneworld, perhaps AA will reconsider resuming ORD-TXL & ORD-DUS. They've already got some limited codesharing in place, but having full reciprocity brings things up a notch.

 

[WorldTraveler]

The new Berlin airport and AB's admission to oneworld do show that there are opportunities that come along to realign alliances but they are rare and they can easily work both ways; the continued instability of aviation in India shows that nothing is certain - and even in stable markets, carrier loyalties can be moved.
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It is possible that an enhanced relationship with AB could help AA in northern continental Europe but AA's presence there is so weak that even a couple new nonstops are not going to dramatically change their presence. Could be an important addition but it isn't going to make or break anything.
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Alliance decisions flow from the strength of one's own network more than any other factor. Conversion of the AA-QF agreement to a JV is a big win for both carriers but it only made sense given that they were competing w/ carriers that either had JVs or better network integration; there are not very many JV/JBA agreements between carriers where both of them don't serve each others' countries.