Friday, May 21, 2010

Crandall on Mergers and Deregulation

With the Delta/Northwest merger in 2008 and the pending merger of Continental/United awaiting clearance from the Justice Department, does American Airlines need a partner to survive?  No, says former American Chairman and CEO Robert Crandall.  See Andrea Ahles, Former AMR CEO Crandall Says American Doesn't Need Merger Partner, Star-Telegram, May 19, 2010 (available here).  In remarks given to the American Association of Airport Executives Conference in Dallas, Crandall stated that American would be better served focusing on its alliance relationships with British Airways/Iberia and Japanese Air Lines than seeking out a domestic merger partner.  He also took time out to decry airline deregulation as unhelpful to the air transport industry while noting that he "favor[s] a mix of competition and regulation rather than the consolidation of every airline under the sun."

While the story does not indicate whether or not Crandall opted to elaborate on his vision for a mixed regime of regulation and competition at the conference, it's likely his vision remains along the same lines that he drew during a 2008 address to the Wings Club in 2008.  See Robert L. Crandall, Remarks at the Wings Club Luncheon (June 1, 2008) (available here).  In that talk, Crandall was prepared to saddle airline deregulation with responsibility for the cumulative failure of the industry over the past 30 years.  He also offered a mix of new regulatory interventions including a mandated "sum-of-segments" pricing policy to encourage nonstop flights (and discourage airline connecting complexes) by charging the full price for each segment of a connecting itinerary; binding arbitration for labor disputes; tougher bankruptcy laws that would oust managements more quickly; and "a more accommodating stance toward industry collaboration" on capacity sharing. 

Blog readers interested in learning more about Crandall's take on deregulation and his suggestions for improving the industry should watch the International Aviation Law Institute's A Conversation with Bob Crandall (Sept. 14, 2009) (available in streaming video here), part of the Institute's ongoing Conversations with Aviation Leaders Oral History Project.

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