Last week, I attended the Travelport Ignite conference which was put on with Duke’s Fuqua business school. There was no tradeshow floor or panel discussions. This was a different kind of conference that was meant to get a small group of people from the travel industry into a room to talk about solving some of its problems. What better way to kick off the event than with the legendary former CEO of American, Bob Crandall?
[Disclosure: Travelport paid for my hotel only at this event]
If you aren’t familiar with Bob Crandall, then you probably haven’t been watching this industry for very long. He was an early believer in computerized reservation systems, and used technology to create a real advantage for American over the years. Under his leadership, American quickly saw value in the new hub-and-spoke model which took hold after deregulation. The airline also became the first to launch a modern frequent flier program (AAdvantage). Not enough? American was a leader in implementing successful revenue management controls using the Super Saver fares it created. That’s just some of what has made Mr. Crandall (as he’s said his friends call him) a legend.
While this is most of what people remember when they think about his legend, there were plenty of failures under his leadership as well, especially in the last decade of his reign. Crandall tried to solve labor issues by proposing a novel B-scale, a system where new employees would get paid less to the do the same work as existing employees. That was a disaster. He also poured a ton of money into creating now-failed hubs in Raleigh/Durham, Nashville, San Jose, and San Juan. And let’s not forget his four-tier Value Pricing experiment which was completely unsuccessful.
He’s a brilliant man who had quite the temper, so the stories go. But in recent years, he seems to have relaxed. I suppose that happens when you’re no longer responsible for running a giant airline. That being said, he’s still incredibly opinionated about this industry and he is blunt, to say the least. I was excited to watch him be interviewed by the dean of Fuqua, and I was not disappointed. The interview was excellent, and Crandall owned the room. Here are just a few snippets from the talk.
It’s Monopoly Time
Crandall did not mince words when talking about consolidation in the airline industry. “Our government has chosen to create monopolies.” He thinks that travelers would be better served with more airlines competing in the market, though that ship has now sailed.
An MBA Didn’t Help
Since the dean of Fuqua was the one doing the interview, he asked early on if Crandall’s Wharton MBA education really helped his career. The answer? “No.” In short, he said the contacts he made through the school and the alumni network were valuable, but then he just had to do a great job once he landed a role. The MBA didn’t help with that.
US Airlines Will Never Provide The Best Service in the World
People have long complained that service at US airlines lags that of international competitors. Why is that? Well, “You can’t make flight attendants retire.” Crandall then explained his response to a complaint asking why a flight attendant didn’t bring someone water when he had hit the call button. “She’s 83 years old!”
American Was Stupid
Why did it take American so long to declare bankruptcy after everyone else had done it? “They were just stupid.” That doesn’t mean Crandall is a fan of bankruptcy, but it means that an airline can’t compete without it if everyone else does it. And by failing to file for bankruptcy protection, American limped along until US Airways came in.
On that downhill slide… “Inside each person who worked at American, there’s a little guy crying. We all loved American and it got destroyed.”
Crandall went on quite the rant about consulting and told students in the room not to do it. Clearly we have similar feelings on this one. He said to those students, “Consulting is a dead end. The only purpose consultants served was to validate the decisions I already made and then convince others.” He added, “if you were the guy who had to do what you [a consultant] were recommending, would you do it? Probably not.”
It was nearly everything you’d hope for when you hear Bob Crandall is coming to speak. The only thing missing was a fiery display of his famed short temper, not that I expected to see it in this setting. One thing I will say is that if Bob Crandall doesn’t grab your attention, nobody will.
This was actually my first time seeing him in person, and I had the chance to meet him afterwards. I was downright giddy when he said he knew about this site and he read it on occasion. That’s pretty damn cool.
This set the tone for an interesting couple days. We talked about topics ranging from big data to loyalty and yes, even how to operate in a world dominated by millennials. We gathered in a classroom in the business school, so it was a very different kind of setting for a conference. The following day, we sat with current Fuqua students and talked to them about the travel industry, offering our help in any way we could.
I like this kind of event where you actually get to think and participate in trying to help solve industry issues. I hope that they put this on again, maybe in conjunction with other business schools next time.