By Pedersen, Daniel
Newsweek , Vol. 131, No. 22
The mixed legacy of a departing airline boss
JUST AFTER THE DAWN of time -before Ronald Reagan was president, when webs were for spiders and 747's flew with piano bars-Bob Crandall became head of American Airlines Inc. Last week Crandall stepped out of American's cockpit after 18 years, leaving a legacy that's about as subtle as his famously salty language. "You [expletive] academic pinhead. You don't know [expletive]," Crandall once shouted to Sen. Edward Kennedy's staffer Phil Bakes, during a break in a 1977 Senate hearing. "You can't deregulate this industry. You're going to wreck it." Far from being an academic pinhead, Bakes later became head of two rival airlines (Continental, Eastern). And Crandall was wrong about the industry's - and his own-future as well. He went on to become a brass-knuckled winner in one of the world's toughest businesses, commercial fight. Deregulated commercial flight.
Love them or hate them, American's innovations in the deregulated era make an impressive litany. Deep discount fares. Frequent-flier programs. Computer reservation systems. Huge hub-and-spoke networks. Crandall and his team either invented them or became the first to use them wisely. Crandall, 62, ran American in a chain-smoking, coffee-guzzling, in-your-face mode that's out of style now in executive suites. But even his enemies-and be made many-express grudging admiration. "He'd arm-wrestle you for a paper clip," says Capt. Rich LaVoy, president of the Allied Pilots Association, which struck American in 1997. "Up close, you develop a certain respect for him."
Deregulation hasn't worked perfectly, but it's worked far better than Crandall imagined. After three years of record profits, he's leaving the volatile industry at the high point of the roller coaster. American's stock price is also at a record high. "The war is going well," he told NEWSWEEK in a farewell interview.
Unless, of course, you're in the back of the plane fighting for leg room. But don't expect sympathy from a man who pulled the celery sticks from Bloody Marys to save $12,000 and whose list of unflattering nick-names includes Fang, Bob the Butcher and Wretched Robert. Fliers, he says, have voted for low fares over airborne amenities. "Travel's less comfortable because it's more crowded," he says. "Because it's more crowded, it's also less expensive."
Crandall was the first airline executive to grasp how information technology could confer a competitive edge. Without computers, his ideas wouldn't have flown-from the frequent-flier program that built brand loyalty, to the reservation system that brought American a cut on hotels and car rentals, to the yield management system that maximized revenues on each flight by creating a mind-numbing array of fares. …